Describe the key features of a fixed-rate mortgage
Hence, the fixed-rate mortgage has earned popularity among homeowners in Dubai because of its reliability. Here are the key features that define a fixed-rate mortgage and why it might be the right option for you:
1. Consistent Interest Rate
The distinguishing characteristic of a fixed rate mortgage is that the interest rate for the loan is the same throughout the term of the mortgage loan. This consistency implies that the sort of payment you are going to make will not change monthly and therefore bring reliability in terms of payment on a long-term contract.

2. Predictable Monthly Payments
It means that in case of a fixed rate mortgage the payment to be made every month towards the mortgage is in fixed amount. This predictability is useful if you are to plan for the long term because while maintaining the best standard of living one will know that it will have to pay a certain amount of money every month without worrying about increases in the interest rates.
3. Loan Term Options
Fixed-rate mortgages include different term options and the most common ones are 15-year, 20-year and 30-year mortgages. Small-term loans are characterized by relatively high monthly charges but lower charges in the total interest fees comparative to the large-term loans which have low monthly charges but high total interest charges.
4. Stability in Economic Uncertainty
Hinged on this, one of the major strengths of the fixed-rate mortgage is to shield the consumer against change in market price. In this concern, any changes on market interest rates do not affect your mortgage rate and payment, which offers security especially in a fluctuating economy.
5. Higher Initial Interest Rates
Fixed rate mortgages traditionally have initially slightly higher interest rates than the adjustable rate mortgage (ARM). This has a higher initial rate as the returns from the investment but when compared to its stability and predictability they are worth it. However, the scenario implies that you may end up paying a higher interest during the initial years of the loan as compared with an ARM​.
6. Amortization Over the Loan Term
Fixed rates mortgages are completely covered amortization loans which means that the balances are adjusted with every payment. At the end of the mortgage period all the money in the loan is repaid and you are given a new loan to pay for your house or some other asset.
Housing loan whose rate of interest is fixed for the entire term of the mortgage is appropriate and convenient for those who wish to lock themselves in a given rate in order to insulated themselves from fluctuation in the market. It is especially rewarding in the case of stable economic environment, especially when it comes to interest rates. However it should be noted that while initial interest rate is slightly higher, the payments are made consistently than in many other methods of financing.
Quiz: Key Features of a Fixed-Rate Mortgage
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