Real Estate Term
Variable-Rate Mortgage
A mortgage where the interest rate fluctuates with market conditions.
What is Variable-Rate Mortgage?
A variable-rate mortgage has an interest rate that moves with the lender's prime rate, so your rate — and often your payment — can change during the term. It usually starts lower than a fixed rate and can save money when rates are stable or falling, but it carries the risk of rising costs. Borrowers who can tolerate payment changes often choose it for the potential savings.
Frequently asked questions
Related terms
Fixed-Rate MortgageA mortgage with an interest rate that remains constant throughout the term.Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on market conditions.Interest RateThe percentage charged by a lender for borrowing money, typically expressed as an annual rate.AmortizationThe process of paying off a loan over time through regular payments that cover both principal and interest.MortgageA loan used to purchase real estate, with the property serving as collateral.
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