AirBNB property 2 bedroom apartment, to fix or leave variable?

Hi guys,

I recently purchased a 2 bedroom apartment in a central Melbourne suburb in St Kilda, just wondering what to do about the loan itself, fix or leave variable.

I plan to hold onto to the property for the next 2-3 years at least and use it for AIRBNB.

My broker is suggesting I fix it at 3.99% with ANZ but I wanted your opinion and advice please.

Regards

 

Not enough info.

- is the unit cross secured?
- What's your plan over the next few years?
- what's your servicing like ?
- will you be releasing equity in the next few years?
- are you concerned about repayments?
- What's the current variable rate?

 

Hi there,

Sorry about that.

The unit is not cross secured. Separate loan and title.
I plan to run it as AIRBNB for the next few years. Perhaps maybe settle in myself. Not entirely sure.

Servicing? As in?

I would like to release some equity within 12-24 months.

Not really worried if interests rates jump 1-2% over the next 2-3 years but would rather keep it as is if I can.

I've been told the current variable rate is around 4.6%.

Thank you

 

Why has he suggested you fix?
Is it based upon a discussion you have had?
Or is it to protect his/her trail?

 

Releasing equity has more options if the loan is variable. So either fix for 24 months and plan to release equity after that, or stay variable.

 

See in bold below.

 

Wise advice from tobe - exactly my thoughts. Keep it variable if you want to have the potential to release equity in the near future, as you may find yourself unable to release equity from ANZ for borrowing capacity/policy reasons in the future and the fixed rate will make it financially unviable to move to an alternative lender who may be willing to do the deal.

Being a new apartment in Melbourne, it is unlikely that you will have significant equity to release in the near term unless you haven't geared the property to 80% for your initial purchase.