10 year mortgage loan
A 10-year fixed rate mortgage offers a low interest rate and accumulates much less interest than other loans due to its shorter term. That means that you can build equity quickly compared to longer fixed rate loans (i.e., 15- or 30-year loans). This type of mortgage could be a great option for someone who can afford a higher monthly payment or a higher down payment.
Why Doesn’t Everyone Get a 10-Year Loan?
For the most part, people think that they cannot afford to pay their house off this quickly or that their money will be better invested elsewhere. The monthly payments for a 10-year loan are much higher than those for longer-term loans; in fact, monthly payments for a 10-year mortgage can be twice as much, or more, than monthly payments for the more common 30-year fixed rate mortgage.
If I Can Afford That Much, Wouldn’t I Just Buy a Bigger or Better House?
It depends on what your goals are. There are many upsides to paying higher monthly payment on a lower-valued property.
One of the biggest advantages is how quickly you gain ownership in your home. A 10-year fixed rate mortgage allows you to own your home and end your monthly payments sooner. If you choose this loan and don’t sell or refinance, you can stop having a mortgage payment after 10 years, instead of after 30. Even if you don’t keep the loan for 10 years, the increased equity you will earn can mean keeping more money when you sell your home or getting a lower rate when you refinance.
Another advantage of this loan is that you’ll save money. The fact that this loan only lasts for 10 years means that over the life of your loan you will end up paying much less than if you had a 30-year mortgage for the same home, because your loan will accumulate less interest.
A 10-year fixed rate mortgage also opens up the possibility of owning several homes as investments. For some people, this type of loan allows them to acquire several properties as investments over time, instead of paying down one higher-value property over the same period of time.
Still, there are benefits to owning a higher-valued property too. A Sindeo Mortgage Advisor can help you choose the right approach for you.