ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In a fixed-rate payment, the total amount due remains the same throughout the life of the loan, although the proportion that goes to interest and principal varies. The fixed-rate payment most often refers to mortgage loans.

Detailed explanation-2: -A fixed-rate mortgage is a home loan option with a specific interest rate for the entire term of the loan. Essentially, the interest rate on the mortgage will not change over the lifetime of the loan and the borrower’s interest and principal payments will remain the same each month.

Detailed explanation-3: -For an installment loan like a mortgage, auto loan or student loan, a fixed rate allows the borrower to have standardized monthly payments. One of the most popular types of fixed rate loans is the 30-year fixed rate mortgage.

Detailed explanation-4: -Examples of fixed-rate loans include auto loans, personal loans, fixed-rate mortgages, and federal student loans.

Detailed explanation-5: -With a fixed-rate mortgage, payments you make each month will stay the same for the full duration of the mortgage term. With a variable-rate mortgage, while the amount you pay stays the same through the term, the amount that goes toward interest can fluctuate.