Mortgages
Fixed or variable mortgage rate? How to choose
Last updated 16 October 2026
A fixed rate gives certain repayments but can cost a fee to leave early. A variable rate can change but can be overpaid or cleared free. Or split the loan.
A fixed rate stays the same for a set period, often a few years, so your repayments do too. A variable rate can change, often following a benchmark such as the European Central Bank's rates. Your lender must tell you when it does (Citizens Information).
What the law says about each
| Fixed | Variable | |
|---|---|---|
| Repay early or overpay | A fee may apply during the fixed period | No redemption fee (Consumer Credit Act 1995, s.121) |
| Stress test by lender | Not required if fixed 5 years or more | Required at +2 points |
| Information you get | A worked example of the early repayment charge | Repayments after a 2 point rise |
| When it ends | The rate that follows, 60 days before | Notice of each rate change |
Under section 121, you can repay a housing loan at any time without a fee unless the rate is fixed. The Central Bank's Consumer Protection Regulations require the early repayment example (Regulation 136) and the 60-day notice (Regulation 187).
Comparing them on a €300,000 loan
Over 30 years, with an illustrative fixed rate of 3.7% and variable of 4.0%. These aren't quotes: check current rates with lenders.
| Fixed at 3.7% | €1,380.85 |
| Variable at 4.0% | €1,432.25 |
| Variable if it rises 2 points | €1,798.65 |
| Split half and half | €1,406.54 |
| Split, if the variable half rises 2 points | €1,589.75 |
Three or five years?
A longer fix protects you for longer, and at five years or more the lender doesn't apply the stress test. But you're tied in for longer if you want to switch, sell or overpay. After five years on the fixed rate above, €270,006.11 of the €300,000 would still be owed and repriced at whatever rate applies then.
Split loans
Some lenders let you fix part of the loan and keep the rest variable. You get some certainty, and you can overpay the variable part without a fee. The cost is that you don't get the full benefit of either if rates move sharply.
When a fixed rate ends
Your lender must tell you the default rate 60 days before, with an estimate of savings on its other rates. That is a good time to compare lenders and consider overpaying or switching.
Work it out
Sources
- Central Bank of Ireland: Consumer Protection Regulations, Part 3, Regulation 182: affordability test at a minimum 2% rate increase (checked 24/10/2026)
- Central Bank of Ireland: Mortgage measures (loan-to-income 4x / 3.5x, deposits 10% / 30%) (checked 24/10/2026)
General information, not tax advice. HeyPenny is not a tax agent.