All Topics / Finance / The Variable interest rate is it a real risk

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  • Profile photo of stargazerstargazer
    Participant
    @stargazer
    Join Date: 2002
    Post Count: 344
    February 19, 2004 - 6:50 pm

    Hi all

    there has been much discussion with the variable vs fixed rates.

    Many wise investors have said leave it variable overtime you win.

    Many wise investors have said fix for peace of mind so you know exactly what is going out.

    So lets assume we decide to leave our loan on variable rates re: we have mised the golden opportunity or we are purchasing at the current markets.

    How do we protect ourselves if rates start to climb.

    regards
    alf

    Profile photo of melbearmelbear
    Member
    @melbear
    Join Date: 2003
    Post Count: 2,429
    February 20, 2004 - 8:39 am

    alf,

    couple of ways – but both rely on you having the extra cash available anyway

    re pay more than required now – as if it were a higher rate (if P&I loan)
    put extra per week aside in a special account that will help to cover expenses

    Or another option (depending on servicability as always)

    Borrow more than you need, and have extra sitting in the offset or LOC that you can draw on to pay increased costs if/when necessary.

    Cheers
    Mel

    Profile photo of stargazerstargazer
    Participant
    @stargazer
    Join Date: 2002
    Post Count: 344
    February 21, 2004 - 11:08 am

    Thanks Mel

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