This is the most common type of residential home loan. This type of loan is repaid by fixed monthly payments (principal plus interest) for a set amount of time. This set amount of time could be for 10, 15, 20, or 30 years. The borrowing rate stays the same over the life of the residential mortgage loan. In the fixed mortgage loans, the mortgage interest is front loaded. In other words, in the first years of the residential loan, a major portion of the monthly payments go towards paying interest. Equity is considerably built in your home as majority of the mortgage payments are going towards paying the principal. This type of mortgage is suitable for those individuals who plan to stay in their estates for a lengthy period of time.

Stability: Because of the fixed mortgage rates and set loan period, you know exactly what the loan payment will be for the duration of the residential loan. This stability in the mortgage loan payment will enable you to plan your finances accordingly.
Lower payments in a low mortgage interest rates environment: Purchasing power and financial flexibility is increased with a lower monthly mortgage payment. Using a 30 year fixed mortgage of $150,000 as an example, if the borrowing rate is 6.50%, the monthly payment would be $948.10. If the mortgage interest rate is 8.50%, the mortgage monthly payment would be $1,153.37. The difference in monthly payments is $205.27.

Affordability: The disadvantage for this type of mortgage is present if the interest rates are high in which case there would be high mortgage payment and you could have difficulty in making payments. In this case, the home loan might not be approved. High payments in a high mortgage rate environment: Nobody wants to pay high home mortgage payments for a long period of time. However, when interest rates are lower, the mortgage can be refinanced. Refinancing your mortgage will replace your current mortgage with a new residential mortgage with better interest rates and lower monthly mortgage payments.