When comparing a fixed and variable rate on a secured loan, the variable almost always starts lower. That is the trade-off: a lower initial payment in exchange for uncertainty about what happens if rates move. This comparator makes the trade-off visible by modelling both options side by side, including what the variable route costs if the rate rises by 1%, 2%, or a custom amount at a point you choose during the term.
Enter the fixed and variable APRs you are considering, select a rate change scenario, and the tool shows monthly payments, total interest, total repayable, and the exact month at which the variable option overtakes the fixed option in cumulative cost. All figures are illustrative. This is not financial advice. The guide to fixed vs variable rates for secured loans covers the broader decision in detail.
At a Glance
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The “variable overtakes fixed” figure is the most important output. It shows the exact month at which the cumulative interest on the variable loan exceeds the fixed loan under the scenario modelled.
Before that month, the variable borrower has paid less in total. After it, the fixed borrower is ahead. If no rate rise is modelled, the variable may never overtake. If a significant rise is modelled early in the term, the crossover can come surprisingly quickly. This single figure quantifies the risk of choosing variable: a crossover deep into the term means the variable advantage is robust; a crossover early in the term means it is fragile and easily wiped out by a modest rate movement.
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Always run the +1% and +2% rise scenarios before committing to variable. If either makes the variable loan more expensive overall, or creates a monthly payment that would be difficult to sustain, fixed offers better value.
The comparator lets you choose no change, a +1% rise, a +2% rise, or a custom amount, and set when during the term the rise occurs. The monthly payment after the rise is shown alongside the original, so the payment shock is visible immediately. The cumulative interest chart shows the two lines diverging over time, and the point where the variable line crosses above the fixed line is the breakeven expressed visually. Testing multiple scenarios gives a range of outcomes rather than relying on a single guess about where rates are heading.
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The size of the starting rate gap determines how robust the variable advantage is. A small gap means even a modest rise reverses it. A large gap can absorb a meaningful rise and still come out ahead.
If the variable rate is only 0.5% below the fixed rate, the monthly saving is modest and a 1% rise in year two can easily wipe it out. If the gap is 2% or more, the variable has a larger cushion and may still be cheaper overall even after a meaningful rise. On a shorter term the variable advantage is more likely to hold because there is less time for rate movements to accumulate. On a longer term the uncertainty is wider, and the case for fixing strengthens. The tool makes both dynamics visible in the numbers.
Secured Loan Fixed vs Variable Rate Comparator
Fixed vs variable rate: which costs less?
Adjust the rates, term and scenario below — all figures are illustrative examples only
Model what happens if the variable rate changes
Fixed rate
Variable rate
Initial monthly saving
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Total interest difference
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Variable overtakes fixed at
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Cumulative interest paid — month by month (illustrative)
Figures are illustrative only. Actual rates, fees, and eligibility vary by lender and individual circumstances. This calculator is not financial advice.
How this comparator works
Set the loan details
Enter the loan amount and term you are considering. These apply to both routes and form the basis of the comparison. Use the amount you actually want to borrow, not the gross loan if fees are being added.
Enter the fixed and variable APRs
Enter the fixed APR you have been quoted or are considering, and the variable starting APR. If you have been given both as options by a lender, use those figures. If you are exploring the concept, use illustrative rates to understand the trade-off.
Model a rate change scenario
Select how much the variable rate might rise and when. Choose from no change, a 1% rise, a 2% rise, or enter a custom amount. This is the most important step – it shows what the variable route would cost if rates move against you, and at what point the fixed rate becomes cheaper overall.
Read the results
The comparator shows monthly payments, total interest, and total repayable for each route. The “variable overtakes fixed” figure tells you the month at which the cumulative interest on the variable loan exceeds the fixed loan – your decision point for how much risk you are comfortable with.
Understanding the results
The variable rate is almost always lower at the start. That is how variable rate products are priced – the lender takes on more risk in exchange for offering you a lower initial rate, and you take on the risk that the rate may rise later. The comparator makes that risk visible by showing you the cumulative cost of each route month by month.
What the “variable overtakes fixed” figure means
This is the breakeven point – the month at which the cumulative interest paid on the variable loan exceeds the cumulative interest paid on the fixed loan. Before that point, the variable borrower has paid less in total. After it, the fixed borrower is ahead. If your variable rate never rises, this point may never be reached. If it rises significantly early in the term, it can be reached much sooner than the illustration suggests.
What the monthly payment figures show
The fixed rate column shows a single monthly payment that does not change for the life of the loan. The variable rate column shows two figures where a rate change has been modelled: the initial monthly payment and the payment after the rate rises. The difference between these two figures is the monthly payment risk you would be taking on. If that gap is uncomfortably large, the fixed rate removes it entirely.
When each rate type tends to suit
Neither rate type is universally better. The right choice depends on your tolerance for payment uncertainty, how long you are borrowing for, and what you think is likely to happen to rates during the term.
