Hi guys. My wife and I have been reviewing our position and where we want to be in 5 years. One of the issues that come up is that our fixed interest period on one of our mortgages [6.67%] runs out in 2 years, at which time it will revert to the variable rate which will surely be a much higher rate and thus reduce our cashflow. The 2 options we were looking at to combat this are
1. make some extra repayments to reduce the principal in preperation for the jump or
2. make some improvments to the house [new kitchen/bathroom, paintjob etc] and thus improve our depreciation and rental value.Ideally we would like to do both but if we had to choose one, which would be better?
All advice welcome!
HI. In a similar situation with one loan. We were going to use the time when the fixed interest period runs out to do some improvements, and then refinance, and grab some equity and use it for another property all going well. After what has happened in the last week or two on the financial markets, it helps see that NO ONE can predict what rates or situations will be like in wo years time – so don't strees over what you have no say over. Rather, enjoy that low rate for another couple of years, and I would imagine you will of course enjoy some growth to your property in that time. I would only be paying extra off the loan if you had no non tax deductable debt to clear up first, and if there was no penalty for doing so. Some banks in particualr still will not let you pay extra offf a fixed interest loan without sticking it to you in fees for the priveledge…..
All the best.
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