Fixed-Rate Mortgage

Quick Summary

A mortgage where the interest rate stays the same for the full term.

ELI5 Explanation

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Your rate doesn’t change during the term, so payments are predictable.

Detailed Explanation

Fixed-rate mortgages provide payment stability because the rate is locked for the term. The downside is that breaking a fixed mortgage early can trigger larger penalties, especially when rates have fallen since you signed.

Example

A 3-year fixed mortgage at 5.29% keeps the same rate until renewal in three years.

Why It Matters

It’s a tradeoff between stability now and flexibility later.