Fixed vs Variable Rate Mortgage Comparison
Enter the loan amount, term, fixed rate, and initial variable rate to compare a fixed-rate and a variable-rate mortgage side by side: total repayment, total interest, and monthly payment of each. Set an assumed scenario where the variable rate rises every few years and see at a glance which one costs less overall.
Input
× 10k
yrs
%
%
%
yrs
Result
Total repayment difference (fixed vs variable)
$5,035,941.00
Under this assumed scenario, Variable rate keeps the total repayment lower
| Item | Fixed rate | Variable rate |
|---|---|---|
| Monthly payment | $96,327.00 | $77,876.00 → $88,438.00 |
| Total repayment | $40,457,579.00 | $35,421,638.00 |
| Total interest | $10,457,579.00 | $5,421,638.00 |
Total repayment difference (variable − fixed)
$5,035,941.00
How it works
- This tool is an estimate for comparing the total repayment of a fixed-rate and a variable-rate loan under the same conditions. Both are calculated with the equal-payment (annuity) method, where each monthly payment is constant, over the whole term.
- The fixed rate applies the rate you enter for the entire term. The variable rate uses an assumed scenario in which the rate rises by the 'step' amount every 'interval' years, starting from the initial rate; each time the rate changes, the monthly payment is recomputed (re-amortized) using the current balance, the remaining number of payments, and the new rate.
- Monthly payment = balance × monthly rate × (1+monthly rate)^remaining ÷ ((1+monthly rate)^remaining − 1), where the monthly rate = annual rate ÷ 12. Each payment's interest = remaining balance × monthly rate (rounded to the nearest unit), and any remainder is settled in the final payment so the balance reaches exactly zero.
- The variable-rate scenario is only one example. Real variable rates move with the market and can also fall. The '5-year rule' (payment fixed for 5 years) and the '125% rule' (a payment can rise to at most 1.25× the previous one) common to Japanese variable-rate loans are not applied here, to keep the calculation clear (this tool re-amortizes at each rate change).
- Bonus payments, early repayment, guarantee fees, credit life insurance, and other fees are not considered. Fixed-period (initial-fixed) products, which switch to a variable rate after the fixed period ends, follow different assumptions from the 'fixed' and 'variable' here.
- Results are rounded approximations and do not predict or guarantee future interest rates. Actual amounts depend on how rates move and on your lender's calculation and rounding rules. Decide between fixed and variable at your own discretion, weighing the risk of rising rates against your household budget.
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Fixed vs Variable Rate Mortgage Comparison