Fix or not?

Discussion in 'Loans & Mortgage Brokers' started by ATANG, 1st Aug, 2017.

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  1. ATANG

    ATANG Well-Known Member

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    Is anyone fixing their investment rate? How possible you reckon the rate could head south in coming years?

    As far as i know, these still apply:
    - Fully offset-able
    - Exit penalty or not depending on the interest rate at that point in time
    - Fixed amount of interest for the period

    Is there something else need to be aware of?
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    Heaps of people are fixing their investment rates at the moment. HEAPS.

    The rates are much more likely to go up rather than down from here.
     
  3. ATANG

    ATANG Well-Known Member

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    Yeah but u know sometimes market move like so unexpected. Am getting very big discount atm for variables, but fixed would be the same as what others are getting. So not sure if its worth. I know it is good in a way i can manage the cost for fixed terms.... but i am quite concern of anything extra i didnt know, i.e. exit penalty, extra cost, etc as never fixed before
     
  4. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    If you are on OO rates, rather than investment, I'd stay variable for now. It's only investment loans that are getting fixed at the moment.

    If you think you might sell or need to refinance in the fixed term, I would stay variable, but if you're happy to set and forget, it can work well for shortish periods.
     
  5. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I concur with Jess. Investors are fixing, most with principal & interest. Owner occupiers are also fixing but not as aggressively.

    Whether RBA cash rates go up or down next is anyone's guess, but I can't see that investment rates will reduce below what the fixed rates on offer are.
     
  6. ATANG

    ATANG Well-Known Member

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    is anything below 4% a good rate to fix?
     
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    NO

    with most lenders there is NO offset or partial at best

    There are a couple of exceptions

    ta
    rolf
     
  8. ATANG

    ATANG Well-Known Member

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    Hm... weird... my lender told me it's fully offset-able...
     
  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    You could be lucky ?

    CUA
    ABL are the 2 larger ones

    ta

    rolf
     
  10. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    If it's investment purposes, then it probably is a good deal.

    Keep in mind that principal & interest repayments will still cost more in repayments, but the interest component is lower. If cash flow is your priority, then this changes the conversation a little and the lower rate may not be the 'best'.
     
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  11. ATANG

    ATANG Well-Known Member

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    That's right, i realised that, i dont mind putting more payment in so long the interest portion is reduced or fixed. Now, i still have few months into settlement, does the fixed rate get fixed as soon as i sign the loan document or it could change depending on the settlement date?
     
  12. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Most lenders will give you the fixed rate on the day of settlement, not the day you sign the documents. There's very few exceptions to this.

    You can opt to pay a 'rate lock' fee which locks in the rate the say the bank receives that particular document, or the day the fee is signed (depends on the lender). Either way it guarantees todays rate at settlement. The fee varies and can be 0.10%, 0.15% of the loan amount, or some lenders charge a flat fee of about $750.

    Your broker or banker should have had this discussion with you when the decision to fix was made.

    The dark side of rate locks is that if the fixed rate drops, you pay the rate at which you locked in at which is now higher and you paid a fee for the privilege! I think this is highly unlikely right now.
     
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  13. ATANG

    ATANG Well-Known Member

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    Yeah, thats what he said about a rate lock fee. I think i won't bother doing it.

    One more question, what is the comparison rate thing? I assume it is the actual fixed rate that will be the amount of interest payable right?
     
  14. Stoffo

    Stoffo Well-Known Member

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    In addition, for an existing loan, when you notify the bank that you wish to fix your loan, how long should it take them until it is done ?
     
  15. Mavis

    Mavis Well-Known Member

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    We made a change request to the bank via our broker and it was about a week for the change.
     
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  16. paulF

    paulF Well-Known Member

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    Took NAB around a week to fix my existing IP loan
     
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  17. TMNT

    TMNT Well-Known Member

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    Ok let me get my tiny brain around things.

    So oo var and Io rates are very low atm
    But ip io are getting harder
    If you do IP P and I with var you can still get low rates however cash flow is worse due to principle
    Assuming you don't have to sell why aren't people doing p and I fixed ?

    When an io period finished it rolls over to p and I is it easy to go back to io once it's already rolled over?
    I assume there is no reapplying/credit checks
     
  18. EN710

    EN710 Well-Known Member

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    I decided to fix 2 on PI that I know I"m not going to sell within 2 years which means about minus $3.5K in cashflow. Worked out the numbers and it will still be manageable as long as I have a job ... o_O
     
  19. aussieB

    aussieB Well-Known Member

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    How long are they fixing it for ? Just curious to know the average.
     
  20. aussieB

    aussieB Well-Known Member

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    Not related to the post. What's the longest duration you have seen a rate lock hold up ?
    Say PPOR on IO would be switching to P&I in January - and the banks fixed rate for P&I today is very attractive. Do banks usually allow fixing rates 6 months ahead in time ?