To avoid this, an adjustable mortgage rate may help you get started on a lower mortgage rate, but if interest rates grow, your monthly mortgage payments will rise also. Fixed mortgage rates are usually higher than adjustable mortgage rates but they can save you money too, especially if the interest and mortgage rates go up. Also, it depends on the type of adjustable-rate mortgage payment you plan to make. Adjustable-rate mortgage payments have characteristics that might ultimately prove risky in the long run. Because the dynamics of interest rates in the market are never certain, the amount of your adjustable-rate mortgage payments are uncertain as well. Most lenders of interest-only mortgage rates do not put any restrictions or penalties should you find it convenient to start paying off the principal loan balance. Even with prepayments, many interest-only mortgage rate lenders will still let you pay up to 20% of your loan balance during any 12 month period without prepayment penalties. Because the initial interest rates and monthly payments are lower, a balloon payment mortgage is paid off with one large payment at the end of the loan term. Balloon payment mortgages are called such because borrowers who are on this type of loan are usually set up for a "balloon" payment at the end of their loan term. When you get an interest-only mortgage, what you're really getting is an interest-only payment method which you can combine with other traditional mortgage types. The other thing you need to keep in mind is that the stated benefits of interest-only mortgages are exaggerated. In a standard mortgage, 95% if each dollar paid to the lender goes to the loan interest. Other mortgage interest rate indices are 1-Year Treasury Security, Prime, 6-Month CD, and the 11th District Cost of Funds (COFI). These indices for mortgage interest rates are subject to the financial conditions of the market. Loans are offered with different mortgage interest rates. Take for example a traditional 30-year mortgage.