Written by Brendan Gilmour
We would like to welcome Helen to the Finance Team. Helen brings 18 years of experience and knowledge to our team and we are very pleased to have her on board. Welcome Helen.
What are out options now that our fixed rate is expiring?
The answer depends on a number of questions; but it’s important to note that it is worth talking to us because invariably there is something that we can do to help.
- How financially stable you are
- How much risk you are prepared to take on
- Economic indicators for rates
We have the added strategic advantage of working in with financial advisers and this makes us privy to further education around these questions. It also helps us to have discussions around strategies involving your lending portfolio. The consensus is that rates are still likely to go up at least 1-2 more times, before finding a more neutral ground, but maybe this is the peak as many other economists are thinking This is just our ‘opinion’ and therefore your appetite for risk must be assessed before using any of this information in your decision making. We can help you make the right decision for your own situation.
There a number of options depending on the answer to the above questions.
- Fix again vs variable
- For investment loans, interest only vs principal and interest. We always recommend principal and interest for home loan, non tax deductible debt, but interest only for an investment property can leave you with more cash flow to invest in other opportunities, maximising your leverage and market exposure.
- Seeking a better deal with either your current bank, or another bank (this would require re-financing).
- Debt recycling – clearing non tax deductible debt by selling an investment and then drawing against this equity to re-invest back into the market with fully geared investments. This strategy requires the collaboration of both your financial adviser and your lending adviser.
- After years of much growth, as we have seen across Australia right now, it is a good time to get your property revalued to see if there is equity there to leverage for your next investment. We often look at borrowing capacity for our clients on request from the advisers. This is an excellent financial planning strategy depending on your stage of life.
It is an excellent cross road when your fixed rate is coming up to expiry, to take stock of your current financial plan, and use this opportunity to take expert advice to guide you towards the best scenario for you. We do this every day, we are good at this, let us help you make the right decisions.