Variable Mortgage (6-month to 1 year terms are most common): With this type of mortgage the interest rate is directly linked to the money market rates and can fluctuate on a weekly or daily basis. While this is usually the best rate available, long-term upward swings in interest rates could be quite costly. On the plus side, long-term downward interest rate swings could mean large savings as your mortgage rate follows the market down. With fixed-rate mortgages, a predetermined amount of each monthly payment goes to the interest and the rest is applied to the principal. With a variable rate mortgage the monthly payments are still fixed but, as the interest rate goes up, more of the regular payment will be applied toward the interest. If the interest rate goes down, more of the regular payment will be applied toward the outstanding principal. Quelle "Variable Mortgage (6-month to 1 year terms are most common):" : General Main page for "Variable Mortgage (6-month to 1 year terms are most common):"