If you’re in the market for a mortgage, you may be questioning whether a variable- or fixed-rate mortgage is right for you. With a fixed-rate mortgage, the interest rate is set for a pre-determined term. The benefit of this type of mortgage is the peace of mind it provides, given that you know what you will be paying for the term you’ve selected.

Variable-rate mortgages feature payments that are fixed for a specific term, although interest rates may fluctuate from month to month based on market conditions. If interest rates go down, more of the payment goes towards reducing the principal; if rates go up, a larger portion of the monthly payment goes towards covering the interest.

If you’re comfortable with the possibility of interest rates edging upward, you may want to consider a variable-rate mortgage, particularly because variable-rate mortgages feature lower interest rates. Variable-rate mortgages also offer the advantage of prepayment at any time without penalty.

If you’re not comfortable with the idea of rising interest rates, you may want to opt for a fixed-rate mortgage, which will mean that you’ll pay a slightly higher rate, but you won’t have to worry about it changing over the term.