What Interest Rate to use

Viewing 5 posts - 1 through 5 (of 5 total)

PropertyPlus
Member
@propertyplus
Join Date: 2004
Post Count: 5
December 8, 2004 - 2:27 am
Just wanted some advice.
When crunching numbers for an IP, what Interest reate are you guys currently using for this current climate? I’m going for 7.5 or 8%. is that being too pessimistic?
Paul Dobson
Participant
@pauldobson
Join Date: 2003
Post Count: 1,196
December 8, 2004 - 3:03 am
Hi Property Plus
You should be able to get a mortgage for 6.5% without any problemms. Then you can “crunch the numbers” and do “what ifs” by gradually moving the interest rate up from there. Possibly by 0.5% increments to, say, 8.5% (or whatever you think rates are likely to creep up to).
Ihope this helps.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
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Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
December 8, 2004 - 4:45 am
Many banks put a margin of 1.5% above the rate when they work out serviceability.
Terryw
Discover Home Loans
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Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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kiwiduvet
Member
@kiwiduvet
Join Date: 2004
Post Count: 92
December 8, 2004 - 11:04 am
so 1.5% on top is a good max to wrk thru for the next 12 months
“Extraordinary Popular Delusions and the Madness of Crowds” ~ Charles Mackay
Chris100
Participant
@chris100
Join Date: 2004
Post Count: 22
December 8, 2004 - 9:52 pm
Add the 1.5% to 2% to calculate – everyone has a different opinion on the market for 2005 (rates that is), so adding a margin covers you for good and for bad.
Another simple tip- calculate your gross rents, then work out what 65% of this is, and you will have have a rough but good guide on what your net cash flow will be if tenanted 100% of the time.
Chris Durman
Commercial Capital Finance Pty Ltd
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