What are peoples thoughts on fixing a rate if was say 5% for 10yrs against their IP. Do you think it is a good idea, as it would give peace of mind plus you get the rent increasing over that time and hopefully capital growth.
At 5%? Hell yes!!
My rule of thumb has always been to fix if the rate was less than 7%. I wouldn't fix now at 7% though because of the economic climate and the fact that interest rates are likely to come down. But at 5% – I'd fix every last loan I had.
K
Agree with Linar,
such a strategy is especially attractive to assets that have longish leases in place such as commercial properties or industrial sheds. However also appealing to resi IP's.
PosEnterprises, care to share any product you might be aware of that is on your radar that may be reflective of such a rate and loan term.
If I find 5% fixed for five I'd also go for it. I am in the fortunate position of having two loans fall due in approx 8 months time. The prognosis on fixed rates and where they're heading should be clearer by then.
Dont think it is a matter of anything actually being on PE radar just a matter of wishing thinking.
Richard Taylor | Australia's leading private lender
hehehee True very true just a thought I had about dreaming lower rates
At those rates lock in big time. But yeh its still very much wishful thinking. Some are offering 5.99 for 3 yrs but longer terms are still fairly high. I will be locking in inv prop at as soon as i can get a longer term for anything under 5.5% . But make sure the loan is portable even if locked, as several people i know did this in 2001 in the last cycle only to get caught in locked positions at the peaks of the last cycles around Dec 2003.
Fixed at 5.99% for three years – sounds ok, but what about the comparison rate. That's what really counts here, isn't it??? In many case the difference between the advertised rate and the comparison rate (usually in very small print, if it appears at all) can be quite substantial.
That's why I like Members Equity – their rates and the comparison rates are one and the same because they don't have fees or charges. They're still streaks ahead of the most lenders as far as I can tell. And no, I don't work for them. I'm just a happy customer.
cheers,
CarlinHi if a house that i live in i sold in 12 to 24 months of purchasing so i dont pay capital gains tax and i keep doing this every 12 to 24 months of purchasing the next property i live in, And lets say iam paying 6% interest. And lets say over 10 years ive owned and sold 7 property's that i have lived in and i did not pay capital gains tax. would i be better of.
Or would i be better of to buy these and hold them all as investments. and pay tax on them in 10 years.But keep in mind i will already have other investment property's.
so iam pretty much saying i can pick up 100% cgt each time i sell a property that ive lived in or i can live in 1 property over 10 years and get 100% cgt on that and keep the other 6 as investments an pay tax.
which way would be better?Me personally no.. i refinance on my properties to purchase other ones , i lock in for my own home but i need the investment homes to be fluid. Great rates though right now….
keiko wrote:Hi if a house that i live in i sold in 12 to 24 months of purchasing so i dont pay capital gains tax and i keep doing this every 12 to 24 months of purchasing the next property i live in, And lets say iam paying 6% interest. And lets say over 10 years ive owned and sold 7 property's that i have lived in and i did not pay capital gains tax. would i be better of.
Or would i be better of to buy these and hold them all as investments. and pay tax on them in 10 years.But keep in mind i will already have other investment property's.
so iam pretty much saying i can pick up 100% cgt each time i sell a property that ive lived in or i can live in 1 property over 10 years and get 100% cgt on that and keep the other 6 as investments an pay tax.
which way would be better?Your question can't really be answered without more details, such as capital growth, long term interest rates etc, and would be almost impossible to predict anyway.
Buying and selling every two years would be an expensive way to go, as you would pay stamp duty, loan fees etc on all your purchases, plus agents fees on all your sales. You would also miss out on all the rental income of option two, plus the tax breaks of deductible interest, and holding the properties means you only pay CGT on half of your gain.
Plus, I wouldn't want to be moving house every 2 years, it would drive me crazy.
What I am wishing for is if I can get fix my IP loan at at good rate for 10yrs it would give me a good sleep during the year factor without having to worry about rising rates which kill your cashflow.
PosEnterprises wrote:What I am wishing for is if I can get fix my IP loan at at good rate for 10yrs it would give me a good sleep during the year factor without having to worry about rising rates which kill your cashflow.I agree totally PE. I have 3 IP loans all variable at the moment and am waiting to see what will happen in the next 2-3 months. If rates decline once again I will fix for 5 years.
sienna1 wrote:Me personally no.. i refinance on my properties to purchase other ones , i lock in for my own home but i need the investment homes to be fluid. Great rates though right now….I too have used the equity in my properties to purchase additional ones and at times those loans have been fixed. I have taken an increase on the original loan with the new loan split being variable and the fixed portion remaining the same.
The issue is not interest rate alone, however also the LVR that such products might impose. Credit situation with interest rates falling on the one hand may also mean that LVR's are pegged back on the other hand to give the bank(s) SANF also.
I like fixed term loans personally, and will be keen to see what transpires this year. However if I'm limited by way of LVR, it may be a balancing act between a slightly higher rate and a more optimal leverage outcome.
Richard and other finance folk…..any news on that front?
You need to be very sure about your strategy. Remember a fixed rate loan locks you into that property for 1, 2, 3, 5 or 10 years – otherwise it can be very expensive to exit! The only other alternative is to switch the loan to a new property but you have to have the right loan in the first place.
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