Browse Forums Home Finance Re: Views: Fixed Loan Vs Variable ? 25May 28, 2013 11:27 pm Heres my 2 cents on fixed vs variable Fixed Rates Good Bits - Your interest rates are fixed in (and if rates go up … who cares) and the monthly repayments remain the same throughout the fixed-interest period. Bad Bits, fixed loans have fewer features than variable loans, are/can be very very very expensive to break and can attract a slightly higher interest rate compared to variable Rate . Rates could go down after you fix them I find fixed rates work great for Investors buying rentals properties (as your monthly payment is always the same) , you have a crystal ball and think rates will go up . Or for poor soles like me who budget every cent ….predictable repayments work well in our budget Standard Variable Good Bits Better Flexibility, Just about all the banks offer variable loans feature like offset, redraw, split loan capacity, extra repayment options , variable repayment schedules and portability (some of the new fixed rate loans offer redraw and extra repayments up to a certain amount ). You can save some money when rates are low .. Yeah!!! Bad Bits – Rates can could up , Rates are sensitive to economic conditions like Greece fall out and the US Markets .Working out what rates are going to do Combo Loans Offers the best and worst of both worlds, fixed and variable. We hedged 50/50 (variable /fixed) on our current loan …. And rates went down (damn) , but we have now fixed another 30% at a much lower rate , with plans to payout variable portion before the fixed comes due . essential things to consider - No body will ring the bell when rates get to the bottom !!! And fixed rates will increase quicker then when they decreased . - Don’t fix for a longer term then you intended to hold the asset/property . Don’t take a 10 year fixed term , when you are going to sell the asset in two years . - Break fee = Loan amount x Remaining fixed term x Change in cost of funds Stig 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 18897 Thank you so much everyone. This all makes a lot of sense. I guess when you talk to a builder who butters up everything to look very polished, you get to start believing… 7 17511 So AFAIk the outcomes of the BAL ratings form part of a clause that allows them to pass these costs on to you. However the more relevant detail is how did it go from 19… 1 9142 |