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Is Fixed safer than Variable? Which loan option is better?
Topic Started: 12 Sep 2014, 06:43 PM (1,294 Views)
jeromanomic
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I just read this article:

http://www.finance-guy.net/lending/are-australian-loans-risky

What do you think? Are fixed rates safer? I've had a loan for almost 6 years, but it has been in a time of falling rates. I'd like to know if this is maybe a good time to lock it in for a while.

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cokatoo56
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jeromanomic
12 Sep 2014, 06:43 PM
I just read this article:

http://www.finance-guy.net/lending/are-australian-loans-risky

What do you think? Are fixed rates safer? I've had a loan for almost 6 years, but it has been in a time of falling rates. I'd like to know if this is maybe a good time to lock it in for a while.

considering that rates are at their lowest ever, you could assume they won't go further down much. so it's not a bad idea to put more on the fixed rate IMO. the issue is banks limit your fixed rate to 1,3,5 years.
so the question is how much can you afford to pay for your mortgage each month.
the more you put on your fixed rate loan, the more you have to pay back per month in a limited time (1,3 or 5 years max).
it would be too good if you could get a fixed rate loan for say 15 years, and split your loan half/half btwn the fixed and the variable rate.
i would put the max i can afford into a 5 years fixed.
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goldbug
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Toss a coin, that's what I'd do with my 40 years experience with bank rates.
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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Foxy
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Zero is coming...

jeromanomic
12 Sep 2014, 06:43 PM
I just read this article:

http://www.finance-guy.net/lending/are-australian-loans-risky

What do you think? Are fixed rates safer? I've had a loan for almost 6 years, but it has been in a time of falling rates. I'd like to know if this is maybe a good time to lock it in for a while.

i always fix rates, and it always costs me money.
I am resetting a loan soon and it will save me $600 per month on the interest bill, 3 months at that rate will pay for my sauna fee's, i will fix it for 5 years as i simply do not care about paying a little extra. A cuban cigar cost $50 to $60.
My average interest cost across al loans is sitting at about 6.2% to 6.5%.
Our group has paid 22% or 23%.
Now that does sort the boys from the men.
Peter
:oo:
Our private banker just called and said interest rates for term deposits are about to drop, so how low can Joe go??
Edited by Foxy, 14 Sep 2014, 11:03 AM.
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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miw
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Mustapha Mond
12 Sep 2014, 08:37 PM
i always fix rates, and it always costs me money.
Truer words were never said.

You don't fix to save money. You fix to assure financial flexibility.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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zaph
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cokatoo56
12 Sep 2014, 07:59 PM
so the question is how much can you afford to pay for your mortgage each month.
the more you put on your fixed rate loan, the more you have to pay back per month in a limited time (1,3 or 5 years max).
You seem to think that fixing the IR means that the amount you fix has to be paid off during the fixed term - not so at all.
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zaph
13 Sep 2014, 12:16 AM
You seem to think that fixing the IR means that the amount you fix has to be paid off during the fixed term - not so at all.
With most banks if you fix your rates they don't let you have an offset account or make extra repayments so look out for that. Fixing at this time is good for people who can't afford a rate rise and can't make any extra repayments
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Jimbo
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jeromanomic
12 Sep 2014, 06:43 PM
I just read this article:

http://www.finance-guy.net/lending/are-australian-loans-risky

What do you think? Are fixed rates safer? I've had a loan for almost 6 years, but it has been in a time of falling rates. I'd like to know if this is maybe a good time to lock it in for a while.

I have always gone for variable rates myself because you will pay a premium for a fixed rate.

Whatever, pay off as much of the principle as you can. Every grand you pay off now will save you two grand in the long run.

Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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Sydneyite
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Variable, always. Unless you have a specific financial need to lock in your costs, then go fixed, but understand it's not to "save", it's because you need the certainty for some sensible reason.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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stinkbug
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Neither is safer, neither is better.

I have always gone for variable except for last year when I fixed heaps of debt, because the fixed rate was half a percent lower than variable, and saved me over a thousand dollars a month in interest. It has proved to be a good decision so far.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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