In a fixed rate mortgage, your interest rate will stay the same for a set period of time. This is a better option as you will know, exactly how much you have to repay each month during that period. The payments are also fixed.
In a variable interest rate mortgage, the interest rates are periodically adjusted based on how the payment amount is applied to the mortgage. Like- if interest rates decreases then most payment goes towards principal and when interest rates increases, then more of the payment goes towards the interest.
With a fixed rate mortgage<span>, the interest </span>rate<span> is set when you take out the loan and will not change. With an </span>adjustable rate mortgage<span> (ARM), the interest </span>rate<span> may go up or down. Many ARMs will start at a lower interest </span>rate<span> than </span>fixed rate mortgages<span>. This initial </span>rate<span> may stay the same for months or years.</span>
