interest only loan to fix or not to fix?

Viewing 7 posts - 1 through 7 (of 7 total)

adrienne27
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@adrienne27
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February 2, 2006 - 3:25 pm
Hi,
I am applying for an IO loan to purchase IP, should I fix it for 3 or 5 years or go with the variable rate?
Your thoughts are appreciated.
Thanks
Don Nicolussi
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@don
Join Date: 2005
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February 2, 2006 - 9:06 pm
It depends on what is going on in the rest of your portfolio. What are your plans for this property. NB There are fixed products out there that allow you to repay extra and redraw as you need it.
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Terryw
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February 2, 2006 - 11:01 pm
Fixed rates can be costly to exit. This may cause problems if you sell the property, or if you want to change banks etc.
Terryw
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Derek
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February 2, 2006 - 11:57 pm
Not disagreeing with Terry at all.
The flip side of the cost equation asoutlined by Terry is the security of knowing what your repayments will be for the duration of the fix period.
If you do fix five years and above, in my personal opinion, is too long in most cases.
Derek
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Don Nicolussi
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@don
Join Date: 2005
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February 3, 2006 - 10:26 am
The flip side of the cost equation asoutlined by Terry is the security of knowing what your repayments will be for the duration of the fix period.
Agree – and this can become critical as portfolios grow. Find someone that you like and trust to explain the various products and their pros and cons.
D&L Property Projects Ltd
Sourcing Quality Investments in New Zealand.Email to receive current deals & New Zealand Information Sheet.
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Don Nicolussi | Property Fan
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redwing
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@redwing
Join Date: 2003
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February 3, 2006 - 10:42 am
PLUS IO payments are less than P&I..
In my situation i’m not concerned with reducing the loan (that happens when we try and *tweak* the loan to quote DD)
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adrienne27
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@adrienne27
Join Date: 2004
Post Count: 11
February 3, 2006 - 2:58 pm
What do you mean by “tweak ” the loan?