Finance and Business Blog by Friends of Voe

It is quite normal for potential home buyers to look into 30 year or 15 year fixed mortgage rates when considering their monthly repayments. Most people that buy a home later in life want to have the mortgage paid off as soon as possible. Decisions of this nature need careful consideration before any commitment is made. For almost every homeowner, having constant interest rate is critical if they are to meet payments without difficulty.

It seems that some lenders are happy to offer deals that appear too good to be true and they usually are. A fixed rate mortgage maintains a set interest rate during the period of the loan. For many people with regular incomes, this is a definite benefit as there are no hidden charges. Both my wife and I decided to research fixed rate mortgages when we started looking at homes for sale.

It was always our intention to clear our mortgage debt as early as we could but we didn’t want to over extend ourselves at the same time. It became obvious that we had to look at fixed rate mortgages over a longer period and not just 15 year plans. The problem was that we weren’t very happy about having a mortgage close to when we both retired so it was our hope a 15 year fixed mortgage rate would still be available to us. It wasn’t easy for us because of the stress to pay the house off early.

We thought about it long and hard and despite the pressure we decided to go with the 30 year loan plan. Reaching the decision we did was the only one that made sense. Probably the over-riding decider was the fact my wife was expecting a child. As she intended to raise our child at home we couldn’t rely on her financial income to the monthly expenditure. Our monthly payment would have been too high if we had committed ourselves to the 15 year fixed mortgage plan. We knew that it just wasn’t an option and the risk was too great. After looking at the much lower amount we would be paying per month with a 30 year mortgage loan, there wasn’t any option but to go with it.

If we have spare cash throughout the year then we can use it to reduce the capital sum. We also found that we were reducing the number of years left on the mortgage by making these payments. This is well worth it in the long term but it does require some discipline. We would have much preferred to have taken out a loan with a 15 year fixed mortgage rate but we had to consider our other commitments as well. As it is, things worked out very well for us by taking this route.