Fixed Interest Rates
Fixed interest rates refer to home mortgage interest rates that are fixed for a specific period. The period these interest rates are set for varies between one and five years but the term can be as high as ten years. As a general rule, the longer the term of the fixed interest rate, the higher the actual interest rate. For example, if a one year fixed interest rate is 7.29 percent per annum with a particular home lender, the five year fixed term rate may be 7.45 percent per annum while the ten year fixed interest rate might be 7.65 percent per annum. This will depend on individual lenders and some lenders may have the same rate for fixed rate loans of between one and five years.
With fixed interest rates, you will generally have to repay the exact amount each month, unlike most variable interest rate loans where you can make extra repayments, either one off payments or extra regular repayments. Some fixed rate loans now however, may allow you to repay a certain amount extra over the term of the fixed interest rate. Check with the lender to see if they will allow this on their fixed rate loan.