Hey Guys,
With a 25yr. loan you obviously have to choose P&I, I only, Fixed and variable. My question: is it possible to have a loan say P&I or I only, but for say the first 3-5 years it variable, and the last of the loan is fixed?I was thinking at the current loan rates are pretty high, so if you wanted to buy a property now, take you loan out and then when its at the botom fix it in.
Or is there another way of going about this?
Matt
“If you do what you have always done, you will get what you have always had.”
“Isn’t it time for a change?”
Matt, unlike the States, we cannot fix our loans for 30 years (40 years I think they now offer). At the moment our maximum is 10 (or possibly 15), but these rates are much higher than the variables.
Cheers
MelHi Melbear and Team,
Is that true they offer Loans over 40 years?
If so, do you think Australia will follow suit?
cheers
s.i.sSave on a regular basis
“People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.”
http://www.theenlightenedway.com/tools/mil_calc.shtmlSIS, Dolf de Roos said it at his seminar a couple of weeks back, so I guess it is.
I doubt Aust will follow suit in a hurry. We don’t offer fixed loans for 25 years, so haven’t caught up to them in that respect yet.[
]Cheers
MelI am guessing it would be better to get a variable interest rate at the moment, because of the high interest rates. Is it possible to say change it from variable to fixed in about 2 years time or so?
Matt
“If you do what you have always done, you will get what you have always had.”
“Isn’t it time for a change?”
Absolutely Matt. You can change from variable to fixed at any time. The other way around is where you could cop the fees to get out of it.
Cheers
MelHi Melbear & Team,
Due to how expensive housing affordability is now, do you think in some rectrospect, that the government, might push or the banks might see fit, to begin and allow servicing 40 years period loans?
For Example if first home buyers, cant get into the market, maybe perhaps this is another way that can be achieved to help them, get into the market.
Spreading the Actual repayment over a 40 year period would make weekly, fortnightly and monthly repayments less, even so much less than a 30 year period, that the first home buyer could easily make repayments and many properties that investors would seek, would also become positivily geared.
Even with this situation the banks will still be making a bigger profit, if people do decide to pay their mortgage loans over a 40 year period.
What are you views? do you think 40 year loans is all talk or do you think, they will come in place to keep up with the price of housing affordability?
cheers
s.i.sSave on a regular basis
“People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.”
http://www.theenlightenedway.com/tools/mil_calc.shtmlSIS, I don’t think that the government will push the banks to do this. The banks would certainly tell the gov to get back to governing, and leave them to banking.
It has to come down to the bosses at the banks assessing the commercial viability. At the moment, I think they’re still quite happy to take bigger payments earlier, rather than spread them out over a longer period. And they’re still lending money.
I guess it will boil down to when they’ve got money to lend, and no takers cos of the cost – then they might look at ways to encourage people to get in, 40 year loans may be one way.
Cheers
MelA LOC can be for as long as you need. 40 years no problem!
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Fixed Rate ??
REDWING
Matt, the banks set the rates for fixed at 1, 3,5 yrs etc ‘guessing’ where the rates will go, if you lock in you’re trying to ‘guess’ better than them.. hopefully you lock in at a lower rate ( say before the last two 0.25% rises and any more ) and achieve a better rate than is available ‘now’
Basically Thats how i look at it anyway.. is that right Simon or Terryw ?
REDWING
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
Redwing,
Thats basically right. But don’t forget they employ a load of experts to make those predictions – some better qualified than you and I. I used to liken it to a casino. Some people walk out winners but the casino stays open because most don’t.
So I normally don’t advise people to fix unless they are the type who derive substantial comfort from the added security that a certain rate brings – and are willing to pay for that privilege!
Another downside is the lack of flexibility fixing brings. Not so difficult for the buy and hold brigade but for those willing to take profits when they appear there could be additional costs in selling.
Having said that there was a period several months back where I pushed fixed rates pretty hard. I was doing three year fixed deals at 5.89% and five years for not much more. We could all see the way rates were headed and I took advantage of a lag period there. I even fixed myself!
Now I am not so keen on them with the three year rate now over 7% and the forecast for the interest rate divided between those who say up and down. Who knows what the future holds.
But basically when you fix you are taking a position against the banks advisors!
Good Luck,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Is every one on this site under 30 years old?
I dont think that 7% is all that high .
I was around when my morgage was 18% [although a small one] and have had loans ever since and would be happy to fix my next loan for 5 years at 7% as I believe the average over that time would almost certanly not be under that amount
Boo BooBooboo I had a 14% mortgage myself – but don’t forget when making those comparisons that the average loan was a hell of a lot smaller in the 80’s than it is today. And incomes and rents haven’t risen accordingly.
So my 14% on that $50K mortgage (purchase price $52K – Still can’t figure how I got that loan through back then?) was way cheaper than if I was buying that same property today!
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Is every one on this site under 30 years old?Im under 20 [
]Matt
“If you do what you have always done, you will get what you have always had.”
“Isn’t it time for a change?”
40 year loans , boy wouldnt that make it a lot easier for people to be able to afford there morgage payments, personally i think that would be a great option for banks to offer with maybe a half percent above the average interest rate , the only problem is i wouldnt be able to apply for it as i would amagine you would have to be around 25 and under to apply . It would sure help first homeowners on low income into there first home, which might start another realestate boom [
]As Simon said ([
]), an LOC can last an awful long time – and can be paid interest only if that’s what you want to do. It would cut the payments down, and you pay more as and when you can.He’s also mentioned somewhere that age doesn’t seem to affect the granting of long term loans to ‘older’ people.
Cheers
MelThe only reason i could see that you would do interest only is to reduce the payments, so you are getting more cash flow per month. But you don’t actually ever end up owning the house. Are there any other reason why you would do this?
Matt
“If you do what you have always done, you will get what you have always had.”
“Isn’t it time for a change?”
Matt
In a P&I loan, over a long term, there is not all that much principal paid off anyway. As we are talking about making houses more ‘affordable’ and discussing 40 year loan terms (which are US only at the moment), I suggested an IO loan, which is the lowest payments that the bank requires for you to own the house.
Perhaps you really want to own your PPOR, but can’t quite afford a 30 year loan, and would like a longer term, then an LOC would allow you to pay only the interest. I think you’re mad if you don’t at least pay some extra off, so that you are ‘buying’ yourself some equity, and not relying on the CG.
So it’s not really increasing cashflow (PPOR purchase), more it’s making it possible where otherwise it might be more of a struggle, and it provides a bit more flexibility in payments.
Cheers
MelBy the way, I don’t want to ‘own’ my houses – I just want to ‘control’ them. I’m more than happy to have mortgages on every house I own, just so long as they still give me some money after the bank has been paid for their ‘interest’ in my property.[
]Cheers
MelMatt,
Just a quick example to put IO and never paying the loan off into perspective.
30+ years ago my parents bought a waterfont house in Sydney.
If they still owned it and had paid IO they would today owe under $100K on it. Probably worth well in excess of $1.5M today.
Thats the magic of growth!
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
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]), an LOC can last an awful long time – and can be paid interest only if that’s what you want to do. It would cut the payments down, and you pay more as and when you can.You must be logged in to reply to this topic. If you don't have an account, you can register here.
