Flexible interest plans like the HIBOR plan and prime plan change along with fluctuations in the HIBOR and the Prime Rate. The appeal of these plans is that you may be able to cut your interest payments over time if the HIBOR rate and the Prime rate go down in the future. However, there's also the possibility that the Prime and HIBOR rates will go up and you?ll have to pay more in interest.
The appeal of fixed rate mortgage plans is that you no longer have to worry about the fluctuations in base rates in the near future. It's much easier to plan your finances with a fixed rate mortgage plan. The rate is generally fixed for a certain period of time, e.g. 3 years. Although the interest rate of fixed rate mortgages is generally higher than that of flexible interest plans.
Your choice between a flexible rate mortgage plan or a fixed rate mortgage plan depends on your estimation of future interest rates and your capacity to take the risk of potential changes in interest rates.
