Header Ad Module

Collapse

Announcement

Collapse
No announcement yet.

Fixed Term Mortgages = 1, 2, or 3 years?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Fixed Term Mortgages = 1, 2, or 3 years?

    What will be your preferred fixed term lending period if you'd be buying now?
    I believe in Time, not timing.

  • #2
    Originally posted by newkidontheblock View Post
    What will be your preferred fixed term lending period if you'd be buying now?
    One year.

    Unemployment figures have just been released.

    A bit unexpected.
    www.3888444.co.nz
    Facebook Page

    Comment


    • #3
      I've just refinanced, and fixed for five years at 8.95%
      (Probably as a result of memories of 23% in the mid-1980s).

      Comment


      • #4
        I'm 'loaning' now and got a deal @ 9.3% for 2 years. But thinking of giving that up for a 1 year fixed at a higher %. A bit of a dillemma...
        I believe in Time, not timing.

        Comment


        • #5
          I re-fixed some loans a couple of weeks back for 6 mths.

          M
          Comments may not be relevant to individual circumstances. Before making any investment, financial or taxation decision you should consult a professional adviser.

          Comment


          • #6
            Do any of the banks permit full repayment of the loan during the fixed term?

            Comment


            • #7
              Originally posted by Green Fish View Post
              Do any of the banks permit full repayment of the loan during the fixed term?
              You mean breaking the fixed term?
              I believe in Time, not timing.

              Comment


              • #8
                That would be one way of describing it. The obvious point here is the ability to refinance if interest rates fall.

                Comment


                • #9
                  I'm sure they all do. The question is "how much is it going to cost?"

                  Personally, I'd go for a shorter term - 6 months, or 1 year at the maximum, even if it means paying a premium interest rate. Interest rates are only going to go one way now, and it may be sooner rather than later.

                  I did fix for 5 years at 8.95% back in about '02. Of course interest rates then plummeted, I had to pay $10k to get out of it, but still did okay as they kept dropping even further.

                  I have my entire lending portfolio up for renewal between Sep & Nov this year, so here's hoping...

                  Originally posted by Green Fish View Post
                  Do any of the banks permit full repayment of the loan during the fixed term?

                  Comment


                  • #10
                    ASB new rates

                    This tiny cut in rates is a joke. Does the ASB really believe that everyone will now rush and buy property? A typical $250,000 mortgage for 3 years at 9.65% yesterday and 9.5% today save a measly $7.25 per week or less than four litres of petrol.



                    ASB cuts interest rates
                    Fairfax Media | Friday, 09 May 2008

                    Banking group ASB is cutting its fixed interest rates for loan terms ranging from six months to three years, citing a lower cost of sourcing funds.

                    ASB said today it was dropping its six month loan interest rates to 9.75 per cent from 9.85 per cent. The one year rate is falling to 9.4 per cent from 9.75 per cent, the two year rate to 9.4 per cent from 9.7 per cent. It is also cutting the three year rate to 9.5 per cent from 9.65 per cent.

                    "While the financial markets continue to be volatile, there has been a distinct reduction in the cost of funds across a broad range of terms," Hugh Burrett, ASB's managing director said. "We are passing on this lower cost to our customers through adjusting our lending rates
                    OllyN [email protected]
                    Independent Property Consultant
                    Residential and Commercial Solutions

                    Comment


                    • #11
                      Originally posted by newkidontheblock View Post
                      What will be your preferred fixed term lending period if you'd be buying now?
                      12 months right now. I think the OCR will probably start dropping in around 6 months (unless Labour does some inflationary bribes at the last minute) but this will take a little while to translate into Fixed rates going down.

                      Coming off a one year rate at this time next year should allow a borrower to then ride the floating rates down and look at fixing more towards the bottom of the interest rate cycle.

                      The interest rate yield curve appears to be flattening out as well
                      For property financial solutions
                      CALL 021300192 or [email protected]
                      Click HERE to be added to my Advanced Property Finance Newsletter

                      Comment


                      • #12
                        Originally posted by Green Fish View Post
                        That would be one way of describing it. The obvious point here is the ability to refinance if interest rates fall.
                        You can always repay during a fixed term period if you want.

                        The bank charges you an early repayment fee, which if interest rates have risen is generally about $100. If they have fallen, it is based on how much rates have fallen and the period of the fixed term left. It is designed to compensate them for the loss they will make on relending that amount at a lower rate.

                        At least one of the banks includes the formula for calculating the exact amount in their loan documents (can't remember which off the top of my head). It is about half a page long.

                        Generally, if rates have fallen I doubt it would be worth it.

                        Comment


                        • #13
                          The fee charged usually works out to be the same amount of money you would save in interest costs over the remainder of the loan term, so yes it's not really worth it. Unless you think interest rates will drop further and you can lock in a better term.

                          I remember seeing the formula on my loan docs too, although I can't remember from which lender. The formula looks complicated, but it's actually pretty easy to work out.

                          It is the (balance being repaid) x (the difference in interest rate between what you currently pay and what you would currently pay for a new loan term equal to the remainder of your fixed term period) x (the number of years remaining on the loan period). If that makes sense...

                          Originally posted by Xav View Post
                          You can always repay during a fixed term period if you want.

                          The bank charges you an early repayment fee...
                          Generally, if rates have fallen I doubt it would be worth it.

                          Comment


                          • #14
                            Spread your risk & break your loans up into multiple chunks. That way you hedge your bets, a form of interest-rate diversification.

                            Costs for breaking fixed rate loans is mathematically calculated based on your current fixed rate relative to the market rate, the remaining term and of course the amount of the loan.

                            Comment


                            • #15
                              Reluctantly

                              I've held off as much as I can, but had to commit. Despite forecast of further interest rate drop, signed a 9.2% for 1 year.
                              I believe in Time, not timing.

                              Comment

                              Working...
                              X