Fixed vs variable mortgage: which should you choose?
Neither is universally cheaper, and anyone who tells you otherwise is guessing at the future. A fixed rate buys you certainty: your repayment cannot move for the agreed period, whatever happens to interest rates. A variable rate buys you flexibility: you can overpay as much as you like and walk away without a penalty, but the lender can raise or lower your rate with little warning. The honest deciding factor is not the market — it is you. How much would a sudden jump in your monthly payment actually hurt? If it would break your budget, certainty is worth paying for. If you have room to absorb a rise and want the freedom to clear the loan early, flexibility may suit you better. This is a personal financial decision, and where the stakes are this high a mortgage adviser should look at your specific numbers.
What each one actually promises
A fixed rate locks both the interest rate and the monthly repayment for an agreed period — often two, three, five or more years. During that window nothing changes. When the fixed period ends, you do not stay fixed forever: you roll onto another rate unless you actively choose to fix again or move elsewhere. The certainty is real but time-limited, and it comes with strings attached.
A variable rate is exactly what it sounds like. The lender can change it at its own discretion, up or down, and your repayment moves with it. There is no locked period and no guarantee. That openness is the price of the flexibility a variable rate gives you — and it means your budget has to be able to withstand an increase you did not choose and cannot refuse.
What one percentage point is worth
Rate differences sound small and land large. The figures below are illustrations of what a gap between rates costs — not current market rates, which change constantly and which this page does not quote.
On a €300,000 mortgage over 30 years, the difference between a 4% rate and a 5% rate is €178.21 a month. Over the full life of the loan, that single percentage point adds up to €64,158 in extra interest. That is the scale of what you are weighing when you compare one offer against another.
Here is how the monthly repayment and total lifetime interest move across a range of rates on that same €300,000 loan over 30 years:
| Rate | Monthly repayment | Lifetime interest |
|---|---|---|
| 3% | €1,264.81 | €155,332 |
| 3.5% | €1,347.13 | €184,968 |
| 4% | €1,432.25 | €215,609 |
| 4.5% | €1,520.06 | €247,220 |
| 5% | €1,610.46 | €279,767 |
| 6% | €1,798.65 | €347,515 |
Read down that column and the point becomes physical. Half a percentage point is roughly €80 to €90 a month and tens of thousands over the term. This is why the rate a variable lender can move to matters so much, and why the certainty of a fix has a value you can put a number on.
The trade-offs beyond the rate
With a fixed rate, the catch is what happens if your circumstances change. Overpayments are usually capped — many lenders let you pay down only a limited amount each year without penalty — so you cannot simply throw a bonus or an inheritance at the balance and be done. And if you need to leave the fixed rate early, whether to switch lender or repay the loan, you can trigger a break fee. That fee compensates the lender for the deal you agreed to leave, and it can be substantial. Fixing is a commitment, not just a rate.
With a variable rate, that commitment disappears. You can overpay as much as you want, whenever you want, and every euro comes straight off the balance — shortening the loan and cutting the interest you pay. There is no break fee to leave, so switching lender or clearing the mortgage early costs you nothing in penalties. The freedom is genuine. The price of it is that the rate is never guaranteed, and the same door that lets you leave lets the lender raise your payment.
What happens when a fixed rate ends
When your fixed period runs out, you roll onto the lender’s default variable rate automatically unless you do something. You have three real options: fix again, switch to another lender, or do nothing. Doing nothing is not a neutral choice — it is a choice, and it is usually the expensive one. Default rates are rarely the best rates a lender offers, and letting yourself drift onto one can quietly cost you the equivalent of the percentage-point gaps in the table above, month after month. Treat the end of a fixed term as a deadline to act on, not a date that passes on its own.
How to compare offers fairly
The headline rate is not the whole cost. Fees, charges and how the rate behaves over the full term all feed into what you actually pay, which is why the Annual Percentage Rate of Charge — the APRC — exists. The APRC folds the interest rate together with the mandatory fees into a single figure, so it reflects the true cost of the mortgage rather than just the advertised rate. When you compare offers, compare APRCs on like-for-like terms: the same loan amount, the same term, the same type of rate. Comparing a two-year fixed against a variable, or a 25-year term against a 35-year one, tells you very little. Line up the same thing against the same thing, then let the APRC do the honest arithmetic. And because the right answer turns on your own tolerance for a payment rise and your plans to overpay or switch, a mortgage adviser is the person to weigh it against your circumstances.