Chapter 3 of 10 · Rates, lenders and switching · 3 of 10
Fixed or variable mortgage: how to decide
Checked 21 Oct 2026the Central Bank's mortgage measures, Revenue's rules and the scheme operators' published terms.
Fixed versus variable in Ireland in 2026: what each costs, breakage fees, overpayment limits, and the questions that decide it for you.
Written in plain English for the person buying, selling or switching. This guide covers the Republic of Ireland only.
A mortgage comes with an interest rate. The rate decides how much you pay each month. In Ireland you choose between two kinds: a fixed rate and a variable rate. This guide explains both in plain words, shows what each costs, and gives you the questions that decide it.
The short version
A fixed rate stays the same for a set number of years. Your payment does not change in that time. A variable rate can go up or down at any time, so your payment can change.
Fixed gives you certainty. Variable gives you freedom. Most new mortgages in Ireland are fixed. In August 2026, the Central Bank's figures put the average new fixed rate at 3.49% and the average new variable rate at 4.16%.
What a fixed rate is
A fixed rate is a rate that your lender promises for a set period. The period is usually 1 to 5 years. Some lenders offer 7 or 10 years. A small number offer a rate fixed for the whole term of the loan.
During the fixed period, nothing changes. The European Central Bank (the ECB, the bank that sets interest rates for the euro) can raise or cut its rates, and your payment stays the same. See our glossary for the terms used here.
The catch is the exit. If you want to leave a fixed rate early, your lender can charge a breakage fee. We explain that below.
When the fixed period ends, the loan moves to a variable rate unless you choose a new fixed rate. Our guide on a fixed rate ending covers that moment.
What a variable rate is
A variable rate is a rate the lender can change at any time. It usually moves after the ECB changes its rates, but a lender can also move it on its own.
There is no breakage fee on a variable rate. You can overpay as much as you like, switch lender, or clear the loan, all without a charge for leaving.
The downside is that you do not know what your payment will be next year. A rise of 0.5 of a percentage point on €300,000 adds about €85 a month over 30 years.
A tracker is a special kind of variable rate. It follows the ECB rate plus a fixed margin. Lenders no longer sell trackers. If you have one, read our tracker mortgage guide before you change anything.
A worked example: €300,000 over 30 years
The table shows the monthly payment on a €300,000 loan over 30 years at three rates. The figures come from our repayment calculator.
| Rate | Monthly payment | Difference from 3.5% |
|---|---|---|
| 3.5% | €1,347 | |
| 4.0% | €1,432 | €85 more |
| 4.5% | €1,520 | €173 more |
On a fixed rate at 3.5%, you pay €1,347 every month for the fixed period. On a variable rate at 3.5%, you pay €1,347 this month. Next year the rate could be 4.0% and the payment €1,432. It could also be lower.
That gap is the whole decision. A fixed rate removes the chance of the higher figure. It also removes the chance of the lower one.
What a breakage fee is
A breakage fee is what a lender can charge when you end a fixed rate early. Ending early means switching to another lender, clearing the loan, or overpaying beyond the allowed amount.
The fee is not a penalty. It is the lender's cost of unwinding the money it borrowed to lend to you. The fee is worked out from the lender's cost of funds, under the Consumer Credit Act 1995. In simple terms:
- If market rates have fallen since you fixed, the lender loses money when you leave, and the fee can be large.
- If market rates have risen since you fixed, the lender loses nothing, and the fee is often zero.
Your lender must give you the figure in writing when you ask for it. Ask before you decide anything. The fee changes from day to day, so ask again near the date you plan to act.
How much you can overpay on a fixed rate
Most Irish lenders let you overpay 10% of the balance each year on a fixed rate without a breakage fee. On a balance of €250,000, that is €25,000 a year. Credit unions that offer mortgages often allow more.
Above the allowance, a breakage fee can apply to the extra. Our guide on overpaying your mortgage shows what overpaying saves and how the limit works.
On a variable rate there is no limit.
Fixed and variable side by side
| Fixed rate | Variable rate | |
|---|---|---|
| Your payment | The same for the fixed period | Can change at any time |
| If rates rise | No change until the period ends | Your payment goes up |
| If rates fall | No change until the period ends | Your payment may go down |
| Leaving early | A breakage fee can apply | No fee |
| Overpaying | Usually 10% of the balance a year without a fee | No limit |
| Switching lender | After the period, or with a fee | At any time |
| Typical new rate, August 2026 | 3.49% average | 4.16% average |
The averages are the Central Bank's figures for new lending in August 2026. Each lender's current rates are on our rates comparison. Those rates are indicative until the weekly check replaces them.
The questions that decide it
Nobody can tell you which will cost less over the next five years. Nobody knows where rates are going. What you can decide is what you can live with. Ask yourself these questions.
- Could you still pay if your payment rose by €100 or €200 a month? If not, a fixed rate protects you.
- Do you plan to sell, move or switch within the next few years? A breakage fee could apply on a fixed rate. A short fixed period or a variable rate avoids it.
- Do you expect a lump sum, such as a bonus or an inheritance, that you want to pay off the loan? Check the overpayment allowance on a fixed rate first.
- How much is the gap between the fixed and variable rates on offer? In 2026 the average variable rate was higher than the average fixed rate.
- Do you want to stop thinking about it? A longer fixed period means fewer decisions.
A broker (on the Central Bank's register) can walk through these questions with you. See what a mortgage advisor does.
Splitting the loan
Some lenders let you split the loan in two: part fixed, part variable. You get some certainty and some freedom. Overpayments go to the variable part without a fee. Ask your lender whether it offers a split and on what terms.
What happens when the fixed period ends
About two months before the end date, your lender writes to you with your options. Since 24 March 2026, under the Consumer Protection Code 2025, the lender must also tell you what you could save on a lower rate it offers. Read about that duty and the other 2026 changes.
You then have three choices: fix again with the same lender, switch to another lender, or move to the variable rate. Our fixed rate reminder emails you 90 and 30 days before the date so you have time to compare.
Where this leaves you
Put your own figures into the repayment calculator at two or three rates, and see what each would mean each month. Then work through the questions above. If you are buying your first home, the first-time buyer journey shows where the rate decision sits in the whole process, and get quotes connects you to the professionals you need.
Questions people ask
Is it better to fix or go variable in Ireland?
There is no single answer. A fixed rate gives you the same payment for a set number of years and a possible fee if you leave early. A variable rate can change at any time but has no breakage fee. The questions in this guide help you decide which matters more to you.
How long can I fix my mortgage for in Ireland?
Lenders offer fixed periods from 1 year to 10 years, and a small number offer longer, up to the whole term. Each period has its own rate. Compare them on the rates page.
What happens when my fixed rate ends?
Your lender must write to you before the end date with your options. If you do nothing, the loan moves to the lender's variable rate. You can fix again with the same lender or switch to another.
Can I overpay a fixed rate mortgage?
Most lenders let you overpay up to 10% of the balance each year on a fixed rate without a fee. Above that, a breakage fee can apply. Check your lender's allowance before you pay extra.
What is a breakage fee?
A breakage fee is a charge for ending a fixed rate early, including by overpaying beyond the allowance or switching. It is worked out from the lender's cost of funds, and the lender must give you the figure in writing. It can be zero.