All Topics / Finance / To fix or not to fix, that is my question

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  • Profile photo of elkamelkam
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    @elkam
    Join Date: 2006
    Post Count: 722

    Hello

    I have always taken out PI variable loans with offset a/c to buy my properties. However from reading the forum it seems as if I am the exception. I currently have 3 loans covering 2 properties and am wondering what I should do.

    How do you work out how much of your loan to fix.

    Is this a good time to fix some/all of the loan(s) and for how long.

    What should I take into consideration.

    Thanks in advance. [smiling]
    Elka

    Profile photo of TerrywTerryw
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    @terryw
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    You should take into consideration your views on rates, but also the inflexibility fixing creates – it may be harder and more costly to change lenders. And this could hinder your expansion.

    Terryw
    Discover Home Loans
    Parramatta
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    Profile photo of foundationfoundation
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    @foundation
    Join Date: 2005
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    Bear in mind that this is simply my personal opinion based on my own limited research and resources and should not be considered specific financial advice blah-blah so sue me.
    I think interest rates are going to rise much faster and much further than even the most extreme of mainstream commentators are currently predicting.
    That’s all. If I had loans I’d be fixing them.
    F.[cowboy2]

    Profile photo of elkamelkam
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    @elkam
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    Thank you both.

    Both your posts reflect my own feelings which is why I have not been able to make a decision. The contrdiction of these two interests (no pun intended [smiling]) has been paralizing me.

    Thanks again
    Elka

    Profile photo of DerekDerek
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    @derek
    Join Date: 2004
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    HI Elkam,

    Why not have a bit each way – fix some of your loans and keep some for flexibility purposes.

    This is what we do – a bit each way.

    Derek
    [email protected]
    http://www.pis.theinvestorsclub.com.au
    0409 882 958
    Skype – derekjones2113

    Profile photo of elkamelkam
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    @elkam
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    Hello Derek

    That is the way I have decided to go. A bit each way.

    Hopefully I will have it in place before the next (August??) rates rise.

    Thanks for the “push” [smiling]
    Elka

    Profile photo of catacata
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    @cata
    Join Date: 2005
    Post Count: 559
    Originally posted by foundation:

    so sue me.

    Carefull F. someone might take that as advice.[biggrin]

    I heard from a reliable source (but have not looked into it myself) that over ANY 4 year period that variable was cheaper. Yes ANY 4 years including the late 80’s.

    CATA
    Asset Protection Specialist
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    Profile photo of elkamelkam
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    @elkam
    Join Date: 2006
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    Interesting comment Cata
    Now that I’d like to check. [hmmm]

    Anyone know where to find interest rates by year?

    Elka

    Profile photo of DerekDerek
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    @derek
    Join Date: 2004
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    Hi Elka,

    Stuart Weymss wrote an article along these lines for API – a copy of it is available on his website

    http://prosolution.com.au/free_articles/articles.php

    The article in question is down the page a little so you will need to browse a little.

    Cheers

    Derek
    [email protected]
    http://www.mononpoly.tic.com.au
    0409 882 958
    Skype – derekjones2113

    Profile photo of elkamelkam
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    @elkam
    Join Date: 2006
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    Great link Derek.

    Not only on the topic of fixed interest but on loan structuring and much more. Thank you.

    Now I’m more paralized then ever. [glum2]

    Actually ANZ has an interesting product, I think. A 1 year fixed loan with offset account. I checked and the interest is calculated daily so you are getting the full advantage of the offset account. The interest charged is the same as for a 3 year fixed loan.

    Any thoughts.?

    Elka

    Profile photo of realreal
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    @real
    Join Date: 2006
    Post Count: 2

    Hi,

    Variable is best for flexibility usually, and offset is good idea of that.

    Rates rise are a real issue for some right now. Up until recently I would only use Variable myself too!

    I have found one loan that has the best of both worlds. You can fix it for 1-5 years but has an attached 100% offset account!
    This the only fixed rate loan with this facility I have come accross ever!
    But your circumstances might mean you need to re-finance, even with your current lender possibly, to go fixed.

    You need to balance the re-financing costs versus the security of fixing in this uncertain environment.

    Cheers
    John

    Profile photo of elkamelkam
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    @elkam
    Join Date: 2006
    Post Count: 722

    Hello John

    Would you share the name of the lender and or loan … or do we have to do our own legwork. ?

    It would be interesting to see the ifs and buts of this loan as it does sound like a great option. As I posted, the ANZ has a 1 year fixed with offset loan but a 3 year with offset would be my prefered option.

    Thanks [smiling]
    Elka

    Profile photo of elkamelkam
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    @elkam
    Join Date: 2006
    Post Count: 722

    Hello all

    As I hate unfinished symphonies I thought I would post the result of your advise.

    I have fixed half my loans for 1 year using the ANZ fixed with offset loan … all for free as I have a pro package.

    I have structured it so that only 1 property is affected leaving 2 others with variable loans for flexibility.

    BTW. It appears that the ANZ is not doing drive by valuations any more. I had 2 properties revalued (again for free as part of the package) and not only did they do an internal inspection, they did it using a tape measure. Is that a sign of the times?

    Thank you all for your help. [smiling]

    Elka

    Profile photo of kinkso0o0okinkso0o0o
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    @kinkso0o0o
    Join Date: 2004
    Post Count: 61

    Hi elkam,

    Im on the pro package with ANZ as well. I had 2 properties revalued a week ago. Normally they would do a drive by for both but i requested a internal inspection in one (lots of renos). The other was just a driveby by my request.

    So i think its still the same if you request it.

    Cheers,

    Damon

    In theory, there is no difference between practice and theory, in practice, there is….

    Profile photo of JamesMcJamesMc
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    @jamesmc
    Join Date: 2006
    Post Count: 8

    have always taken out PI variable
    Hi, pretty new to this, so appologies for what is probably a simple question.
    What is ‘PI variable’ as discussed?
    (Mind you, old Chinese proverb goes like “Any question with an answer is worth asking”)
    Thanks.
    James

    Profile photo of kinkso0o0okinkso0o0o
    Member
    @kinkso0o0o
    Join Date: 2004
    Post Count: 61
    Originally posted by JamesMc:

    have always taken out PI variable
    Hi, pretty new to this, so appologies for what is probably a simple question.
    What is ‘PI variable’ as discussed?
    (Mind you, old Chinese proverb goes like “Any question with an answer is worth asking”)
    Thanks.
    James

    PI variable = Principal+Interest Loan with Variable Interest rate.

    IO = Interest only

    Cheers,

    Damon

    In theory, there is no difference between practice and theory, in practice, there is….

    Profile photo of JamesMcJamesMc
    Member
    @jamesmc
    Join Date: 2006
    Post Count: 8

    Thanks Damon.
    I knew it would be simple.
    James

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