Home mortgage, exploring in depth
Banks expect that at some point during the term of your loan, the prime interest rate will rise above the interest rate of your mortgage, and the bank will be required to make up the shortfall itself. Banks offer higher interest rates for fixed rate mortgage loans than for adjustable rate mortgages to cover for this eventuality. A convertible home mortgage loan initially has an adjustable rate, but can be converted to a fixed rate during a certain period of the loan's term. If interest rates are high but you expect them to drop shortly, this is a good loan type to choose. You can enjoy the comparatively low interest rate of an adjustable rate home mortgage, then lock in an attractively low fixed rate for the rest of the life of the loan.