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One of the most critical decisions you will ever make in your entire financial life is deciding on the type of home mortgage loan to go for. For most people, the option of a fixed rate mortgage is very appealing and attractive. But if you are knew to home mortgages, you might be very confused on what a fixed rate mortgage is and why many people always go for this option.

Fixed Rate Mortgage - this type of mortgage is very straightforward as the name suggests. The mortgage loan attracts a fixed interest rate that will remain constant throughout the mortgage tenure. This therefore means that the monthly repayments you will be making will remain constant throughout of course giving room for inflation.

Verdict - if you aren't sure whether this is your mortgage, you should by all means consult a professional financial advisor who will help you locate the best possible deal in the market and advice you whether the base interest rate will rise or fall. This will help you reach a verdict whether an FRM or ARM is the best way to go.

Why an FRM - most people find this option appealing because of the peace of mind and security that comes with it. For one, you can be able to budget for the long-term and short-term effectively knowing as it is the rate of interest remains constant for as long as the mortgage is due. Needless to mention, a mortgage with an adjustable or changing rate of interest means that the monthly installments could significantly change depending on fluctuations on the market. A fixed rate mortgage is best taken when the competition is stiff and the fixed rate of interest is low than that of the adjustable rate mortgage.

Drawbacks - an FRM has its share of drawbacks too in that the interest rate is normally higher than that of its variable rate counterpart. The added peace of mind and security comes at a costly price in that you will end up paying more in terms of interest over the tenure of the mortgage. The other drawback is that the 'fixed' rate is normally fixed for a given period of years, mostly 3 years, after which the rate is adjusted and then fixed again for another period of time. What this means therefore is that the rate could be cheaper during the initial 'fixed period' but rise in subsequent years.

In spite of the mentioned drawbacks, the FRM is still an attractive option to many. If you have a fixed income every month, this is definitely your type of mortgage. This is because having a fixed repayment every month means you will have the peace of mind knowing that you can be able to afford the payments whether or not the national interest rates rise.