Listening to the recent “Your Money Your Call” podcasts Ive decided it’s time to jump on fixing the interest rates before the bank beat me to it & begins raising.
Assuming that I don’t intent on selling I’m interested to know if others out there that have fixed or or about to are locking in 2, 3 or 5 year fixed rates. The property professor on the panel is locking in his at 5 years… 3 seems to be the number I'm most comfortable with right now
A lot can happen in 5 years. Would you need to reval to withdraw equity for further purchases within in 5 years? Do you have enough money to cover in an emergency (lose your job etc).
What's the rate comparison 2yr, 3yr, 5yr. That makes a difference too.
I think it’s too hard to effectively plan 5 years in advance. Lots of things can happen during that time – including those mentioned by catalyst above.
Personally I wouldn’t fix for longer than 3 years.
Thanks guys, with further research I'm deciding on a 80% Fixed / 20% Variable which should allow me the option of topping up the loan should re-valuations come back with sufficient equity for a further purchase in future. The properties are sitting neutral to positive CF now so fixing will give me the piece of mind that they will take care of themselves for the next 3 years.
Catalyst the rates i'm looking at are 4.98% for 3 years, the only property i'm hesitant to fix for 3 years is the Gladstone inner city unit as we've seen the market snowballing backwards.. although optimistic in the medium to long term. Possibly maybe locking that one in on 2 years only at 4.88%
Listening to the recent “Your Money Your Call” podcasts Ive decided it’s time to jump on fixing the interest rates before the bank beat me to it & begins raising.
Assuming that I don’t intent on selling I’m interested to know if others out there that have fixed or or about to are locking in 2, 3 or 5 year fixed rates. The property professor on the panel is locking in his at 5 years… 3 seems to be the number I'm most comfortable with right now
Thanks in advance!
They have already beaten you. Fixed rates are a different beast to variable and lenders use different criteria to set them and are continuously adjusting them.
Not to say that they aren't viable but your primary reason to fix shouldn't be to beat the banks.
Rarely see someone beating the banks via fixed rates (usually the opposite) but in saying that they are at 30 year lows and less than variable rates which is unusual.
Some banks have already pushed up fixed rates so maybe they know something the average punter doesnt?
There is a sniff in the air one of the major banks are increasing their fixed rates this week, which is what i meant by jumping on or beating them to it & fixing before they increased. I'm using the assumption that as you say they know something we don't … but knowing my luck though is the U.S will crash next year & rates will continue to drop!
Related questions, are banks normally waiving annual/initial fees for new loans at the moment? We recently got new loan which had an applicable annual fee but also a cash payment for new loans, some promotion offer.
Also if you rate lock for 3 years, the property goes up in value and you want to tap the equity to say buy another IP, can you easily add another loan on the property instead of initiating break fees on the 3 year fixed loan? What is the easiest way to borrow additional debt against the property in this circumstances?
Wstpac have just increased their 3 year fixed by 0.2%.. but the 2 year remains unchanged. Hmm so now the options if i fix are 4.89% for the 2 year vs the new rate of 5.19% for the 3 year. I'm assuming the 2 year with a split of 80/20 is the way to go??? which gives me the option of topping up if equity becomes available for a future purchase.
Looks like the banks are confirming we're at the bottom of interest reductions!
Related questions, are banks normally waiving annual/initial fees for new loans at the moment? We recently got new loan which had an applicable annual fee but also a cash payment for new loans, some promotion offer.
Also if you rate lock for 3 years, the property goes up in value and you want to tap the equity to say buy another IP, can you easily add another loan on the property instead of initiating break fees on the 3 year fixed loan? What is the easiest way to borrow additional debt against the property in this circumstances?
NAB/Homeside have also increased thier fixed rates recently.
Most banks are waiving application fees but still charging the annual fee as the trade off is you get a discounted variable rate.
CBA are offering $700 for a refinance from another bank and St George are offering $1250.
If your loan is fixed and you get it revalued and the property has increased you will be able to access the equity &increase the loan with a separate sub account/loan split to the existing fixed loan therefore avoiding break fees.
Related questions, are banks normally waiving annual/initial fees for new loans at the moment? We recently got new loan which had an applicable annual fee but also a cash payment for new loans, some promotion offer.
Also if you rate lock for 3 years, the property goes up in value and you want to tap the equity to say buy another IP, can you easily add another loan on the property instead of initiating break fees on the 3 year fixed loan? What is the easiest way to borrow additional debt against the property in this circumstances?
NAB/Homeside have also increased thier fixed rates recently.
Most banks are waiving application fees but still charging the annual fee as the trade off is you get a discounted variable rate.
CBA are offering $700 for a refinance from another bank and St George are offering $1250.
If your loan is fixed and you get it revalued and the property has increased you will be able to access the equity &increase the loan with a separate sub account/loan split to the existing fixed loan therefore avoiding break fees.
Hi FMS, thanks for the reply, not sure I get it entiry.
Lets say you've got house $100k, 80% LVR, 50/50 variable/fixed. Value then goes to $200k, could you just increase the variable up to hold LVR 80% at new value? Or how would a sub account/loan split work in this instance?
It just means that you can still access equity with a fixed loan but it just needs to be set up as a separate loan rather than an increase to the existing.
Based on the all the discussion in the forum, is it now time to fix rate for 2 or 3 yrs. I can not see reasons why the RBA will increase the rates. Increase in rate will affect the exchange rate, however signs of the residential property markets over heating is emerging