Fixed vs Variable Mortgage Calculator
Compare a fixed-rate mortgage against a variable (adjustable) rate mortgage. See which saves more interest over the life of your loan, and where the break-even point is. 100% private — no data leaves your browser.
Fixed vs Variable Rate Mortgages: Key Differences
A fixed-rate mortgage locks in your interest rate for the entire loan term — your monthly repayment stays the same whether market rates rise or fall. This certainty makes budgeting easier and protects you from rate hikes. A variable (or adjustable) rate mortgage typically starts at a lower rate but resets periodically based on a benchmark rate (such as the US federal funds rate, RBA cash rate in Australia, or OCR in New Zealand). If rates rise, your repayments increase; if they fall, you benefit.
The choice between fixed and variable depends on several factors: your risk tolerance, how long you plan to stay in the property, the current interest rate environment (rising vs falling), and the size of the rate differential between fixed and variable options. This calculator models a common ARM structure — a lower initial rate that adjusts after a fixed period (e.g., 5-year ARM).
When a Fixed Rate Mortgage Makes Sense
Choose a fixed rate when: interest rates are historically low and likely to rise, you plan to keep the property for the full loan term, you need payment certainty for budgeting, you are risk-averse or on a fixed income, or the rate difference between fixed and variable is small (under 0.5%). Fixed rates are also preferable for first-home buyers who need predictable cash flow during the early years when financial buffers may be smaller.
When a Variable Rate Mortgage Makes Sense
Choose a variable rate when: rates are high and expected to fall (locking in a lower variable rate lets you benefit automatically), you plan to sell or refinance within the initial fixed period, you have a high risk tolerance and strong financial buffer to absorb rate increases, or the rate differential is significant (over 1%). Variable rates have historically been lower than fixed rates on average over long periods, but with higher volatility.
How to Use This Calculator
Enter your loan amount and term. Input the fixed rate you have been offered. For the variable option, enter the initial rate (teaser rate) and the expected rate after adjustment (based on your lender's benchmark plus margin). Set when the adjustment occurs. The tool calculates monthly payments for each phase and the total interest cost — showing you the exact dollar difference and break-even point where the variable advantage disappears.