Every here and there, on advertising, you see and hear about this – which one will suit better to you; fixed rate mortgage or variable rate! Selecting the right one can make your worries over – say for next 10 years. But the decision should not be taken hastily.
Actually a lender would offer different rates for different types of mortgages. This is basically picked out on financial risk to the company and you. When the client is willing to take the risk, the rate of interest will be lowered as a special offer. On the other way round, that is when the lender takes the risk more, the rate automatically becomes bit higher. When the period is longer, the risk will be higher too for the company.
Variable rate mortgage is better suited to persons who might tolerate higher risk and have a flexible budget. On the other hand, fixed-rate mortgages are best for first time buyers with low risk tolerance.
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