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Fixed-rate vs. adjustable-rate mortgages

Fixed or adjustable mortgage rates – it's a question of certainty versus flexibility.

There are two types of home loan interest rates, adjustable and fixed. In short:

  • Variable interest rates can change at any time (up or down) and tend to offer slightly lower rates and more repayment flexibility.
  • Fixed interest rates cannot go up (or down) for the life of the loan (usually 15, 20 or 30 years) but often have higher rates.

Both rate types have strengths and weaknesses and it all depends on your needs as a borrower. It’s usually a trade-off between flexibility on the one hand and certainty on the other.

Read on to find out more about the differences between fixed and adjustable rates.

Adjustable versus fixed interest rates: what’s the difference?

  • No change. Your interest rate won’t change at all during the life of your loan.
  • Changes. Your lender can change your interest rate at any time (up or down).
Fixed ratesAdjustable rates
  • Less to worry about. You can lock in your rate and don’t have to worry about it changing, even if market interest rates go up.
  • Watch your rate. You need to keep an eye on your interest rate and consider switching if it gets too high.
  • Higher fees. Fixed rate loans often have higher interest rates.
  • Lower fees. Competitive variable loans often come with lower fees than their fixed rate equivalents.

Which rate type is right for you?

The real question is: what do you want from your home loan? Knowing this helps you to select the right loan for your budget and needs. Here are some things to think about:

  • I want to know exactly what my payments are each month. You’ll probably want to go with a fixed-rate loan. By locking in your rate, you can budget with confidence, knowing your payments won’t change over time.
  • I want the lowest possible rate. Adjustable rates are usually more competitive than fixed rates, although that’s not always the case. But if you’re a bargain hunter who’s always after a lower rate and is happy to compare and refinance regularly, then an adjustable-rate mortgage may suit your needs.

Compare mortgage lenders and brokers

Compare these lenders and lender marketplaces by the type of home loan you're searching for, state availability and minimum credit score (for a conventional loan). Select See rates to provide the company with basic property and financial details for personalized rates.
Name Product Loan products offered State availability Min. credit score
Morty
(NMLS #1429243)
Morty
Conventional, Jumbo, Refinance
AL, AR, CA, CO, CT, DC, DE, FL, GA, IA, ID, IL, IN, KS, KY, MD, ME, MI, MN, MS, MT, NC, NE, NJ, NM, OH, OK, OR, PA, SC, TN, VA, WA, WI, WV
660
Preapproval in minutes and closing in as little as 3 weeks with no origination fees.
SoFi
(NMLS #1121636)
SoFi
Conventional, Home equity, Refinance
Not available in: HI, MO, NM, NY, WV
620
No hidden fees, multiple loan terms, and member discounts available.
Better
(NMLS #330511)
Better
Conventional, Jumbo, FHA, Refinance
Not available in: HI, MA, MN, NV, NH, VT, VA
620
Online preapproval in minutes and no origination fees with this direct lender.
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