Fixed or variable ?

Viewing 6 posts - 1 through 6 (of 6 total)

hwd007
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@hwd007
Join Date: 2002
Post Count: 247
September 11, 2003 - 3:49 pm
I just bought a renovated 2 bed IP in South Yarra and am worried about interest rates. Do you think I should lock in 3 year fixed ? as I know at least I can afford the outflows on the 6% rate. I ain’t got a tenant yet so bit concerned, as I know the rents are weak in Melbourne, but I got 40 days to go before settlement. It cost me $318K excluding stamp duty but I may struggle to get $300 a week even though its in excellent condition. I partly bought it for lifestyle reasons in a few years time. My other two IPs are in Brisbane and doing well and I will only buy in Brisbane for the next one, if I make it that far hehe
benson
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@benson
Join Date: 2003
Post Count: 101
September 11, 2003 - 4:01 pm
If you are concerned that it will cause you problems if the rates go up and you have bought for the long term I would definately lock in rates. The 3 year rates seem pretty good value to me.
Ben.
hwd007
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@hwd007
Join Date: 2002
Post Count: 247
September 11, 2003 - 5:23 pm
yea thanx I am thinking of locking in as I know at least I can afford it even though its a bit tight. I will be about $6.5K out of pocket per year on it.
Kirby319
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@kirby319
Join Date: 2003
Post Count: 120
September 11, 2003 - 11:21 pm
I just bought an IP in Cairns where the figures are tight (just positive after depreciation) and decided to lock in rates for 3 years just to be on the safe side.
In your circumstance I would recommend it if you are worried about costs blowing out which is a real possibilty with negatively geared property if interest rates go up.
Mortgage Hunter
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@mortgage-hunter
Join Date: 2003
Post Count: 3,781
September 11, 2003 - 11:58 pm
In the past I have been reluctant to advise fixing for all but the most security minded clients. My reasoning is that it is like going to the casino. Most folks end up worse than if they hadn’t gone but it is the stories from those who win that make us go back! I also believe that you are betting against the bank expert in working out whether you will pay less to the bank over the long run.
BUT having said that I now believe it more likely that rates will move upwards instead of down wards and am seeing more articles supporting this.
I am currently fixing my most recent purchase using a 3 year product at 5.89%.
Cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985
brownwombat
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@brownwombat
Join Date: 2003
Post Count: 24
September 12, 2003 - 12:55 am
How about considering a split loan ? I have just done this – am hedging both angles. If only we had a crystal ball []