Understanding Mortgages: Fixed vs. Variable Explained

What a Mortgage Really Is A mortgage is essentially a long-term loan that uses property as collateral. While most people focus on interest rates, the structure of that rate — fixed or variable — often determines the overall cost and peace of mind.

Fixed-Rate Mortgages

A fixed-rate mortgage locks in your interest rate for the loan’s duration, ensuring predictable monthly payments. They’re ideal in times of low or rising interest rates because borrowers are shielded from fluctuations. The trade-off? Fixed loans often start with slightly higher rates compared to variable ones.

Variable-Rate Mortgages

Variable (or adjustable) mortgages fluctuate based on market conditions. When interest rates drop, borrowers save; when they rise, costs climb. These are often attractive for short-term homeowners or investors who expect to sell or refinance within a few years.

Choosing Between the Two

Your choice depends on financial stability and risk tolerance. If you prioritize consistency, a fixed rate provides peace of mind. If you’re flexible and can handle variability, a variable rate can save money initially. Hybrid options also exist — fixed for a few years, then adjustable — blending predictability and potential savings.