ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -What type of home loan has the lowest interest rate? VA loans typically have the lowest interest rates.

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: -Key Takeaways. A fixed interest rate avoids the risk that a mortgage or loan payment can significantly increase over time. Fixed interest rates can be higher than variable rates. Borrowers are more likely to opt for fixed-rate loans during periods of low interest rates.

Detailed explanation-4: -A fixed rate mortgage can protect you from the fallout of future rate rises. This type of mortgage offers a set interest rate for a certain period of time. For example, a building society might offer a two-year fixed rate at 1.5%. So you’ll know exactly how much you’ll pay each month, making budgeting a lot easier.