4 Things to Consider Before Fixing Your Interest Rate

With interest rates at record low levels, many homeowners are considering the possibility of fixing their interest rate on the home loan.

Before going down this path it’s important to ask some key questions and decide whether this is the right option for you.

4 Things to Consider Before Fixing Your Interest Rate

Why Fix?


When looking at a fixed interest rate, the main reason a homeowner would consider that option is the security of knowing the repayments are set for a period of time.

That might be a good option if you’ve got a home loan that you wouldn’t be comfortable with should interest rates rise. However, it’s important to consider that in the current environment, fixed rates are generally higher than variable rate loans.


Is It Flexible Enough?


While fixed-rate loans are great for your security they are also not particularly flexible.

Many fixed-rate loan products won’t allow you to make repayments over and above the normal repayment schedule. There are also costs involved if you choose to refinance, which are generally a lot lower with a variable loan.


How Long Should I Fix My Rate?


When taking out a fixed-rate loan, you’ll generally have the choice of fixing your home loan rate for between 1 and 5 years, with longer terms up to 10 years available from some lenders.

Once again, a longer-term plan gives you a degree of security that you wouldn’t have with a variable loan. However, you might expect a longer-term fixed-rate home loan to come with a higher interest rate to protect the lender.


How Much Should I Fix?


Most lenders will offer you the flexibility to fix a certain percentage of your total home loan.

Fixing only some of the loan might be a good choice for homeowners who want some security with their interest rate, but don’t’ want to lock themselves into anything that might cost a lot in the long run.

Assess how much you might be able to pay down on the variable portion of your home loan through making additional repayments. Then you’ll have a good idea of what percentage of the loan you could look at fixing.

By |February 5, 2022|Categories: Finance|Tags: |0 Comments

To Rent or Buy?

Owning your own property is normally very high up on the list of things people want to achieve in their life. However, depending on your financial goals and what stage of life you’re at, what you hope to achieve with property will likely differ quite considerably.

For first home buyers, the biggest question is usually whether to rent or buy?


To Rent or Buy?

Advantages of Buying


Capital Gains

The most obvious advantage of buying a property is that you own it and benefit from the capital gain on the property, should its value increase. However, you also have to pay all the costs such as council and water rates and ongoing maintenance.


You Control It

When you own a property, you get to do anything you want to it. A common complaint from renters is that they aren’t even allowed to put up a picture hook. That’s not an issue if you buy a house.


Add Value

If you own a property, you’re able to add value to it and manufacture equity in certain ways. The most common strategy for this is to do a small renovation or even a subdivision.


More Affordable

In a lot of cases, you will find it is more cost effective to buy than rent, in the current environment, thanks to record-low interest rates. If you’re living in an area where you can pay less on your mortgage than you would renting, then the incentive is certainly there to go out and buy.


Advantages of Renting



One of the greatest benefits renters enjoy is flexibility. Many people who choose to rent do so because they are able to rent in highly desirable locations, like the inner city that offers a great lifestyle and amenity. For many of these high-demand locations, purchasing a property can be very expensive and outside the budget.


Lower Fixed Costs

Costs are usually less of a burden for renters as the landlord is generally required to pay many of the ongoing costs of the property, including strata fees, water and council rates, and maintenance.


Cash Flow

Renting can allow you to free up more cash, so you can put it into other ventures. If you’re trying to start a business or you want to spend your money on things like travel, then renting can be advantageous.



Over the past few years, there has been a growing push from property investors in Australia to continue renting and purchasing an investment property instead of a home to live in. This is a way you can get the best of both worlds – you can live in a great location and still invest in property elsewhere. Rentvesting is increasingly common in places like Sydney and Melbourne, where house prices are higher.

By |November 4, 2021|Categories: Finance|0 Comments

Is a Bridging Loan Worth It?

In the current market where property prices are trending higher and there’s a shortage of stock, upgraders and downgraders can find it difficult to get into a new property. For many, the age-old question of whether to buy first or sell first is more prominent than ever with the present housing market favouring sellers.

Fortunately, there is an option that can help in the form of a bridging loan. A bridging loan is a short-term loan that helps buyers purchase a property before needing to sell their current property.

In a perfect world, you would sell your property and then go out and find a new property. However, if the perfect home comes along beforehand, you might not want to miss out on the opportunity. That said, there are advantages and disadvantages to bridging loans.


Is a Bridging Loan Worth It?




The main benefit of a bridging loan is that you can buy a property right away. You don’t have to wait for the property to sell or even to settle, which can be a long time in some instances. It will also give you room to sell your property, so you aren’t forced to sell immediately at a worse price than you might have received otherwise.


Capitalised Interest

When you take out a bridging loan, it is normally an interest-only loan, where you pay back all the interest at the end when you sell your original property. With this type of loan, you’re only needing to pay back one mortgage at a time and can pay off all the accrued interest when you sell and settle on your current property.


Standard Rates

In years gone by, bridging loans weren’t as appealing as they often came with very high-interest rates. These days many lenders will offer standard variable rates, but as always, policies differ between lenders and products.




More Interest

When you are taking on a bridging loan you are technically carrying two properties and therefore will be paying interest on both. The longer it takes to sell your current property the more interest you will be required to pay. Some lenders might even force you to pay higher interest rates after a set period of time.


Higher Costs

There are certain areas where you will need to pay additional costs when using a bridging loan. For example, given that you have two properties, you will need to pay for two valuations. There can also be costs involved with breaking your current loan to take on a bridging loan.


Need To Service the Debt

To qualify for a bridging loan, you still need to be able to service the total amount of debt based on your income and expenses. In some ways, this is similar to getting an investment loan. You will also need to have a reasona

By |November 4, 2021|Categories: Finance|0 Comments
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