Variable Rate Mortgage Definition

The phrase "variable rate mortgage" means only that the mortgage interest rate is not fixed and may be altered over time. In the US, the most popular variable rate mortgages are usually referred to as adjustable rate mortgages, or ARMs, where the interest rate is determined by some indexed price that fluctuates over time.

Other types of variable rate mortgage are possible, however, such as a payment option mortgage. In brief, if you take out a variable rate mortgage you won’t ever know, exactly, how much future mortgage loan payments will be.