Home Loans
Fixed or variable rate: how to choose
How the two kinds of rate behave, what each costs to leave, and a way to decide between them.
Key takeaways
Fixed means certainty, variable means flexibility
Ask for exit charges in figures
Test a two-point rise
Ask about a split loan
A fixed rate buys certainty. A variable rate buys flexibility. Neither is right for everyone.
1. How each works
A fixed rate stays the same for a set term. A variable rate moves with the market.
2. The cost of leaving
Fixed loans often carry a charge for early repayment. Ask for it as a figure.
3. Test your budget
Work out the payment if the rate rises by two points. If that would hurt, lean towards fixed.
4. Mixing the two
Some lenders let you split the loan. Ask whether that is offered and what it costs.
This is a demo article with invented figures.
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Written by
Tomás Rivera
Home finance writer
