Property is an investment whether it’s your principal place of residence or not so we all want to know as much as we can, right? There are many things to consider and one of the main ones is, of course, what the interest rates are doing. It wasn’t that long ago that many Australians thought fixing their interest rate was the best thing to do as rates where getting higher and higher only to then fall to record low levels. It’s a tough place to be when you’re locked in and paying thousands more than the current market.
Well rates were down and now they are heading up again and no one knows how high they’ll climb this time. So the question of whether to fix, split or not fix is back on the table. Answering this question has a lot to do with personal circumstances but consider whether you:-
Are a first home buyer? If so you may want to fix your rate and know exactly what you will be paying for the first few years.
or
Are you investing or wanting to make extra repayments? A variable or split rate might suit better as they come with the options of interest only payments as well as extra repayments so you can pay the loan off quicker.
I’ve recently heard about a new loan that’s hit the market and it’s one to look out for, as not all banks are doing it. It’s a capped rate home loan. It works like a variable loan when interest rates are going down but is capped at a fixed rate when interest rates are on the rise. Now the capped rate is for a fixed term and is of course fixed at a higher rate than the current standard variable but it’s an option worth considering.
Now I’m not here to promote any one product or bank but to deliver as up to date information as I can, so just on the quiet, according to my sources (Australian Property Investor Magazine), this capped rate home loan is currently only being offered by Bankwest and the capped period ends on the 10/11/2012.
This new home loan product seems like it could be an acceptable alternative to what has been in the market to date let’s hope the other banks catch on and it stays around a bit longer the more competition out there the better.
http://australiawealth.com.au/
