Browse Forums Home Finance 1 Jul 09, 2009 9:48 am If u were looking at what income u bring in and trying to see how much u could afford, what interest rate would u use, i know at one stage the rates went up to 18%? What rate should we use to be safe to make sure we can afford the repayments in the future? We want to use this to determine the project we undertake? Only dh is working for now and i will in a couple of year when kids are in school. Re: How to know what loan u can afford, what interest rate? 2Jul 09, 2009 10:10 am I have a excel spreadsheet that has every interest rate on it, and you can quickly and easily work out repayments.
If your so worried about interest rates why not just get a fixed home loan? Then you will know what it will be. I think predicting interest rates would be like predicting the weather in a years time. The spreadsheet link is here - scroll all the way over to the right to put in your own values edit : took the link out. if you want the spreadsheet pm me and I will email it. Re: How to know what loan u can afford, what interest rate? 4Jul 09, 2009 10:24 am We have a combination of fixed and variable. That way I do get some benefit when the rates drop and dont feel the full effect if the rates rise. I have fixed in 63% of my loan at 6.59% and the rest variable currently at 5.11%. This way even if the variable rates go up to 16% we can still afford it on one wage. Depending on your bank you can fix in your rates for up to 15 years I think??? There are lots of conditions on fixed loans that can be quite restrictive. If you are unsure id definately reccommend to speaking to a homeloan advisor before doing anything. Living in Caloundra Thread****** Lovin my house all finished!!! Now tackling the HUGE task of the Garden- viewtopic.php?f=31&t=14782 Re: How to know what loan u can afford, what interest rate? 5Jul 09, 2009 1:54 pm From memory, the average mortgage rate over the long term is between 7 & 8%. If I were you I would check my serviceability for the loan at 8%. It's extremely unlikely that rates will ever get back to 18% simply because there is a much bigger debt burden these days. That said, rates were over 9% only last year so nothing is certain. It will take quite a while to get that high again but you may want to fix at least part of your loan for insurance factor. Re: How to know what loan u can afford, what interest rate? 6Jul 09, 2009 2:04 pm Netadelle- that's a great spreadsheet, thanks for sharing. Homemaker - I would calculate on 10% interest, to be on the safe side. Blog: http://bluemistkids.blogspot.com "Never be afraid to try something new. Remember, amateurs built the ark, and professionals built the Titanic." Re: How to know what loan u can afford, what interest rate? 7Jul 09, 2009 2:07 pm I always work on 11% even when I was a lending manager. I can remember when the interest rates where 16% and it wasn't pleasant. Always budget on a higher rate then you can imagine. Then build up as big a buffer as you can to help protect you should the worse case scenario occur. Some things are worth waiting for. Re: How to know what loan u can afford, what interest rate? 8Jul 09, 2009 7:03 pm The long term fixed interest rates will be the average rate that the bank expects, plus a premium. Eg the CBA 15 year fixed rate is 8.19%, which says they expect rates to be a little less than that on average. As for what they COULD go up to, that'll be anything they have been at in the past, and even higher You can view the fixed rate premium as payment for "high rate insurance" from the bank. Metricon Riva 33 - http://herlihy-riva.blogspot.com Site start 15/03/2010 - Handover 23/12/2010 9 months and 8 days (284 calendar days) from site start to handover Re: How to know what loan u can afford, what interest rate? 10Jul 12, 2009 9:23 pm We are going full variable and budget of 10%. We will pay our loan right from the start based of a 10% rate, building a bit of a buffer. Touch wood, I don't think we will see interest rates go back up to what they were in the early 90s. If it gets above 10% you will see a LOT of people in trouble. The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 19108 Hi, you've probably already resolved this, however, Commbank will probably pay the funds to you after you send evidence the work is done regardless the change in the quotes. 1 35327 How much are you ahead in payments compared to where the build is at? Have you fully drawn down the loan? 5 11927 |