Definition of Fixed-rate payment:
A fixed-rate payment is an installment loan with an interest rate that cannot be changed during the life of the loan. The payment amount also will remain the same, though the proportions that go toward paying off the interest and paying off the principal will vary. A fixed-rate payment is sometimes referred to as a “vanilla wafer” payment, presumably because it is very predictable and contains no surprises.
A fixed-rate payment agreement is most often used in mortgage loans. Homebuyers generally have a choice of fixed-rate mortgage loans or adjustable-rate (ARM) mortgage loans. Adjustable-rate mortgage loans are also known as floating rate loans. Homebuyers typically can decide which loan type is the better choice for them.
A sum of money that a borrower must pay to the lender over a series of periodic payments until the fixed rate interest loan is paid in full under the terms of the contract. Typically, this term is used in the home loan industry to refer to payments under a fixed rate mortgage which are indexed on a common amortization chart.
How to use Fixed-rate payment in a sentence?
- Banks generally offer a variety of fixed-rate payment mortgage loans, each with a slightly different interest rate.
- The fixed-rate payment most often refers to mortgage loans. The borrower must decide between a fixed-rate payment and an adjustable-rate payment.
- In a fixed-rate payment, the total amount due remains the same throughout the life of the loan, although the proportion that goes to interest and principal varies.
Meaning of Fixed-rate payment & Fixed-rate payment Definition