All Topics / The Treasure Chest / Fixed or variable ?

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  • Profile photo of hwd007hwd007
    Member
    @hwd007
    Join Date: 2002
    Post Count: 247

    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

    Profile photo of bensonbenson
    Participant
    @benson
    Join Date: 2003
    Post Count: 101

    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.

    Profile photo of hwd007hwd007
    Member
    @hwd007
    Join Date: 2002
    Post Count: 247

    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.

    Profile photo of Kirby319Kirby319
    Member
    @kirby319
    Join Date: 2003
    Post Count: 120

    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.

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    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

    Profile photo of brownwombatbrownwombat
    Participant
    @brownwombat
    Join Date: 2003
    Post Count: 24

    How about considering a split loan ? I have just done this – am hedging both angles. If only we had a crystal ball [:)]

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

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