A variable rate mortgage offers you the flexibility to overpay or redeem your mortgage at any time without penalty. Compare variable rate mortgages from Ireland’s best lenders.
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Here are a few things you should consider:
There are several different types of variable rate mortgages and all of them work slightly differently so it’s important to understand the difference. Not every lender offers every type, but the main ones are:
This is the lender’s variable rate that you usually default to at the end of a fixed or discounted period.
It’s usually the most expensive rate and isn’t specifically linked to the ECB rate. Lenders often change their SVR when the ECB rate goes up or down, but they can change it whenever they wish.
This is a variable rate that’s lower than the standard variable rate (SVR) and runs for a set term, usually a year. At the end of the discounted period, the rate will revert to the SVR, or you can switch to a fixed rate mortgage.
This is a variable rate that can’t go above the rate it’s capped at during the term, even if the European Central Bank (ECB) rate goes up. It offers some peace of mind and the ability to budget as you can work out what your maximum monthly repayments will be.
With a variable rate mortgage, the initial rate is simply the rate you start off with. Unlike a fixed rate mortgage, it can change at any time. Pick a deal that offers a low initial rate because the lower the rate the less you’ll pay in interest and the lower your repayments will be.
The lower your LTV is, the better the interest rate you’ll be offered. Some products may require a low maximum LTV e.g. 50%, so if your LTV is higher, you won’t qualify for the offer.
If you’ve already paid off a chunk of your mortgage, or you only started out with a small mortgage, you need to double-check the minimum mortgage balance accepted. For example, if it’s set at €50,000 and your remaining balance is €45,000, you won’t be eligible to apply.
If there’s a discount period, check how long this will last, or if the rate is capped, work out what your maximum repayment could be. You may also wish to compare any fees and charges.
A variable rate doesn’t guarantee set payments like a fixed rate mortgage, but it does offer a lot of flexibility and you can do any of the following, penalty-free:
Overpaying your mortgage can reduce the interest you pay overall, and reduce your mortgage term.
If flexibility is more important to you than stability, a variable rate mortgage is an option worth considering. You can always switch to a fixed rate deal in the future if you want to fix the interest rate and payments.
Yes. With a variable rate mortgage, you can overpay as much as you like, whenever you like, without penalty. Here’s more on overpaying your mortgage.
A tracker is a type of variable rate mortgage that tracks the European Central Bank (ECB) rate, at a set percentage above or below.
This means that the rate automatically changes when the ECB rate changes, unlike with other variable rate mortgages that aren’t directly linked to the ECB.
Trackers aren’t available anymore because lenders lost too much profit when the ECB rate dropped to 0%. If you already have a tracker, you may be able to keep hold of it, even if you move home.
For example, if you have a Bank of Ireland tracker mortgage, they offer a Tracker for Movers product, that will continue to track the ECB rate.
With a variable rate mortgage you’re free to switch whenever you like.
You’ll need to meet the lending criteria in order to switch, and if you switch lenders too, you’ll have to go through the mortgage application process in full.
Lenders usually increase or lower their rates in line with the ECB rate but not always. They may choose to change their standard variable rate whenever they like.
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