Hi Folks, I'm currently looking at re-financing a loan from Bankwest (variable rate at 6.78%) to Citibank's fixed rates at 6.25% – the rate of 6.25% is available for 1, 2 or 3 years. The question is, should I go for 1, 2 or 3 years … I know that no one has a crystal ball & may not know what the rates will be in the future but what is your gut feeling? I'm mainly after the cheapest rate & the loan amount is $312K for an investment property. Any advice / suggestions / views will be much appreciated. Thank you in advance
Hi,
Im in the same boat. I have an IP and am unsure if i should fix it or not right at this stage.
Personally i do like the idea of fixed for 2 years as this will ensure i know what im paying for the next 24months!
My gut is telling me to fix it as im sure what my repayments are going to be, that said i dont see rates going below 6% in the near future at all, even if it does you wouldnt be losing too much i dont think.When you fix an IP can you pay IO or does it have to be I&C?
Also how does this effect your borrowing capacity in the future for say a PPOR?My loans 260k with about 200k equity.
Sorry if im hijacking your post but very similiar situation!
Thanks
Jony
Hi,
1. If you fix you can choose P&I or I/O
2. Fixing a loan will generally improve your borrowing capacity- as some if not most lenders will be happy to use the “fixed rate” rather then their sensitivity rate which is much higher in term of serviceability calculation.My personal thoughts is rates will drop; if anything it def wont go up…it can only stay the same or go downhills…
But fixing a loan is not about ” beating” the market it’s about planning and peace of mind.IF you fixed the main advantage is
– You know exactly how much your holding cost is each month in terms of outgoing
– Your in going which is your rent will only go up ( rent tend to go up
)So Set outgoing with increasing rent and hopefully capital growth…. YA or YAAAAA??
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Hate to say if you are merely after the cheapest rate then Citibank is not necessarily the way to go.
Shoot Michael a line as he has already provided you with some information and i am sure he can sort you out.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Is 6.36% a good fixed rate for 3 years?
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
It is not the best rate going around if that is your question and if you wait a fortnight may find you could do better anyway.
Dont just look at the rate look a bit deeper into the whole product being offered.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi all,
Just wanted to share the news that I got CBA to provide a 1% discount on current variable (hence at 7.81%) which is good as I previously only had a 0.8% off. I’ve spoken to a couple of brokers including Michael & will wait to see what options I do have particularly in the fixed world before making the next move.
I fully agree with Richard that we can’t just look at rates alone but the whole product being offered, hence I wasn’t going to move my primary banking that I’m doing with CBA at the moment. The aim was to get the best rates for the other IPs I have but will wait for Cup Day at least to see where rates will be moving.
Does anyone know if CBA will offer a better than 1% discount if I bring more business to them (i.e. move one of my IP loan over to CBA variable)?
Regards,
PfPHi P & J
I have no idea which way rates are headed. To me, you are asking the wrong question.
I really like Michael's comment about "beating the market". The best way to look at a fixed rate is as an insurance against rising rates. People with a tight budget are more suited to a fixed rate because they cannot afford rate rises. On the other hand, people with large disposable incomes are better suited to variable loans because they allow you to make unlimited extra repayments, which is what saves you a lot of interest.
In my opinion a person with a large disposable income and the ability to make additional repayments is better being on a variable rate than a fixed rate even if the fixed rate is significantly lower because the interest savings of additional repayments on a loan – more often than not – outweigh the savings of a lower rate.
Not many Banks can do better than 1% off SVR. My suggestion is don't spending too much time chasing every last BPS Pay as much as you can off a low rate rate loan as often as you can.
Good luck
Tim McGrath
Tick Mortgage Solutions – Blackburn North
ph (03) 9877-4698 | [email protected]
(Comment fixed and repost)
Hello,
I have just finished writing articles on whether you should fix your loan or not.
Please click on the link below:
http://www.expresshomeloan.com.au/_blog/Property_and_Mortgage_Blog/post/Understanding_Fixed_Rate_Home_Loan/The keypoint is that do not fix your loan for the purpose of trying to beat the market, i.e trying to predict interest rate direction and be ahead with it.
This is a very hard thing to do as you are up against so many economist and expert in financial market.
(Warrent Buffet the world's greatest investor agreed with this, email me if you want to know more)I also describe exception to when you should fix and what negatives it has.
Please check out and let me know what you think:
)
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