Whether you choose a fixed or variable rate mortgage is a decision that depends on your personal financial goals and comfort with risk. Both offer benefits, and it’s important to weigh the pros and cons of each option to find the best fit for you.

A fixed rate mortgage gives you the stability of a predictable monthly payment that will remain the same for the life of your loan. Fixed rates are typically higher than variable rate options. URL www.toprankinmortgages.com

With a variable rate mortgage, your monthly loan payments will rise and fall in line with market interest rates. This may benefit you in a declining interest rate environment as your payments decrease, but it could also lead to higher monthly loan payments should the market shift to rising interest rates.

When you sign up for a variable rate mortgage, your lender may offer an initial period with a lower introductory rate. This is often referred to as a “rate lock”. However, you’ll need to meet certain conditions to take advantage of this feature.

Fixed Versus Variable Mortgages: Which Option Works Best?

A fixed rate home loan can be more expensive than a variable rate option when you first get started, and if you miss the opportunity to take advantage of low rates, you’ll need to pay to remortgage once your deal ends and you’re on your lender’s Standard Variable Rate (SVR).

You also won’t benefit from any future reductions in your lenders’ home loan rates while you’re locked into a fixed rate. Similarly, you’ll usually have less choice of features to make use of such as the ability to redraw funds or link an offset account when you’re on a fixed rate home loan.