An introduction to the basic differences between fixed and variable interest rates for mortgages.
Introduction to Interest Rates
Understanding the types of interest rates available is essential when shopping for a mortgage. The rate you choose can have a significant impact on your monthly payments and the overall cost of your loan.
Fixed Interest Rates
Fixed rates remain the same for the duration of the mortgage term. This predictability makes budgeting easier, as your payments stay consistent.
Variable Interest Rates
Variable rates can fluctuate with market conditions. Although they can sometimes offer lower initial rates, there is a risk that rates could increase over time.
In my experience, fixed rates offer peace of mind, while variable rates are a gamble that can pay off if market rates decline.
Your choice should reflect your comfort with risk and your financial plans for the future.