when evualuating a properties potential as CF+, how much contingency do you put in for an interest rate rise?? if the numbers just work out at 7%, is this good enough, or do you try to get a property that would still be CF+ at 8% or 9% to allow for future repayments?? or is it just a matter of personal comfort in the deals??
cheers
Dallas
Hi Dallas,
The lenders themselves put an interest rate safety margin on assessing the borrowers ability to repay before agree to lend them the money. The odd thing is that this margin is anywhere from 0.75% to 2.5% above the loan product’s actual interest rate. [}
]So in response to your query for investors, I’d always shy on the conservative side if cash flow +ve is imperitive (ie have minimal other spare income) and add about 2% to the rate you are getting. I wouldn’t necessarily run out to put your loan on a fixed interest rate, but that’s really personal choice and food for much debate on this forum. [
]Cheers,
Mel
[email protected]the $64K question huh??
some food for thought I guess. thanks.
Cheers
Dallas
]
]The topic ‘contingency in CF+ IP’s’ is closed to new replies.
