title. i understand the difference between variable and fixed as definitions however with loans, ‘variable’ doesn’t quite register to me..
why on earth would someone consider that type of loan with a purchase of let’s say, a house?
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It’s also not uncommon to break your loan into different combinations to offset that volatility in interest rates.
For example, having $100k fixed at 3% for 5 years and another $100k on a variable rate for 5 years and so on, minimises the impact when interest rates go up, as half your $200k loan is unaffected (because it’s fixed), and only the variable loan $100k is subject to those increases
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