Fixed rate tends to suit
You want certainty over your monthly payment for the full term. You are budgeting tightly and a payment increase would create difficulty. You are borrowing over a longer term where rate movements are harder to predict. The fixed rate offered is close to the variable starting rate, so the initial saving from variable is small relative to the risk. You want to set the loan and not think about it again.
Variable rate tends to suit
The starting variable rate is meaningfully lower than the fixed rate and the monthly saving is significant to you. You are borrowing over a shorter term where the window for rate changes is smaller. You have some financial flexibility to absorb a payment increase if rates rise. You believe rates are likely to stay stable or fall during the term. You are able to overpay or repay early without a penalty, which limits the downside if rates do move against you.
Frequently asked questions
What is the difference between a fixed and variable rate secured loan?
A fixed rate secured loan has an interest rate that stays the same for the agreed term. Your monthly payment is set at the start and does not change, regardless of what happens to interest rates in the wider market. This makes budgeting straightforward and removes the risk of payment increases, but you will not benefit if rates fall either.
A variable rate secured loan has a rate that can change during the term, usually in line with the lender’s standard variable rate or a base rate such as the Bank of England base rate. The starting rate is typically lower than a fixed rate product, but your monthly payment can rise if rates increase. Variable rate products sometimes allow greater flexibility on overpayments and early repayment, though this varies by lender.
What does the “variable overtakes fixed” figure mean?
This is the month at which the cumulative interest paid on the variable loan equals and then exceeds the cumulative interest paid on the fixed loan, given the rate change scenario you have modelled. Before this point, the variable borrower has paid less in total interest. After it, the fixed borrower has paid less overall. If no rate rise occurs, the variable loan may remain cheaper throughout – this figure shows what has to happen for that advantage to be reversed.
It is the most important output of the comparator because it quantifies the actual risk of choosing variable. A breakeven point in month four of a five-year loan is very different from one in month eighteen – the former means the variable advantage is fragile, the latter means variable is likely cheaper even with a moderate rise.
Is a variable rate always cheaper to start with?
In most cases, yes – variable rates are priced lower than fixed rates because the borrower accepts the risk of future rate changes. The lender is not having to price in the cost of guaranteeing a rate for years ahead. However, the gap between fixed and variable rates varies and is not always significant. If the initial saving is small – less than £20 to £30 per month on a typical loan – the certainty of the fixed rate is often worth more than the modest saving the variable offers.
What happens to my payments if the variable rate rises?
Your monthly payment increases in line with the rate change, calculated on your outstanding balance at the time of the change. The comparator models this by applying the rise at the point you specify and recalculating the remaining payments. The total interest figure updates to reflect the higher rate for the rest of the term, and the “variable overtakes fixed” point moves earlier as a result. The larger the rate rise and the earlier it occurs, the more the variable advantage is eroded.
The practical implication is that you should always model the +1% and +2% scenarios before choosing variable – if those scenarios would create payment pressure or make the variable loan materially more expensive overall, the fixed rate provides more reliable value.
What is not included in the comparator figures?
The comparator calculates capital and interest only, using the rates and term you enter. It does not include arrangement fees, which can differ between fixed and variable products and can be a meaningful part of the true cost on a shorter-term loan. It does not include early repayment charges, which are more common on fixed rate products and can affect the comparison if you plan to repay early. It does not include valuation or legal fees, which apply to both routes equally.
For a full picture of how fees affect the true cost of secured borrowing, our guide to APR on secured loans explains what the annual percentage rate includes and how to compare offers on a like-for-like basis.
Squaring Up
The fixed vs variable decision is not simply about which rate is lower today – it is about how much payment certainty matters to you and how comfortable you are with the possibility that the variable loan could cost more over the full term. This comparator makes that trade-off visible using your own numbers.
- The variable rate is usually lower to start. That is the trade-off: a lower starting payment in exchange for uncertainty about future payments and total cost.
- The “variable overtakes fixed” figure is the key output. It tells you exactly how much rate movement is needed before the variable loan becomes the more expensive choice overall.
- Always run the +1% and +2% scenarios. If either makes the variable loan more expensive overall, or creates a monthly payment you could not comfortably absorb, the fixed rate offers better value.
- The gap between fixed and variable rates matters. A small initial saving rarely justifies the risk of a variable rate over a long term. A large initial saving may justify it on a short term.
- Fees are not in the figures. Arrangement fees, early repayment charges, and legal costs apply to both routes and can affect the true cost comparison. Get full quotes before deciding.
- Variable rate flexibility can offset some risk. If a variable rate product allows fee-free overpayments or early repayment, you can reduce the balance faster and limit your exposure if rates rise.
If you have not yet confirmed your equity position or checked how much you may be able to borrow, the LTV calculator is the right starting point. The eligibility checker is worth running if you are at all uncertain about how your circumstances will be assessed.
Ready to see what you could borrow?
Checking won’t harm your credit score Check eligibilityAll figures are illustrative only and are not a quote, offer, or financial advice. Calculations use the standard annuity formula based on the rates and term you enter. They do not include arrangement fees, early repayment charges, legal costs, or valuation fees. The rates you are offered will depend on your credit history, income, equity, and the lender’s assessment of your circumstances. Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
