Fixed, Variable or Mixed Rate: what is the difference?
With a fixed rate, your repayment is always the same. With a variable rate, your repayment goes up and down with Euribor. With a mixed rate, your repayment is fixed for the first years and variable after that. The choice is between always knowing what you pay and accepting that the repayment may change.
In this guide
Variable rate
The interest rate is the sum of two parts: the reference rate, which is usually Euribor, and the spread, which is the bank's margin. When Euribor changes, your repayment changes. It can go up or down over the life of the loan.
Fixed rate
The interest rate is set when you sign the contract. The repayment stays the same until the end of the loan. You always know what you will pay.
In return, a fixed rate usually starts higher than a variable rate. That is the price of not taking the risk of a rate rise.
Mixed rate
The contract has two phases. First, a period with a fixed rate. Then, a period with a variable rate. For example, on a 30-year loan, 5 years at a fixed rate and 25 years at a variable rate.
Does the ESIS have to show all three options?
Yes, if the loan is to buy or build the home you will live in. The ESIS must simulate the loan with a fixed, a mixed and a variable rate. Once you choose, the bank makes its offer for that option.
Source for the three definitions: Banco de Portugal — Four tips for comparing home loan offers (in Portuguese).
An example with the sums
You borrow €200,000 over 30 years. These are example figures, not today's rates.
Variable rate, with Euribor at 2% and a spread of 1%. The interest rate is 3% and the repayment is about €843 a month. If Euribor goes up to 3%, the repayment becomes about €955. If it goes down to 1%, it becomes about €739.
Fixed rate of 3.5%. The repayment is about €898 a month, from the first month to the last.
In this example, the fixed rate costs €55 more a month at the start. In return, you are protected from a rise of €112 a month.
The bank also looks at the type of rate
With a variable or a mixed rate, the bank works out your affordability ratio as if the rate went up. This is part of Banco de Portugal's recommendation. Source: Banco de Portugal — LTV, DSTI and maturity limits.
See our guide What is the effort rate, and what should mine be?
What if you want to repay early?
The type of rate changes the maximum fee. With a variable rate, the bank can charge up to 0.5% of the amount you repay. With a fixed rate, it can charge up to 2%.
An example. You repay €20,000 early. With a variable rate, the fee is at most €100. With a fixed rate, it can reach €400. See the guide Can I repay my loan early? What penalties apply?
Can I switch rate after signing?
Only if the bank agrees. Switching from a variable to a fixed rate, or the other way round, is a renegotiation of the contract. The bank cannot charge fees for the renegotiation.
How to choose
Do not decide only on the first year's repayment. Ask yourself how much the repayment could rise without squeezing your budget. If the answer is "not much", a fixed or a mixed rate gives you more security.
Compare the total cost of the offers as well, not only the rate. Banco de Portugal advises comparing the APR (TAEG) and the MTIC.
To see what the rate does to your repayment, use the mortgage repayment calculator. We look at the three scenarios with you, for your case.
Sources
- Banco de Portugal — Four tips for comparing home loan offers (in Portuguese)
- Banco de Portugal — LTV, DSTI and maturity limits
- Banco de Portugal — Interest rates in home loans
- Banco de Portugal — How to repay and transfer
- Banco de Portugal — How to renegotiate
Sources checked on 22 September 2026.
Susana Vasconcelos
- Intermediária de crédito autorizada pelo Banco de Portugal n.º 0008496
- Mais de 10 anos na banca