Fixed vs Variable Mortgage Rate Calculator

Choosing between a fixed and a variable mortgage rate comes down to the gap between the two rates and how comfortable you are with the variable rate moving. A fixed rate gives payment certainty, usually at a slight premium; a variable rate can be cheaper today but can rise later. This tool shows a simplified, like-for-like cost comparison at today's rates, and it does not predict where the variable rate goes next.

A worked example

With the defaults (mortgage balance 200,000, fixed rate 5.5%, current variable rate 5%, fixed period 5 years), the tool returns Variable, because 5% is below 5.5% and the model holds both rates constant. Adjust any input and the result updates as you type, with no submit button.

What moves the result

The result responds to Mortgage Balance, Fixed Rate, Current Variable Rate, and Fixed Period. Because both paths use the same balance and period, the cheaper one is simply whichever rate is lower. Flipping the two rates past each other shows the winner switch.

The formula behind this

This is a deliberately simplified figure: balance times rate times the fixed-period years, applied to the full balance. It is not a real amortising schedule, so the interest numbers run higher than an actual mortgage, where the balance falls each month. The figure is useful for comparing two rates side by side, not for quoting a real interest total. Everything the calculator does is shown in the formula box below.

Why the variable rate is held constant

The model keeps the variable rate fixed at the value entered, so it reflects today's rates only. That means it cannot show a break-even point (the rate rise at which a variable deal would end up costing more than the fixed one), because that needs an assumption about how the variable rate changes over time. The figure is best read as a snapshot of the current spread, not a forecast.

What this doesn't capture

The figure leaves out the things that make a real mortgage cost what it does: monthly amortisation of the balance, arrangement and valuation fees, insurance, early-repayment charges, and any rise or fall in the variable rate over the period. For real repayment figures, an amortising mortgage calculator is the better fit; this tool is for a quick read on which current rate is lower.