What is the difference between fixed and variable rates?

Variable rate is a floating rate offered by banks which is subject to market conditions which could change anytime without notice. It in return gives great flexibility. I.e. to pay extra into the loan uncapped, pay off a loan in full, link an offset account, etc. A fixed rate is offered for a specific term, not subject to change once in effect. It gives certainty but has caps if you wish to pay extra into the loan without paying any penalties.