Many property owners are paying the price for not obtaining independent advice when they arranged the finance for their property purchase.
No matter how informed you are or how good a loan might seem, discuss the loan structure & your options with a property lawyer before committing to the loan.
Tip 05 – Fixed Or Variable Interest Rate?
Advantages of a fixed rate loan:
- certainty as to the loan repayments for the term of the fixed rate loan
- protection against future increases in interest rates for the term of the fixed rate loan
Disadvantages of a fixed rate loan:
- no reduced loan repayments where the interest rate drops for a variable rate loan
- unable to make additional payments to reduce the debt for the term of the fixed rate loan
Splitting – best of both?
- consider splitting the loan into 2 parts – one part fixed & the other part variable
- this allows you to enjoy the advantages of a fixed loan for one part, and to avoid the disadvantages for the other part!