Why Other Countries Aren't Worried About 30-Year Mortgage Rates

You don't have to go with 30-year mortgage rates. Consider other options.

Jul 29, 2014 at 10:32AM

A house in Denmark. CreditPoul-Werner Dam via Flickr.

If you're in the market for a new home, you probably care a lot about the prevailing 30-year mortgage rates. After all, 30-year mortgages with fixed rates of interest are the top home loans in America. That's not so all over the world, though. Take a look at some global alternatives and see how you think 30-year mortgage rates compare to other options elsewhere.

At MSN Real Estate, Marilyn Lewis offered some examples:

  • Many Japanese mortgages are "convertible," giving the borrower, after a certain period, the chance to renew for another fixed period or to switch to an adjustable rate.
  • In countries such as Australia, Canada, the Netherlands, and Spain, many mortgages have two components: a fixed-rate one and an adjustable-rate one.
  • In countries such as Canada, Germany, and the Netherlands, many borrowers use rollover mortgages, where the rate is fixed for a set period, and then borrowers renew the loan at regular intervals, at prevailing rates.
  • In the Netherlands, most mortgages are interest-only. You only pay interest and don't gain equity in your home, but you do enjoy tax benefits along the way.

Here are some more interesting features of international loans from a 2010 Research Institute for Housing America report. Compare them with our standard 30-year mortgage rates and terms:

  • In Germany, you can buy interest rate insurance from lenders, and you can lock in rates for several years before actually getting your mortgage.
  • While U.S. loans are typically amortized over 15 or 30 years, Finland offers 60-year amortizations, and you'll find multigenerational 100-year ones in Japan and Switzerland.
  • In Australia and the U.K., some mortgages offer "payment holidays," permitting some payments to be skipped.
  • In Canada, France, and Japan, you can get flexible-term loans, in which the payment stays the same, but the length of the loan fluctuates as prevailing interest rates change.
  • In many countries, if you can't pay your mortgage, it's not just your home that's at risk; lenders can go after your other assets and your income.

If you're now thinking that your boring 30-year mortgage rates rather poorly compared with other options around the world, take heart: Some of them can be found here. Yes, the vast majority of loans these days are 30-year mortgages with fixed rates. But you can get shorter-term and variable-rate ones, too, such as adjustable-rate mortgages (ARMs). With ARMs, your rate is typically fixed for the first few years, and then it is adjusted up or down in accordance with prevailing rates. Since many people only need a mortgage for a few years, these can make plenty of sense.

So don't think you're stuck with your 30-year mortgage rates and terms. There's a world of alternatives out there.

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A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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