9 ms·

Does that mean fixed rate for 30 years? That would be unthinkable in the UK. From what I’ve seen, even 10 years would be unconventional.

snarf21 4y ago
That is correct. This is why home ownership is the main wealth building tool here.
chrismcb 4y ago
Yes. It means a fixed rate for 30 years. Unless you refinance the only thing that changes is your property tax. 15 years is really the way to go, as it typically isn't that much more per month. But 30 is the standard.
- sidewndr46 4y ago
  No clue where you are at, but my homeowner's insurance definitely goes up more often than once every 30 years.
  - ghaff 4y ago
    Well, there are a bunch of things. Insurance and all the other maintenance and upkeep costs associated with owning a home. But, still, in general locking in a mortgage means locking in costs for the most part even if it doesn't eliminate spending generally.
- Rebelgecko 4y ago
  It might've been just because I got my mortgage at a weird time, but when I refi'd there wasn't really a benefit to going 15 year. The interest rate was basically the same, so it seemed pointless.
  - peapicker 4y ago
    The same interest rate for an additional 15 years is a lot more total interest paid. Example: 100k at 15yr and 6% interest with monthly payments, the total paid back is $151,894.23 - the amount over 100k was interest. 100k at 30yr and 6% interest? Total paid back is $215,838.19 - more than twice the total interest paid back.
    - californical 4y ago
      Yeah but you can (usually) just pay the same amount with a 30yr as if you had a 15yr mortgage, but you still have the added security that if you fall into hard times, you have a lower mandatory payment with the 30yr. Also you’re correct about the higher cost of the mortgage, and this doesn’t really work as well at 6%… but if you had a 3% mortgage, you would have better returns taking the 30 year and investing the difference each month. The amount of money you’d make from the returns on that would, on average, be greater than if you paid off the mortgage in 15, then started investing. But yeah, doesn’t work as nicely at 6%.
      - ghaff 4y ago
        When I refinanced my 30 year fixed a long while back, I had a choice of 15 or 30 year terms. 15 year was a little lower, but your right that it wasn't much but it was a little lower--so that's what I took. But it was a pretty modest mortgage at that point (when I bought the house it was pretty much a fixer-upper) so I wasn't really worried about making payments. Getting a 30 year as an insurance policy is probably the right answer for many people even if it costs a bit more. >but if you had a 3% mortgage, you would have better returns taking the 30 year and investing the difference each month That would have been a good strategy over last decade certainly. Though that's hindsight and you're effectively taking out a loan and investing the money.
    - astura 4y ago
      Yeah, but there's no prepayment penalty so if the interest rate was the same and you're good with money you should take the 30 year mortgage and pay double every month. That way you have flexibility to half your mortgage payment if you run into financial hardship in a decade. Obviously it you can't control yourself with money then don't do this. When I bought my house I went with the 30 year mortgage. The interest rates between 15 years and 30 years were not hugely different and my 30 year interest rate was so low. I ended up really glad I did.
gnopgnip 4y ago
It is a result of a government to encourage/subsidize home ownership. A few other countries do fixed rates for 20-40 years, France for instance.
john_fushi 4y ago
(In Canada) The max my bank offers is 10 years, and it comes at a premium. The standard I see around me are 5 years.
AndrewDucker 4y ago
Yeah, even ten years is unusual in the UK. If for no other reason than it being quite a bit risk for the bank giving the loan that interest rates won't go up for a decade.
irrational 4y ago
My home mortgage interest rate is fixed at 2.2% for the entire 30 years of the loan.
guyzero 4y ago
Yes it does and yes it's wild. A few years back you could have gotten a million-dollar 30-year fixed mortgage loan at like 2% interest. Nowhere else can you get that sort of long-term locked in borrowing rate.
- oblio 4y ago
  It's for sure present in other countries and in some places you could lock in 30 years 1.10%.
- matwood 4y ago
  It is wild and why home ownership is such a big thing in the US. I've got a low rate locked in, and been in my house for 10+ years. The house next door rents for 2.5x my total mortgage. My mortgage has barely moved during this time period (taxes and insurance go up). With only modest raises, the relative cost of my mortgage to income has made it something I don't even think about.

