When you are considering a mortgage, one of the choices which you will have to make is whether to go for a fixed or variable rate mortgage.

Depending on your finances, preference for flexibility or stability, and your longer term plans, either can be the better choice for you.

MortgageOne has dedicated mortgage advisors to give you information about your mortgage options and to get you the best rate. We work with a range of lenders to save you time and hassle in applying for a mortgage.

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Fixed rate mortgages

With a fixed rate mortgage, the interest rate of your mortgage is fixed for a set period of time. This means that your monthly mortgage repayments will remain stable for this time period, after which you will revert to the lender’s standard variable rate.

Traditionally, fixed rate mortgages offered a fixed rate for a period of one to ten years, but more recently fixed rate periods of 20 to 30 years have become available in the Irish mortgage market. These are known as lifetime fixed rate mortgages.

Fixed rate mortgages are useful for budgeting and financial planning, especially in times of rising interest rates. However, if ECB interest rates fall you will not benefit if your mortgage is fixed.

With a fixed mortgage, you will also be likely to face an early repayment charge if you wish to overpay your mortgage, redeem or repay your mortgage early, or switch your mortgage, although not in every case and not with every lender so it is worth checking this with your mortgage lender.

Variable rate mortgages

A mortgage with a standard variable rate will see monthly repayments change as the European Central Bank interest rate fluctuates, although lenders may not always pass these rate changes onto their customers immediately.

It is also possible to get a discounted standard variable rate for a fixed time, usually for a short initial period on taking out the mortgage. Following this time, you will pay the standard variable rate.

With a variable rate mortgage, you can benefit from flexibility as making additional payments or overpaying your mortgage, or switching your mortgage does not usually incur a fee.

However, a variable rate mortgage can also lead to higher repayments when interest rates go up which can make it difficult to budget or plan for repayments. If your budget is tight, a fixed rate mortgage may be a better fit for you.

Cashback mortgages

A cashback mortgage offers a cash lump sum, either a fixed amount eg. €1,000 or a percentage of the mortgage amount, upfront usually when you draw down the mortgage, and sometimes also after 5 years.

Most cashback mortgage lenders offer cashback with new fixed term mortgages only.

Cashback mortgages can seem attractive, especially when you are faced with the expenses associated with a property purchase. However, you may pay considerably more for your initial cashback over the term of the mortgage so compare rates carefully.

Which should I choose between fixed and variable rate mortgages?

This depends largely on your personal situation and also what mortgage offers you can obtain from lenders. If you have a stable income and you are planning on purchasing a home for many years, you may opt for the security of a fixed rate mortgage and the peace of mind this offers.

So-called lifetime fixed rate mortgages can offer lower rates than traditional shorter term fixed rates, however, if interest rates are lower over time you will not benefit from potential savings as a standard variable rate mortgage could offer.

If you are planning to move home or purchase a different property, then it may make more sense for you to choose a shorter term fixed rate or a variable rate mortgage as you will avoid early repayment charges.

Likewise if you hope to be in a financial position to make additional payments or repay or redeem your mortgage early, then a variable rate mortgage may offer more flexibility.

Fixed vs Variable rate FAQS

A green mortgage offers a better rate or a discount for those who are purchasing or building a home with a Building Energy Rating (BER) of between A1 and B3.

If you are purchasing a new home, you may be eligible for a green mortgage as newer homes will usually benefit from a lower BER. A green mortgage may also be available for those retrofitting an older home to achieve a lower BER.

A tracker rate mortgage is a variable rate mortgage which is aligned with ECB interest rates. If the ECB rate rises or falls, this is reflected in your tracker rate.

New tracker rate mortgages are no longer available for most customers, although Home Mover tracker mortgages may be available to those who already have a tracker mortgage. If you have a tracker mortgage the general advice is to be very cautious about switching and losing your tracker rate.

The annual percentage rate of charge is a way of showing the total cost of your loan, as it takes the interest rate but also other fees and charges into account.

Mortgage lenders are required to quote the APRC, and it can be a useful way of comparing mortgage rates when choosing a mortgage lender or mortgage offer.

Seek professional advice

Use our mortgage calculator to see how much you could borrow and also get an estimate of your monthly repayments with different lenders.

MortgageOne professional mortgage advisors can discuss your situation with you and advise you whether a fixed or variable rate mortgage would be the best fit for you. Our expert knowledge of the Irish mortgage market means that we can find the best options and rates.

MortgageOne is part of LHK Group, an insurance and financial services company that has been an independent, family run business for over 90 years. We pride ourselves on being client focussed and giving genuine and impartial advice.

Contact us today

Use our mortgage calculator, call us or leave us your details and a specialist mortgage advisor can contact you to discuss a mortgage application to take the first step towards homeownership.