Fixed vs Variable Mortgage Calculator
🏠 Free ToolCompare fixed and variable rate mortgages to see which option saves you more over the life of the loan. Visualize monthly payment differences, total costs, and the breakeven year.
How it Works
Choosing between a fixed and variable rate mortgage is one of the most important financial decisions when buying a home. This calculator lets you compare both options side by side, using the same loan amount, property value, and term to give you a clear picture of the cost difference.
The fixed-rate option gives you certainty: your monthly payment stays the same from the first month to the last. The variable-rate option models a scenario where the rate starts lower but gradually increases by the spread you specify. This simulates a rising interest rate environment, which is the most common concern for variable-rate borrowers.
The breakeven year tells you when the variable-rate mortgage becomes more expensive than the fixed-rate option. If you plan to sell or refinance before that year, the variable rate may save you money. If you plan to hold the mortgage for the full term, the fixed rate offers protection against rising costs.
Use the spread slider to model different scenarios. A smaller spread assumes rates stay close to current levels, while a larger spread simulates a more aggressive rate increase over time.
Frequently Asked Questions
What is the difference between a fixed and variable rate mortgage?
A fixed-rate mortgage keeps the same interest rate for the entire loan term, giving you predictable monthly payments. A variable-rate mortgage starts with a lower rate that can increase over time based on market indices like Euribor.
When is a variable rate mortgage better?
Variable rates are typically better when interest rates are expected to remain stable or decrease, when you plan to sell or refinance within a few years, or when the initial rate savings are significant enough to offset potential future increases.
What is the breakeven point?
The breakeven point is the year at which the cumulative cost of the variable-rate mortgage equals the cumulative cost of the fixed-rate mortgage. After this point, the variable rate becomes more expensive.
How does the spread affect my variable rate?
The spread is the margin your lender adds on top of the reference rate (e.g. Euribor). A spread of 1% means your rate will always be the reference rate plus 1 percentage point. The spread is typically fixed for the entire loan term.
Can I switch from variable to fixed rate later?
Many lenders allow you to switch through a renegotiation or surroga (in Italy). However, the fixed rate you lock into will reflect current market conditions at the time of switching, which may be higher than the original fixed-rate offer.