| Ph: 02 9415 1511 |
||||
|
What does the crystal ball hold for interest rates through 2011?
While there have been varying opinions on where the cash rate will go, it seems the majority opinion has a minimum rate rise of 50 basis points (.50%). This isn’t set in stone by any means and the recent troubles that have hit Queensland and Victoria may have an influence on any decision to move rates, despite the Reserve Bank’s statements to the contrary.
How will any rate movements affect me?
The short answer is ‘that depends’ and it depends on many factors:
- Are you paying more off your mortgage than the repayment required?
- Is your household budget tied into a set repayment figure each month?
- Do you like knowing exactly what you’re required to pay each month?
- Will a rise in rates affect your current lifestyle?
- How much of an increase can your budget ‘wear’ before the much touted ‘mortgage distress’ sets in? (We should add the percentage of income attributed to paying the mortgage some people find distressing is fine for others – it completely depends on your individual circumstances.)
Should I consider fixing my home loan now?
This question requires one on one advice to individually assess each situation. We are currently sitting on historical average rate figures after experiencing lows in rates that drove much of the property sales over the last 4-5 years. Fixing your mortgage, or a portion of your mortgage, can bring a bit of certainty to knowing what your repayment will be each month.
You should be aware that fixing a loan is a contract and as such, there are terms of the contract that must be met or penalties will be incurred.
What are the penalties for breaking a fixed rate loan? An example for you.
You’ve fixed your loan at 8.00% for 3 years, but one year later you decide you want to change lenders or bank products to a different loan or possibly you’re selling your property. The current market for a fixed loan is 7.00%. The lender will be losing 1% over the next two years, based on the 3 year agreement. They will want 2% of the loan in break fees as well as any other exit costs.
This topic should be discussed with your broker if any fixed loan is being considered and any contract entered into.
Although the government is moving to get rid of bank exit fees, this will only be for
new loans taken out AFTER July 1, 2011.
What about my investment property loan?
If you’re holding your property as a long term investment, you like many investors may choose to fix a loan for a period of time to have certainty around your monthly repayments. Many an investor though, chooses to have the flexibility of a variable loan knowing that fixing their loan in changing times is only a phone call to your broker away.
What if I want more information?
To discuss you lending and debt restructuring/advice requirements, please contact PrimeLending on 9415 1511 or
book an appointment
|
|
|||
|
|||
| Secure Client Login Login to our Secure Client Areas or make an account payment.  |