The main thing you need to decide is how long to fix for.
Fixed rate terms last for between one and ten years, but not every lender will offer this range of terms.
You’ll usually pay a lower rate on a short term loan of one or two years, and a higher rate on a loan of five or more years.
Choosing a term that will work best for you depends on a few things such as:
Choosing the cheapest option isn’t as simple as picking the term with the cheapest rate - which is nearly always the shortest term.
You need to factor in the costs associated with switching mortgages too, as you’ll be switching more often with a short fixed term loan.
If rates drop during your fixed period, you won’t be able to switch and take advantage of a cheaper rate while you’re tied in. This will have a bigger impact if you’re fixed for longer.
However, depending on your situation, it may still suit you better to fix for longer, and have the stability of set payments for an extended period.
Check if you meet the lender’s eligibility criteria first, and how much you can borrow.
If you choose a deal with your current lender, you’ll be able to skip the application process, but they may recheck your affordability.
Yes. You have no ties with a variable rate mortgage so can switch whenever you like.
You’ll need to apply for the deal you want and carefully consider how long to fix for.
You can get a fixed rate mortgage for between one and ten years, but some lenders may not offer this full range of terms.
When the term comes to an end, you’ll switch over to the lender’s standard variable rate, which is usually expensive.
You’re also free at this time to: overpay as much as you like, redeem your mortgage, or switch lenders, penalty free.
You can switch at any time but if you switch before your fixed term ends you’ll have to pay an early repayment charge (ERC), which could cost thousands of euro.
Once your term has finished, you’ll switch to the lender’s standard variable rate (SVR), and can switch penalty free.
It’s down to the risk to the lender. They can afford to offer better rates on one or two year deals because there’s less opportunity for the European Central Bank (ECB) rate to increase.
Terms of five or more years make it difficult to predict what rates will do, so they mitigate the risk by inflating rates slightly.
Lenders risk losing money from agreeing rates that could end up lower than the ECB rate.