Interest Rate Options

There are three main type of interest rates available in Ireland at present:

• Fixed Rates
• Variable Rates
• Tracker Rates.
  

Fixed Rates:
Almost all lenders will give you the option of 'fixing in' your interest rate today, for a specific amount of time.  This can be as short as one year, or in some cases, as long as 10 or 20 years.  Generally speaking, the longer you fix the rate, the more expensive the rate will be.

The big benefit of fixed rates is that you know exactly how much your repayment will be over that period of time, regardless of what happens with interest rates generally, during that period.

The down side is that if variable and tracker rates stay low, or drop further, you are tied into a higher rate.  Fixed rates tend to be less flexible that variable and tracker rates, not allowing you for example, to make any additional payments or redeem the mortgage early without a penalty.

The important thing to remember, if you are choosing to take a fixed rate, is that if there is a possibility that you will change lenders, or pay off your mortgage, in lets say 5 years time, you should take a fixed rate of less than 5 years, or you'll end up paying penalty fees.

Variable & Tracker Rates
Variable and tracker rates are in most ways very similar - if general interest rates go up, both variable and tracker rates go up too, or if they go down, the variable and trackers rates will go down.  The difference is that with tracker rates, the rate is tied into the European Central Bank (ECB) rate, and you'll know the margin that the bank is charging for the whole mortgage term at the outset.  This means that the bank can't increase rates on a whim - only if the ECB raises their rates.  In theory, with normal variable rates, the lenders could raise their rates whenever they like. 

Trackers are proving very popular in Ireland at present and generally offer better value than standard variable rates.

Apply for a fixed, variable or tracker mortgage with up to 9 lenders

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