When looking to purchase a home, you have plenty of options when it comes to financing. However, not all mortgage types are created equal. Some will come with a higher interest rate and require a larger down payment than others.

For those looking to buy a home without worrying about your mortgage for the next few years, a 5 year fixed rate mortgage is one option worth considering. So what is this type of loan and why should you get one? 

Fixed Interest Rates For 5 Years

The first thing to know about this type of mortgage is that it’s a fixed interest rate for the next 5 years. So, while rates might be low now, they could be much higher in the future. With rbc5 year fixed rate mortgage, you won’t have to worry about rising rates and your monthly payments will remain the same for the next five years.

And if interest rates do increase, you’ll still have time to renegotiate your loan so that you can pay less for your home.

No Pre-Payment Penalty

One of the first things to look for in a mortgage is whether or not there is a pre-payment penalty. With this type of loan, that’s not an issue. You can pay off your mortgage before it expires without incurring any fees.

A Chance To Improve Your Credit Score

When you buy a home, your credit score will be impacted. Depending on the type of loan you choose, it can either increase or decrease your credit score. A 5 year fixed rate mortgage is one option that can help you build up your credit score.

Typically, lenders consider your previous actions when looking at whether or not to grant you a loan. With this type of mortgage, they won’t have the same access to your financial history because they only have information from the last five years. This could give you an edge in the approval process and make it easier for you to get a loan if you don’t have a strong credit score yet.

A Mortgage With No Fuss, No Muss

A 5 year fixed rate mortgage is perfect for those who are looking for a low-hassle way to finance their home. Unlike adjustable rate mortgages, this type of loan does not adjust with the interest rates. The interest rate you sign up for when you take out the mortgage will be the same throughout the entire term.

This means that you can go into your loan knowing exactly what payments will be like and have time to plan accordingly.

Conclusion

Buying a house is the single largest purchase of your life, so it’s important to make sure you have the right mortgage for your needs. A 5 year fixed rate mortgage can be a great option for those who want to get a house now but don’t know how long they will stay in the same place. This type of mortgage also makes it easy to budget for your monthly payments and allows you to build up your credit score.