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fixed interest mortgage vs variable interest mortgage

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  • 11-05-2024 4:55pm
    #1
    Ohoopee
    Registered Users Posts: 136 ✭✭


    Hi,

    I am hoping to get some advise. I am trying to decide between a varied interest mortgage and fixed term interest mortgage. I know what the difference is between the two but which choice is the best doesn't seem very obvious. Right now the variable interest mortgage is giving me the lowest interest rate and the lowest monthly payments…obviously this can change hence the variable. The fixed mortgage all only seems to be fixed for a limited number of years…7 years is the max offered by my bank. This gives me a higher interest rate than the variable at the moment and my monthly payments will be more but at least I know will know how much I have to budget. I have tried going to a mortgage broker, mainly just to get advise but was going to let them see if they can beat the current offer I have but I can't get them to return my calls in a Timely fashion and I have found an affordable house that I like and I don't want to wait around for the broker too much and end up losing the house. Any advise would be greatly appreciated.



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    #2
    Nigzcurran
    Registered Users Posts: 2,727 ✭✭✭Nigzcurran


    I can't see the rates going higher than they are at the moment for a good few years if ever to be honest. I'm slightly hopeful that the ECB will actually manage to keep things stable for once!



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    #3
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,068 Mod ✭✭✭✭Jim2007


    Nobody can tell you what is going to happen with interest rates over the next several years, for instance there is an estimated $360 billion of corporate debt that needs to be refinanced in the next five years, will that impact rates, possibly, it's anyone's guess….

    Your first decision point is to figure out how much you can comfortably afford to pay out each month regardless of what mortgage package you eventually decide to go with. And do plenty of stress testing on this to make sure you are not over stretching yourself.

    A fixed interest mortgage offers certain for a period, nothing more than that. This suits some people who like a certain amount of certainty in their lives or they know that they financial situation will be better in a couple of years time and so on. If it turns out you save money with this option, then treat it as a bonus, not something you rely on.



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    #4
    thebiglad
    Registered Users Posts: 1,576 ✭✭✭thebiglad


    For the duration of my mortgage I have used Fixed Rates sometimes over the duration I have done well compared to the variable and other occasions not so much but, I fix for 3-5 year periods in the knowledge of what my payments will be in that time - at the point where the mortgage renews I pay off a lump sum from the mortgage and then fix again - I will finish my mortgage 10 years earlier than scheduled and throughout I have had certainty over my payments.

    A variable rate mortgage can move often and with little notice, I just didn't want that.

    To really advise on where interest rates will go is very difficult but I would say typically look at the 10 year fixed rate from the bank - that's what they believe will turn them a nice profit over 10 years.



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