Choosing Between A Fixed Rate or Adjustable Mortgage

Buying a home or investing in property usually means applying for a mortgage. The usual decision is between choosing a fixed rate (where the interest rate remains constant through the life of the mortgage) or an adjustable rate (in some countries have what is called a floating mortgage rate - where the interest rate floats with the market).

With an adjustable mortgage rate, the interest rate is adjusted (either up or down) at specified times during the mortgage term. Adjustable Rate Mortgages (ARMs) often have an initial interest rate lower than fixed rates but adjust upward (unless rates fall dramatically) usually after the first year. Some people prefer Adjustable Rate Mortgages for cases when they are certain they won't own the property for an extended period (more than 5-7 years) of time.