Fixed Rate Mortgages
These mortgages have interest rates that remain the same over the entire length of the loan term. Historically, these loans have had terms of fifteen and thirty years. However, in recent years, the industry has made both ten and twenty year terms available. More recently, some lenders are allowing any term up to thirty years (360 months). For example, if you desire a 22 ½ year term (270 months), it is usually available.
Having the same interest rate over the entire loan term means that the monthly payment will remain the same. Additionally, this means the last payment will be equal to the first. When the last payment is made, the loan balance will be paid in full.
Varying the term of a fixed rate mortgage will vary the scheduled monthly payment. It only stands to reason that if you desire to payoff a loan in a shorter period of time this can be accomplished by increasing the monthly payment.
Below you will find an example of the monthly payments necessary to pay off a loan of $300,000 with a fixed interest rate of 6.00% over respective terms of 30, 20, 15 & 10 years:
If you would like to experiment with a variety of rates, terms and loan amounts, please feel free to use our mortgage calculator.