All Topics / Help Needed! / What Interest Rate to use

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  • Profile photo of PropertyPlusPropertyPlus
    Member
    @propertyplus
    Join Date: 2004
    Post Count: 5

    Just wanted some advice.
    When crunching numbers for an IP, what Interest reate are you guys currently using for this current climate? I’m going for 7.5 or 8%. is that being too pessimistic?

    Profile photo of Paul DobsonPaul Dobson
    Participant
    @pauldobson
    Join Date: 2003
    Post Count: 1,196

    Hi Property Plus

    You should be able to get a mortgage for 6.5% without any problemms. Then you can “crunch the numbers” and do “what ifs” by gradually moving the interest rate up from there. Possibly by 0.5% increments to, say, 8.5% (or whatever you think rates are likely to creep up to).

    Ihope this helps.

    Cheers, Paul

    Paul Dobson | Vendor Finance Institute
    http://www.vendorfinanceinstitute.com.au
    Email Me | Phone Me

    An alternative way to finance your home.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Many banks put a margin of 1.5% above the rate when they work out serviceability.

    Terryw
    Discover Home Loans
    Mortgage Broker
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of kiwiduvetkiwiduvet
    Member
    @kiwiduvet
    Join Date: 2004
    Post Count: 92

    so 1.5% on top is a good max to wrk thru for the next 12 months

    “Extraordinary Popular Delusions and the Madness of Crowds” ~ Charles Mackay

    Profile photo of Chris100Chris100
    Participant
    @chris100
    Join Date: 2004
    Post Count: 22

    Add the 1.5% to 2% to calculate – everyone has a different opinion on the market for 2005 (rates that is), so adding a margin covers you for good and for bad.
    Another simple tip- calculate your gross rents, then work out what 65% of this is, and you will have have a rough but good guide on what your net cash flow will be if tenanted 100% of the time.

    Chris Durman
    Commercial Capital Finance Pty Ltd
    B 07 3853 5221
    F 07 3853 5256
    M 0427809858
    C/- Brisbane Technology Park, 1 Clunies Ross Court, Eight Mile Plains, Queensland 4113
    ACN 110 082 347
    CAUTION – This message may contain privileged and confidential information intended only for the use of the addressee named above. Any views expressed in this message are those of the individual sender and may not necessarily reflect the views of the Commercial Capital Group.

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