Fixed Mortgage or Variable Better In todays Market “Question Answered”

Whether a fixed-rate or a variable-rate mortgage is better for an individual borrower depends on their specific circumstances and risk tolerance.

Fixed-rate mortgages are generally considered a safer option because the interest rate is locked in at a set rate and will not change over the life of the loan. This can provide stability and predictability for borrowers’ monthly payments. However, fixed-rate mortgages typically come with a slightly higher interest rate than variable-rate mortgages, so the monthly payments may be higher.

Variable-rate mortgages, on the other hand, have interest rates that can change over time. The interest rate is tied to an underlying index, such as the London Interbank Offered Rate (LIBOR). If the index rate goes down, the borrower’s interest rate and monthly payments will also decrease. This can lead to significant savings over the life of the loan. However, if the index rate goes up, the borrower’s interest rate and monthly payments will also increase, which can be a significant financial risk for some borrowers.

In general, if someone believe that interest rates in the market are going to rise, fixed rate will be a better option , if not variable rate will have a better advantage, with lower interest rate and possible savings.

It is important for a borrower to consider their own financial situation, goals, and risk tolerance when deciding whether to choose a fixed-rate or variable-rate mortgage, and it is always recommended to consult a financial advisor for more information and guidance.