Fixed vs Variable Rate Mortgage: What Are the Differences?

The mortgage rate is a key item in anyone’s financial plan. It’s not an easy decision to make, with fixed debt and variable debt rates, but it’s worth the effort. This article will explain the difference between these two types of mortgages, and discuss which might be best for your personal situation.

Why Choose a Fixed Rate Mortgage?

When you take out a fixed-rate mortgage, you’re locking in a rate for the life of the loan. This means that if interest rates go up, your monthly payment will also increase. Conversely, if interest rates decline, your mortgage payments will shrink.

Fixed-rate mortgages are generally more expensive than variable-rate mortgages, but they offer certain benefits that can make them worth the extra cost. A fixed-rate mortgage typically offers lower rates during economic downturns because banks are less likely to want to lose money on these loans. And because you’re locked in at a set rate, you can be sure you won’t get hit with an unexpected hike in your payments down the road.

How Do You Find the Right Fixed Rate Mortgage for You?

If you’re looking to buy a home, your first step is determining if you should go with a fixed or variable rate mortgage. Here’s what you need to know about the two types of mortgages.

What Is a Fixed Rate Mortgage?

A fixed-rate mortgage is one where the interest rate on the loan remains the same throughout the duration of the loan. This type of mortgage is typically best for borrowers who want to lock in their interest rate for as long as possible.

Why Would I Want a Fixed-Rate Mortgage?

A fixed-rate mortgage can be advantageous if you plan on keeping your home for an extended period of time and don’t anticipate any significant changes in your income or credit score. Furthermore, fixed-rate mortgages tend to have lower interest rates than variable-rate mortgages, which can make them more affordable over the course of a loan term.

How Does a Fixed Rate Mortgage Work?

When you apply for a fixed-rate mortgage, lender will look at your current debt level, monthly income and expected expenses (including principal and interest payments) when deciding on an appropriate interest rate. Generally speaking, lenders offer lower rates on fixed-rate mortgages to attract prospective buyers and make sure they are able to repay their loans in full on schedule.

What Is a Variable Rate Mortgage?

A variable-rate mortgage is one where the interest rate changes throughout the duration of the loan – sometimes dramatically so

Should I Choose a Variable Rate Mortgage?

A variable rate mortgage is one in which your interest rates can change over time, based on prevailing market conditions. This can be an attractive option if you’re unsure about where the economy is headed and whether or not you’ll be able to get a fixed rate mortgage in the future.

Fixed rate mortgages typically have lower payments over the life of the loan, but they’re more expensive up front. If interest rates increase after you’ve taken out a fixed-rate mortgage, your monthly payments could increase significantly.

If you want to buy a home but are worried about getting a good interest rate, consider a variable-rate mortgage. Just make sure that you understand what’s involved with these loans and that you can afford to pay higher monthly payments in the event that rates increase.

Pros and Cons of a Variable Rate Mortgage

There are a few key differences between a fixed and variable rate mortgage. Here are the pros and cons of each:

Fixed Rate Mortgages

-Fixed rates tend to be more stable than variable rates, meaning that they won’t change as much over time. This can be important if you plan on keeping your home for a long period of time.

-Fixed rates also tend to have lower interest rates than variable rates, which could make them a good option if you want to borrow money for shorter term purposes.

-However, fixed rates can be more expensive than variable rates, and you may need to pay higher premiums if you want one with a low interest rate.

Variable Rate Mortgages

-Variable rate mortgages allow lenders to set their own interest rates, which means that they can change frequently according to market conditions. This can make them more volatile than fixed rate mortgages, and could lead to higher loan payments in the short term if interest rates rise.

-Variable rate mortgages also tend to have lower initial borrowing costs than fixed rate mortgages, but this may not always be the case. And remember – if interest rates go up after you take out your loan, your monthly payments will likely increase too!


A fixed-rate mortgage offers a predictable rate of interest over the life of the loan, while a variable-rate mortgage can change over time. Fixed-rate mortgages are typically more expensive than variable-rate mortgages, but they offer stability and security in terms of interest rates. If you’re looking for a long-term financial commitment, a fixed-rate mortgage may be the best option for you. On the other hand, if you’re concerned about fluctuations in interest rates and want to take advantage of current low rates, a variable-rate mortgage could be an ideal fit for you.

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