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Is anyone fixing soon?

Discussion in 'Property Finance' started by ATANG, 21st Jul, 2015.

  1. ATANG

    ATANG Well-Known Member

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    Have been wondering its wise to fix the loan now that the interest rate is at historic low and likelyhood of the end of rate cut?
     
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  2. wombat777

    wombat777 Well-Known Member Premium Member

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    Depends if you want or need flexibility.

    I fixed a portion of my PPOR loan last year, however that was before I started investing and wanted ready access to the equity.

    I did fix the loan for my first IP as it will be a little while before I need to extract equity from it.
     
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  3. fols

    fols Well-Known Member

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    Seriously considering 50/50 for 5 years
     
  4. Rixter

    Rixter Well-Known Member

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    Couldnt you have set up another loan to extract the equity from the IP?
     
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  5. wombat777

    wombat777 Well-Known Member Premium Member

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    Ok. Will keep that in mind if/when I need the equity. I've only owned the IP for just over 3 weeks.
     
  6. Rixter

    Rixter Well-Known Member

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    Sounds a plan.
    I prefer to set up an LOC on top of my IP loan..then just keep topping up the LOC credit limit when ive had some CG, subject to LVR & DSR.
     
  7. Richard Luke

    Richard Luke Member

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    seek pro advice to your circumstances... but I'd be thinking... worthwhile considering.
    One thing everyone should be googling every day is APRA.
     
  8. ATANG

    ATANG Well-Known Member

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    The thing is I currently have quite a discount for my existing loan, which would be the same for a 2 year fixed rate. Just wondering if its worth...
     
  9. Redom

    Redom Mortgage Broker Business Member

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    Fixed rates are looking like their on the up for the longer maturities (5 years), quite a few have etched up in this market over the last few months.
     
  10. Veech

    Veech Active Member

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    I am thinking of fixing 50/50 for 5 years as well. Looking at CBA , fix rate seem steep at 4.79 for 5 years though.
     
  11. Mick C

    Mick C Well-Known Member

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    Rate is one thing....flexibility and goal is very as important.
    if you fix there's a cost to break....and why would you break?

    1. Sell

    2. Equity ( if the val is short with your current bank OR you reached their servicing)

    Ps 5 years has gone up with the Big 4 only...smaller banks are still doing decent 5 years sub 4.49-4.59 or lower.

    2 and 3 years are currently still the cheapest ~ 4.19.
     
  12. Rixter

    Rixter Well-Known Member

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    Forget about the fixed rate itself for a moment.

    Instead ask yourself 'why' are you wanting to fix?

    Now go back to the fixed rate and ask yourself after weighing up the pro's & cons, am I prepared to pay that in order to attain my 'why'?

    You will discover fixing is not about 'the rate'.

    I hope this helps.
     
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  13. DanW

    DanW Well-Known Member

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    As long as it's not 50/50 of the same property.. If you're going to kill flexibility, do it for one property in full and leave the others flexible, just my opinion.
     
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  14. Veech

    Veech Active Member

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    Actually thats what I am planning to do. Fix one propety while leave the other one flexible.
     
  15. ATANG

    ATANG Well-Known Member

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    Cuz what i'm paying now seems to be quite stable and affordable. So i was thinking if this could keep the same for another 2, 3 years, that would keep my budget really stable and healthy. That is to say my current variable rate is the same as the 3 year fixed rate.
     
  16. jins13

    jins13 Well-Known Member

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    I did think about it yesterday due to ANZ and CBA increasing their rates, however I really need the flexibility because still keen to do some more purchases. I guess if I was content, than probably would consider fixing.
     
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  17. Tim86

    Tim86 Well-Known Member

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    I think in this current environment flexibility is better than anything else. With bank policy changing every 5 minutes. I just wouldnt want to lock into any particular bank considering they could change into a monster by the time your fixed period is up and the landscape could have changed drastically by that point and you may well be stuck with the monster. Whereas if you were flexible all the way you may give yourself the chance to run for the hills before the dragon burns down the village.

    (Sorry I just started watching game of thrones).
     
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  18. eng

    eng Well-Known Member

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    Redom what does that mean in laymans term?
     
  19. RetireRich101

    RetireRich101 Well-Known Member

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    Correct, but you have the flexibility to refinance when it comes out of fixed.
    Based on the latest announcement 0.27 increase on most banks, it appears they're touch "existing" variable IP customer which I didn't see this coming. It is the IP in a fixed term they didn't touch. The new fixed rate they will change, but it seems still attractive in my view.

    It feels like the tornado apra is coming, quick hide under the bunkers(fixing) for few years may be an option. Selling is the big down side to fixing. If you got a good fixed rate now, why would you consider refinance when you see this the dragon is still burning down...

    our only chance to 'run for the hills' currently are the few 2nd tier, but what if they abandoning us? I can see a matter of time when they fill in the books...

    the flexibility in variable loans yesterday may not be as flexible today.
    my view is that next rate cut, banks will only pass on to the OO and not IP loans. this would be a 0.5 differential point. I feel they might aim for a 1 base point differential between OO V IP loans.
     
  20. Amalgam

    Amalgam New Member

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    Winter is coming (in the IP finance world).

    Fixing is hiding underground in suspended animation for 3 years, allowing the storm to pass, but no one knows what kind of world will be left when it's time to come out of hiding. It's a risk, but a different kind of risk.