If there's one question we hear more than any other when it comes to mortgages, it's this: "Fixed or variable — which is better?" It's also the question that gets answered worst, because people almost always look for the universally right answer, when really there's only the right answer for you. In this episode we won't tell you what to choose: we'll explain how the bank thinks, what the real risks are (the actual ones, not the newspaper-headline ones), and what questions you should ask yourself before signing.
When is a fixed rate the better choice?
With a fixed rate, you know one simple thing: the instalment will never change for the entire mortgage term. It's the preferred choice for anyone who:
- wants absolute certainty about the instalment
- has a tight monthly budget
- sleeps badly at the idea that something could increase over time
From a financial standpoint, a fixed rate is like taking out insurance: you pay a bit more today to eliminate a future risk. The key point is this: you're not buying the lowest possible rate, you're buying stability. And that has real value, especially if the mortgage is long (20-30 years), your income doesn't have much room to grow, or you already carry other structural expenses (children, rent, other loans).
When is a variable rate the better choice?
A variable rate almost always starts lower than a fixed one. But it isn't a gift — it's a trade-off. In exchange for a lighter initial instalment, you take on the risk that the instalment rises over time and your budget has to adapt.
Variable makes sense if:
- your income is dynamic and growing
- you have margin between the instalment and your income (back to the concept from episode one)
- you're buying today but aren't sure you'll keep the mortgage for its full term
Many people forget this key point: if you expect to sell the property, switch lenders, or pay off the mortgage early, variable can be a tool, not a gamble. The problem arises when someone chooses variable purely because the instalment is lower today, without asking what happens tomorrow.
How does the bank think, and how should you?
The choice between fixed and variable isn't a bet on interest rates. It's a decision about your own risk tolerance. The bank reasons like this: it assesses whether you can pay today, and protects itself with guarantees and margins.
You should reason like this instead:
- what happens if the instalment rises by €100? By €200?
- how much room is there before the mortgage becomes a problem?
- would you rather pay a bit more, or live with uncertainty?
If you can't answer these questions with concrete numbers, the decision isn't ready yet. Don't ask yourself: "What's the best rate?" Ask yourself: "Which mortgage lets me stay calm even if things change?" Because they will change: your job, your family, your priorities. The right mortgage is the one that holds up to change, not the one that wins on paper today.
Fixed and variable aren't right or wrong — they're different tools for different people. The bank offers you a product; you're taking on a commitment that lasts decades. In the next episode we'll talk about down payment, ancillary costs and hidden fees: the ones that don't show up in the instalment but do affect — quite a lot — your financial balance. If you're weighing up a mortgage or want to understand which choice best fits your situation, talking it through first makes all the difference. We're here for that too.
Glossary
- Fixed rate: an interest rate that stays the same for the entire mortgage term. The instalment never changes, regardless of how markets or reference rates move. Example: with a mortgage fixed at 3%, you'll pay the same instalment even if rates rise to 5% or fall to 2% in five years' time.
- Variable rate: a rate that changes over time based on a reference index (usually the Euribor) plus a spread set by the bank. The instalment can rise or fall over the years. Example: if the Euribor rises, your instalment increases; if it falls, the instalment decreases.
- Spread: the fixed margin the bank adds to the reference rate. It represents the bank's profit and is one of the few genuinely negotiable items. Example: Euribor + 1.20% spread.
- Mortgage portability (surroga): the option to transfer a mortgage from one bank to another to get better terms, with no notary costs for the customer. Example: moving from a 4% rate to a 3% rate while keeping the same outstanding balance.