snarf21 4y ago

That is correct. This is why home ownership is the main wealth building tool here.

chrismcb 4y ago

Yes. It means a fixed rate for 30 years. Unless you refinance the only thing that changes is your property tax. 15 years is really the way to go, as it typically isn't that much more per month. But 30 is the standard.

sidewndr46 4y ago
No clue where you are at, but my homeowner's insurance definitely goes up more often than once every 30 years.
- ghaff 4y ago
  Well, there are a bunch of things. Insurance and all the other maintenance and upkeep costs associated with owning a home. But, still, in general locking in a mortgage means locking in costs for the most part even if it doesn't eliminate spending generally.
Rebelgecko 4y ago
It might've been just because I got my mortgage at a weird time, but when I refi'd there wasn't really a benefit to going 15 year. The interest rate was basically the same, so it seemed pointless.
- peapicker 4y ago
  The same interest rate for an additional 15 years is a lot more total interest paid. Example: 100k at 15yr and 6% interest with monthly payments, the total paid back is $151,894.23 - the amount over 100k was interest. 100k at 30yr and 6% interest? Total paid back is $215,838.19 - more than twice the total interest paid back.
  - californical 4y ago
    Yeah but you can (usually) just pay the same amount with a 30yr as if you had a 15yr mortgage, but you still have the added security that if you fall into hard times, you have a lower mandatory payment with the 30yr. Also you’re correct about the higher cost of the mortgage, and this doesn’t really work as well at 6%… but if you had a 3% mortgage, you would have better returns taking the 30 year and investing the difference each month. The amount of money you’d make from the returns on that would, on average, be greater than if you paid off the mortgage in 15, then started investing. But yeah, doesn’t work as nicely at 6%.
    - ghaff 4y ago
      When I refinanced my 30 year fixed a long while back, I had a choice of 15 or 30 year terms. 15 year was a little lower, but your right that it wasn't much but it was a little lower--so that's what I took. But it was a pretty modest mortgage at that point (when I bought the house it was pretty much a fixer-upper) so I wasn't really worried about making payments. Getting a 30 year as an insurance policy is probably the right answer for many people even if it costs a bit more. >but if you had a 3% mortgage, you would have better returns taking the 30 year and investing the difference each month That would have been a good strategy over last decade certainly. Though that's hindsight and you're effectively taking out a loan and investing the money.
  - astura 4y ago
    Yeah, but there's no prepayment penalty so if the interest rate was the same and you're good with money you should take the 30 year mortgage and pay double every month. That way you have flexibility to half your mortgage payment if you run into financial hardship in a decade. Obviously it you can't control yourself with money then don't do this. When I bought my house I went with the 30 year mortgage. The interest rates between 15 years and 30 years were not hugely different and my 30 year interest rate was so low. I ended up really glad I did.

gnopgnip 4y ago

It is a result of a government to encourage/subsidize home ownership. A few other countries do fixed rates for 20-40 years, France for instance.

john_fushi 4y ago

(In Canada) The max my bank offers is 10 years, and it comes at a premium. The standard I see around me are 5 years.

AndrewDucker 4y ago

Yeah, even ten years is unusual in the UK. If for no other reason than it being quite a bit risk for the bank giving the loan that interest rates won't go up for a decade.

irrational 4y ago

My home mortgage interest rate is fixed at 2.2% for the entire 30 years of the loan.

guyzero 4y ago

Yes it does and yes it's wild. A few years back you could have gotten a million-dollar 30-year fixed mortgage loan at like 2% interest. Nowhere else can you get that sort of long-term locked in borrowing rate.

oblio 4y ago
It's for sure present in other countries and in some places you could lock in 30 years 1.10%.
matwood 4y ago
It is wild and why home ownership is such a big thing in the US. I've got a low rate locked in, and been in my house for 10+ years. The house next door rents for 2.5x my total mortgage. My mortgage has barely moved during this time period (taxes and insurance go up). With only modest raises, the relative cost of my mortgage to income has made it something I don't even think about.