Should I Get a Variable or a Fixed Rate Mortgage?

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During the mortgage loan process you might find yourself learning about lots of different kinds of terminology associated with the home buying process. A couple of very important terms are variable and fixed rate mortgage loans. But what exactly are these two kinds of loans and how are they different? We will define both and describe what their strengths and weaknesses are so you might better understand what kind of mortgage will work for you.

Variable Mortgage

A variable rate mortgage is a mortgage where your interest rate can rise or fall across the entire term of the mortgage loan. Interest is the amount of money a lender will charge you as a cost for borrowing funds from them to purchase your home. Usually your bank will inform you in advance of if you rate is going to go down or up and how it will affect your monthly payments.

The fluctuation of interest rates is usually influenced by certain benchmarks and indexes such as the prime rate published by the Wall Street Journal and the London Interbank Offered Rate (LIBOR).


  • In the event that mortgage interest rates drop, so do your regular monthly payments.
  • Variable rates provide the opportunity to make lump sum payments or increase your regular monthly payments, which can save you money and interest and could even assist you in paying off your mortgage sooner.


  • In the event that mortgage interest rates rise, so do your regular monthly payments.
  • Because your payments will vary over the term of your mortgage loan, it can be more difficult to budget for the cost of your new home as regular monthly payments will be more unpredictable than payments made with a fixed rate mortgage.
  • Because your payments are largely influenced by the mortgage market, if the mortgage market starts doing poorly and becomes more expensive, so do your monthly payments.

Fixed Mortgage

A fixed rate mortgage is a mortgage is a mortgage where your interest rate remains the same for a previously agreed upon length of time. This means that even if the mortgage market rates fluctuate your interest payments will remain the same for the entire length of your fixed rate loan.

In Ireland, the maximum amount of time you can fix a mortgage for is 10 years.


  • Because your interest is fixed, your mortgage payments will remain consistent and reliable for the entire length of your fixed rate loan.
  • Fixed mortgages protect you against fluctuating and potentially volatile interest rates.
  • Consistent payments make it easier to plan ahead for budgeting purposes, making it a good option for home buyers with tighter budgets.


  • You might potentially miss out on a drop in your lender’s interest rates.
  • In the event you decide to choose another mortgage rate or change to a different lender you will most likely have to pay your lender some kind of penalty flee.