The interest rate and the period for which you fix this rate have a big impact on your monthly payments and the total costs of your mortgage. That's why it is important to understand how this works before you make any decisions.

The mortgage interest rate is the percentage you pay on the amount you borrow. This rate can vary depending on the lender. It also depends on your loan amount, the value of your house, and how long you fix the interest rate.

You can choose a short or long fixed-rate period. A short period is 1 to 5 years. The advantage of the short period is that the rate is lower. However, there is a good chance that the interest rate will rise after this period. This means that your monthly payments may increase.

A long fixed-rate period is for 10, 20, or 30 years. The interest rate stays the same for a longer time. This way, you know exactly what to expect financially. However, the rate is higher than with a short period. On the other hand, you are protected against unexpected increases.

Besides the fixed-rate period, you also have mortgage interest deduction. This is a tax benefit that allows you to deduct part of the interest you pay from your taxable income. The result? Lower net monthly costs. The biggest benefit will be in the first years, since you pay the most interest then.

Keep in mind, rules for interest have become stricter in the last few years. They will most likely change again in the future.