Credit Cave

This is the most popular type of mortgage which has a fixed rate of interest and monthly payments. Fixed rate mortgage is offered for two periods - 15 years and 30 years. The popularity of a fixed-rate mortgage stems from the fact that borrowers do not like to repay their loans at a fluctuating rate of interest. Besides, with a fixed-rate mortgage, you can get a great deal if you apply for the mortgage when the rates are low. To get an idea of mortgage rates in the US, go to this mortgage calculator.

The advantages of a 30-year mortgage include having a lot of time to repay, low monthly payments, more money in hand for other expenses, and greater tax deductions. The disadvantages include a higher interest rate as compared to a 15-year mortgage, in the initial phase; the money goes into paying for the interest charged and not the principal.

With a 15-year mortgage, the biggest advantage is that you build equity at double the speed and reduced overall interest rates. Disadvantages include high monthly payments, reduced tax deductions, and often buyers are restricted to purchasing a smaller home.

Every body and their dog knows just how heated the housing market has been in the UK and many other countries over the last few years.  We’ve seen record appreciation year after year, but it has now got to the point where the average earner cannot afford to buy into a property.  Worryingly, the crucial first-time buyers are starting to dry up as the property markets keeps rising to price them out.

So as a result of this crazy house price bubble we’ve all been experiencing, there are fewer buyers.  And because there are fewer buyers, the market is no longer sustainable according to a top market research group, Capital Economics.

In an interview with the BBC, Capital Economins’s Jonathan Loynes said that house price growth “will severely constrain consumer spending and weak consumer spending will mean that it will be a struggle to get growth up to the levels forecast by the Chancellor.”

This comes hot on the heels of a report from the Halifax, a leading UK mortgage lender, that gave a buoyant outlook for the property market and the recent interest rate rise intended to cool off inflation.

What will happen next is anybody’s guess, but as soon as the market starts to show signs off a drop I’m selling up and renting until it bottoms out.  Then I’ll buy.  But let’s hope it doesn’t get to that stage.