What’s the difference between a fixed-rate mortgage and an adjustable-rate mortgage (ARM)?

A fixed-rate home loan is just how it sounds – you get the same annual percentage rate (APR) through the life of your loan until it’s paid off in full and you’re mortgage-free! (Or you sell up or refinance, but that’s another story.)

Having a fixed rate means your monthly mortgage payment stays the same through your term, too. So while market interest rates may go up and down, you’ll stay steady on course with the rate you got when you bought your home.

An adjustable-rate mortgage (ARM) gets a fixed rate only at the start of the term. Let’s say, for the first five years. Then, once that initial period is up, the rate starts blowing with the wind, the moon, and the tides. So your monthly payment may go up and down, too.