variable-rate mortgage is pretty much what it sounds like: a mortgage with a interest rate that varies. Whereas a fixed rate stays constant throughout the term of your mortgage, a variable rate (and your monthly payment) changes throughout the term.
A variable rate mortgage isn’t the perfect mortgage, or at least, not always. Sometimes a variable rate mortgage would be the best type to get, and sometimes it could be the wrong type to get.
Here are some pros and cons of variable rate mortgages to help you decide whether a variable-rate mortgage is for you:

  • If the interest rate drops, your interest payments drop, too.
  • If the interest rate drops, but you keep paying the same amount, you could pay off your mortgage more quickly.
  • Historically, variable rate mortgages are cheaper over time.


  • If interest rates rise quickly, your interest payments rise, too.
  • It’s harder to budget for if rates change frequently
  • You have to keep an eye on interest rates, you can’t just set it and forget it

If you’re worried about mortgage rates rising (as they have been doing over the last several months), you could try a shorter term (say 1 or 3 years) just to be safe and see where rates go during that time. Not all mortgage lenders offer such term lengths, so always check with your lender first.
While it’s important for you, as a homeowner, to make informed decisions when signing a mortgage, always be sure to contact a mortgage professional to answer your questions.