Many homebuyers opt for Adjustable Rate Mortgages because they offer a low-interest rate and monthly payment. That's because they meet the needs of homeowners well, and here's why: Most borrowers stay in their homes just five to seven years, making 3-, 5-, or 7-Year ARMs excellent loan options for them.
Short-Term Fixed Rate MortgagesThe Bank of England's Short-Term-Fixed mortgages offer an excellent option for many homebuyers - a lower rate than traditional fixed-rate mortgages offer and the stability of longer-term fixed-rate mortgages. To be sure, the longer the rate is fixed, the more stability the borrower receives, and the higher the interest rate.
Interest rates on Short-Term Fixed rate loans are attractive and fixed until they reset in 3, 5, 7, or 10 years.
Many borrowers, not surprisingly, prefer them, especially those who plan to move before interest rates on their loans reset.
- 3-Year Fixed
- The 3-year Fixed Rate loan is amortized over 30 years, and its rate is fixed for the first 3 years, and it becomes an Adjustable Mortgage for the remaining 27 years of the 30 year cycle.
- 5-Year Fixed
- The 5-Year Fixed rate loan offers an interest rate that is fixed for 5 years, and it becomes an Adjustable Mortgage for the remaining 25 years.
- 7-Year Fixed
- The 7-Year Fixed rate loan provides an interest rate that remains fixed for seven years, and it becomes an Adjustable Mortgage for the remaining 23 years.
- 10-Year Fixed
- The 10-Year Fixed rate loan offers an interest rate that is fixed for the first 10 years, and it becomes an Adjustable Mortgage for the remaining 20 years.
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