Variable-Rate Mortgage
A variable-rate mortgage is a mortgage where the interest rate can change during the term, usually in relation to the lender’s prime rate. Some variable mortgages keep payments steady while the portion going to interest changes, while others adjust the payment amount when rates change.
Variable rates can be lower than fixed rates at times, but they expose borrowers to interest rate risk. The best choice depends on budget flexibility, risk tolerance, and how long the mortgage is expected to be held.
Why this matters:
Many borrowers choose variable rates for savings, but the risk is real when rates rise. Understanding how your specific variable mortgage adjusts helps you plan and avoid payment shocks.
Related Mortgage Terms
Often confused with:
Adjustable-Rate Mortgage — Both can change, but the payment behavior may differ.
Closely related:
Prime Rate — A common benchmark for variable mortgages.
Interest Rate — The key driver of cost and payment changes.
Next step:
Prime Rate — Understand what actually causes variable rates to move.