fbpx

Do You Have a Fixed Mindset?

[et_pb_section admin_label=”section”][et_pb_row admin_label=”row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Text” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

Everyone seems to be an expert when it comes to discussing fixed versus variable rate home loans.  But for us it is personal – your personal sleep at night factor.

Don’t kid yourself that you will beat the banks by choosing if and when to fix your home and investment loans – they have people way smarter than us determining what is likely to happen to rates in the long term. Fixed rates are determined at the bank’s discretion and often used as tactics to attract new customers.

While I am generally not a big fan of fixed rates (as the banks normally make margin on them), if you are someone who needs a period of certainty in your repayments for your home loan or investment property loans, and providing it is affordable, this is what needs to drive your decision.

However, I normally suggest not fixing for anything more than 3 years as fixed rates for terms longer than this come at a cost premium and a lot can happen to rates given global economic dynamics in the long term.

If you do fix your property loans, there are a three things you need to consider:

  1. Your offset account debt reduction feature switches off when the loan is fixed (with the exception of a couple of banks).  The solution is to have a portion fixed and a portion variable so that offset savings still apply to the variable component.
  2. Most banks only let you pay down an extra $5,000 to $20,000 per year while the loan is fixed before penalty fees apply.
  3. You need to be confident to keep your loan fixed for the full duration selected. Significant ‘break’ cost fees can apply if you decide to revert to variable early or pay down any or all of the loan.

Tim Lawless, Asia Pacific Research Director for Core Logic RP Data recently said, “With bank funding costs moving higher, there is some risk that mortgage rates will increase outside of any movements from the Reserve Bank’s overnight cash rate.”

In other words, banks are likely to increase rates in the short to medium term independent of the Reserve Bank of Australia. Given that we appear to be at the bottom of the rate curve, now may be a good time to lock in some of your home loan on attractive fixed rates that go as low as 3.99% for 3 years.

Let’s start the conversation .. to fix or not to fix.

[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section admin_label=”Section” fullwidth=”off” specialty=”off” background_image=”http://www.knowhowproperty.com.au/wp-content/uploads/2016/01/startegybanner.jpg” transparent_background=”off” background_color=”#ffffff” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”off” padding_mobile=”off” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off”][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_contact_form admin_label=”Start-egy Booking Form” captcha=”off” email=”[email protected]” title=”Book a Start-egy Session” custom_message=”Fixed MindSet” use_redirect=”off” input_border_radius=”0″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” custom_button=”off” button_letter_spacing=”0″ button_use_icon=”default” button_icon_placement=”right” button_on_hover=”on” button_letter_spacing_hover=”0″ saved_tabs=”all”] [et_pb_contact_field field_title=”Name” field_type=”input” field_id=”Name” required_mark=”on” fullwidth_field=”off”] [/et_pb_contact_field][et_pb_contact_field field_id=”Phone Number” field_title=”Phone Number” field_type=”input” required_mark=”on” fullwidth_field=”off” form_field_font_select=”default” form_field_font=”||||” use_border_color=”off” border_style=”solid”] [/et_pb_contact_field][et_pb_contact_field field_title=”Email Address” field_type=”email” field_id=”Email” required_mark=”on” fullwidth_field=”on” form_field_font_select=”default” form_field_font=”||||” use_border_color=”off” border_style=”solid”] [/et_pb_contact_field] [/et_pb_contact_form][/et_pb_column][/et_pb_row][/et_pb_section]

Learn how to live by design

FREE insights to get you inspired.

Get Invested
by Bushy Martin

The book to get you inspired to invest, live more, work less and leave the endless trap of work and debt.

Living By Design
newsletter

The monthly newsletter full of lifestyle and property ideas, insights and news.

Do you want to live more, work less, and leave the endless trap of work and debt?

Download Bushy's award-winning book Get Invested for FREE and get started on your journey today.

Get Invested eBook
Scroll to Top

LIVE BY DESIGN NEWSLETTER

Get more inspiration to
live by design

Subscribe to our FREE monthly
Living By Design newsletter