# Advantages of a low-interest, fixed rate mortgage



## Bradleyjamess (Jun 19, 2021)

Wanted to get everyone's thoughts on this topic, as I recently learned that having a low-interest, fixed rate mortgage actually works to your advantage when inflation is a far greater percentage.

For example: my interest rate is 3%. If inflation is anything greater than that, it means that the banks are essentially helping you pay off your mortgage over time. Realistically, inflation is far greater than what they say it is (one could argue that's it's actually around 12%) and I believe it will continue to be this way for the foreseeable future.

Everyone says to "get your debts paid off ASAP!"...but what about those with low, fixed rate? While it's definitely not a traditional way of thinking, I think it is an interesting strategy.

Taking inflation into account, I believe it's advantageous to milk a low, fixed rate is long as possible with minimum payments. What are your thoughts?


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## ItsJustMe (Dec 12, 2020)

I would not argue against your premise.

I considered paying extra on my low interest mortgage to pay it off quickly. However, I decided against that because if our form of govt changes to one where private property is not.allowed and/or is confiscated, they can take the mortgage along with it. Or, if my too-large-for-just-me house becomes a place where they house others, I will walk away.


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## Chipper (Dec 22, 2012)

You can always pay more if you have the funds. Why trap yourself into making a huge payment?? You never know what the next years will bring. Cheaper you can live month to month the better IMHO.

Maybe a stupid liberal president will kill your job off then what??


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## rice paddy daddy (Jul 17, 2012)

When we got our mortgage in the 90's, our rate was almost 13% on a 30 year note.
We paid it off as quickly as possible, and now are free.

The Great Recession when I could have very easily lost my job in building materials wholesale distribution was a huge motivator to get rid of any debt.

While a low interest fixed rate may have its advantages, the advantage of no mortgage means no one can take our farm as long as I pay the taxes on it.


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## Denton (Sep 18, 2012)

Here's a way of looking at it.
A few years ago, I bought a car using Ford credit. I could have bought a car using cash, but 0% interest was more than I could pass up. It made sense to use Ford's money. Had things gone bad for me, I could have simply paid off the note and been debt-free, which is where you certainly want to be when you fall on hard financial times.


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## Bradleyjamess (Jun 19, 2021)

I appreciate all the feedback. Trying to take in as many opinions and thoughts on the matter so that I can make an informed and well-educated decision.


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## rice paddy daddy (Jul 17, 2012)

Bradleyjamess said:


> I appreciate all the feedback. Trying to take in as many opinions and thoughts on the matter so that I can make an informed and well-educated decision.


By all means, stay very far away from any adjustable rate mortgages. If they even have those any more.
Fixed rate, fixed term is the only way to go.


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## pikepole20 (Nov 27, 2017)

Sure, if inflation continues having a fixed lower rate mortgage will help. All other costs will be rising so you will still have less money to spend on other essential items. We are working towards being debt free without getting into our savings. If the economy goes belly up, paying off mortgage would be high on our priority list. We live on mostly retirement income, so flexibility would be important. If interest rates and inflation go anywhere near what it was in the seventies, the economy will take a huge hit and all of this government borrowing will become front and center. A fixed interest low interest loan is always best, but try to have a plan B to escape debt.


Sent from my SM-N970U using Tapatalk


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## rice paddy daddy (Jul 17, 2012)

I bought my first house in 1980, when Jimmy Carter was still president.
I believe the interest rate on our 20 year mortgage was north of 18%.

And if the leftist policies of the current administration can not be checked, the Jimmy Carter years will look like The Good Old Days.


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## stowlin (Apr 25, 2016)

The fixed mortgage is a good hedge on inflation ONLY if your income is going to rise with inflation. If it doesn’t the mortgage is just another difficult bill to pay. 

Suggest you “make” $10,000 a month and didn’t pledge more then 20% to your mortgage or $2,000 a month. You invest $1500 a month in retirement savings and live nicely on $6500. Only it’s a year into Biden and what was $6500 is now $7,500. Your income went up to $10,500 but now you only have $1,000 left for retirement instead of $1,500. That sounds ok because it’s a year, but what if it’s six months, or three months? 

Carry it another “period” and say what was $7,500 for comfortable living is now $9,000. Let’s say your income stayed the same at $10,500. Now you have to change your lifestyle.


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## CapitalKane49p (Apr 7, 2020)

Debt makes people do things and make decisions that are often not in their best interests. 

Pay off any debts and live on your own terms.

Godspeed


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## inceptor (Nov 19, 2012)

rice paddy daddy said:


> While a low interest fixed rate may have its advantages, the advantage of no mortgage means no one can take our farm as long as I pay the taxes on it.


Looking back here reminded me of why we did what we did. Our interest rate was not as high but my wife decided she wanted a 15 year mortgage. There were times it hurt yet now we are mortgage free. Good decision decided by her and her sister. I didn't agree at the time but I'm damn glad I didn't push the point.


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## bigwheel (Sep 22, 2014)

Used to listen to a TV preacher financial guy or two on TV who calimed a 30 year mortage could be cut in half by using an amortization table to figure how much is the principal portion on the last payment due under the loan and send it to em with instructions to apply it to the principle only and not the interest. Having explored the option a bit it seems like making an extra house payment per year comes pretty close to doing the same thing.


https://www.washingtonpost.com/news/where-we-live/wp/2016/10/19/how-to-pay-off-your-mortgage-sooner/


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## peter4paul (12 mo ago)

[QUOTE=" I believe it's advantageous to milk a low, fixed rate is long as possible with minimum payments. What are your thoughts?
[/QUOTE]

There's something magical about having zero mortgage, but yes - what you're saying makes total sense!


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## Pir8fan (Nov 16, 2012)

CapitalKane49p said:


> Debt makes people do things and make decisions that are often not in their best interests.
> 
> Pay off any debts and live on your own terms.
> 
> Godspeed


Exactly. Debt makes you a slave to those you owe.


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## Rohitstad (7 mo ago)

Not sure what is the best option now, but it looks like the premise you describe can be of use now. The inflation is hitting hard, and I am not sure I want to take a loan from a local bank anymore. The rates change daily, and it is hard to guess which option to choose if you are not a professional. That’s why I have decided to hire Mortgage Broker Sunderland to help me make the right decision. Our first session will be on Monday, and I hope to hear good advice from them because I paid significant money for it. I have heard only good recommendations about this company and hope they will help me.


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## OlyBT (2 mo ago)

Considering it's been a year, and as we've seen what's going on with inflation, I wanted to know if the banks helped you pay off your loan or if it was beneficial to you to pay it off early? I understand that the bank helps, but when the rate is fixed and the bank loses money because of inflation. He can't make your rate higher and the interest stays the same. It's in their interest. When they made me this offer (demanded I pay), I decided to consult Mortgage Advice Sheffield located, and just as I thought - the bank insures their property. Those who took out a high interest loan had to pay more. By raising the rate, the bank survives by increasing interest payments and key rates.


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