I am just thinking if now is right time to buy IPs while the int rates are low ?
Let say you buy a number of IPs at low fixed rates now.
Assuming the 5 yr fixed rate (6.3%) is used.
Year 1: 6.3%
Year 2: 6.3%
Year 3: 6.3%
Year 4: 6.3%
Year 5: 6.3%Total :31.5%
Assuming the variable rate for next 5 years will be creeping up:
Year 1: 6.5%
Year 2: 7.5%
Year 3: 8.5%
Year 4: 9.5%
Year 5:10.5%Total :42.5%
It will cost you (42.5 – 31.5) 11% interest more on your investment with variable rate.
If your portfolio has 1 million loan amount, it will cost you 100k more during 5 years using the variable rate.
What do people think about the property prices in next 5 years ?
(Up or Down or Same)I presume most people will say Up?
In that case, don’t you think you should buy IPs at low fixed rate now ?
People waiting for property prices to come down.
The more they wait, the more it will cost them more.I agree that fixing rates at the moment seems a good idea.
My tip is that rates will remain the same for several more months before slowly creeping up to around 8-9% in a few years.
But what the hell do I know?
Of course if the floating interest rates went down……
If we all knew what was going to happen property investment would be no fun would it?
Andrew
http://www.rentmaster.co.nz
Software for LandlordsMy grandfather said – Always pay cash!!
Another little trick that not many people use… say you fix your interest rate at 6.3% for 5 years, then in 6 months, the rate hasn’t changed, you can always fix it for another 5 years from then. You can do this as often as you like, but only at or above the initial rate fix. The advantage being, you know it is fixed for longer.
Dan.
If you want an extraordinary life you have to be prepared to do things that ordinary people aren’t prepared to do.
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