Hi, I was wondering if now would be a good time to fix interest rates? I have 2 properties ( one ppor and one IP). We are looking at getting a third one in the next couple of years. I understand though, if I fix both loans it will make this harder to lend money for the third? Do you think fixed rates are about to go up? Should I just be fixing half the loan?
?Time to fix home loans
- Thread starter ab100
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Well that understanding is incorrect. It makes pretty much no difference.
Its up to you but don't forget with most lenders you cannot offset fixed rates with an offset account.
Fixing is a risk mitigation strategy. Clearly at the moment the fixed rates are very low from a historical point of view, but there is the possibility that they may go lower. 12 months ago people were saying that they couldn't see fixed rates dropping further, but they're now almost 1% lower.
With that in mind, consider a few things. If rates do drop further and you've fixed, you'll simply need to accept it.
Also think about your plans for the immediate future. Fixing can take away your flexibility to move lenders. Is there any possibility that this could happen in the fixed period? Consider your ability to make extra payments during the fixed period (either via an offset account or directly on the loan). You probably want to leave at least this much variable against non-deductable debt.
Personally I think it's a good time to fix, but I haven't fixed everything because for some of my loans I do require flexibility.
With that in mind, consider a few things. If rates do drop further and you've fixed, you'll simply need to accept it.
Also think about your plans for the immediate future. Fixing can take away your flexibility to move lenders. Is there any possibility that this could happen in the fixed period? Consider your ability to make extra payments during the fixed period (either via an offset account or directly on the loan). You probably want to leave at least this much variable against non-deductable debt.
Personally I think it's a good time to fix, but I haven't fixed everything because for some of my loans I do require flexibility.
Some lenders do offer offset accounts alongside their loans. I am currently refinancing an IP with Adelaide Bank who are offering a 4.84% 2 year fixed rate with 100% offset. This gives me a fairly competitive 2 year rate along with the full flexibility of an offset account so best of both worlds.
If rates drop further I can just keep dumping my savings in the offset to help "offset" the impact.
If rates drop further I can just keep dumping my savings in the offset to help "offset" the impact.
It doesn't necessarily change your overall borrowing capacity - in some instances it can enhance it.
It becomes an issue if the lender you've fixed with doesn't let you release equity to purchase your next IP. In those instances, you either pay high break costs to refinance, forego the purchase or find another way to get the deal done.
Cheers
Jamie
That is excellent.
Regardless, shouldn't you dump your savings in the offset account anyway?
Yes but they attract a lower rate of return as interest rates drop if the loan is variable. Clearly, if rates go down you are worse off having fixed regardless of whether you have an offset. I am comparing the situation of having a fixed loan with an offset vs a fixed loan without one.
Only briefly heard on news today that RBA rates didn't move today and they also mentioned that the cash rate could stay at low and not rise for longer than first thought....
Me I don't mind fixed rates, I don't fix all just larger portions... Keep some variable for flexibility prob around 65fixed/35variable on my total borrowings. One loan that was fixed in for 2 years @ 5.8% comes off next month will be refixing for another at around 1% lower, happy days
nice little cash bonus per month...
Me I don't mind fixed rates, I don't fix all just larger portions... Keep some variable for flexibility prob around 65fixed/35variable on my total borrowings. One loan that was fixed in for 2 years @ 5.8% comes off next month will be refixing for another at around 1% lower, happy days
nice little cash bonus per month...Me I don't mind fixed rates, I don't fix all just larger portions... Keep some variable for flexibility prob around 65fixed/35variable on my total borrowings. One loan that was fixed in for 2 years @ 5.8% comes off next month will be refixing for another at around 1% lower, happy days
Lucky! Mine still have 10 months. If interest rates are still super low in 10 months, I will have a nice little windfall per month
Lucky! Mine still have 10 months. If interest rates are still super low in 10 months, I will have a nice little windfall per month
Yeah mines only a small loan will work at to about $130 extra per month, but that will do work well to cover some of the new expenses of the most recent purchase which is slight neg geared.
Wished I'd fixed my AMP rates earlier as they went up yesterday. I get the feeling that most banks are going to slowly increase them so fix while you can!!!
Ugh! I still have 9 months to go.
Fixing is a good strategy if you want predictable payments over a predetermined time period.
Some good deals ATM for 2 year fixed as many are lower than discounted variable rates.
3 years fixed would be my recommendation at the most.
NAB/HSL recently reduced 4 & 5 year fixed which is mildly interesting.
Some good deals ATM for 2 year fixed as many are lower than discounted variable rates.
3 years fixed would be my recommendation at the most.
NAB/HSL recently reduced 4 & 5 year fixed which is mildly interesting.
