Fixed or Variable? Which Way Should I Go?

WITH the major lenders all dropping their fixed rates in the last few weeks, it’s a good time to consider whether locking in a rate is the way to go.

There have been many studies which have shown that over time, it’s better to stick with a variable rate and ride the rollercoaster those rates can sometimes travel on.

Which is exactly what interest rates have done in the last few years here in Australia. In August 2007, the official cash rate set by the Reserve Bank was 6.5 per cent. By December that year it was slashed to 4.25 per cent at the start of the GFC and by the following February it was 3.25 per cent.

With more global uncertainty and unemployment numbers up here locally, the banks dropping their fixed rates, there’s speculation that the RBA will cut the cash rate from 4.75 per cent when they next meet on September 6.

However, Aussie’s Executive Chairman and founder John Symond said while there is a chance variable rates will also drop in the upcoming months, a fixed rate can be useful for homeowners, particularly if they are planning a change in their circumstances.

“Fixed rates are good when you’re planning to start a family, or a work situation is changing as it gives the homeowner some security over the level of the repayments,” he said.

Mr Symond said fixed rate loans have conditions such as the amount of the extra repayments which can be made each year, break costs if the house is sold or the loan is paid out early and a lack of extra features which might be associated with variable loans, such as redraw.

“Personally I believe it’s better to go with a variable rate as you can pay as much as you like off the loan, reducing the term and the level of interest payments,” he said.

“However, if homeowners are concerned about interest rates going up the perhaps splitting the loan into a fixed and variable component may be a good option.

“It’s an each-way bet, which gives some peace of mind over the repayment amount while still allowing them to repay the variable component as fast as they want.”

To discuss how each option could benefit you, call Mike Cormack from Aussie Home Loans Joondalup and claim your free 60 minute consultation on 0403 144822 or visit Aussie Joondalup

Why WA’s Market Must Inevitably Rise

Terry Ryder is the director of hotspotting.com.au and has just released the latest edition of Western Australia Hotspots Report. He had these words to say:
"Key property markets in Western Australia are rising strongly. You’d never know it, because media keeps telling us the Perth market is falling.

But there’s more to WA than Perth. Key regional centres like Geraldton, Port Hedland, Karratha and Albany have strong markets.

The Perth market must inevitably follow suit. It hasn’t happened yet because most of the spending that constitutes the much-touted resources boom is still to come.

The $43 billion Gorgon gas project is Australia’s biggest resources project but the major work hasn’t started. BHP Billiton, Rio Tinto, Woodside Petroleum and others are planning huge expansions, but the big money hasn’t yet been spent.

When miners start digging holes and raising structures, businesses (mostly based in Perth) will expand, with major impacts for commercial, industrial and residential property in the state capital."

Access to Transport Number One for Buyers

According to a survey by PRDnationwide, 57 per cent of home buyers considered public transport as the most important amenity to have nearby when purchasing a property.

PRDnationwide research director Aaron Maskrey said increasingly congested roads and rising fuel costs meant public transport was now higher on buyers’ wish lists than ever before.

“A reliable train, bus or ferry terminal nearby can add thousands to the purchase price and create greater competition for the property,” he said.

The survey also found 16 per cent considered a supermarket was paramount while 12 per cent felt a café or restaurant was most important to have close by.

Mr Maskrey said seeking out good amenity is a priority for many house hunters – including first home buyers.

“Buyers crave convenience,” he said.

Mr Maskrey said only eight per cent wanted a school in close proximity.

“People are choosing a property based on how it fits into their lifestyle – not just how many bedrooms and bathroom it has,” he said.

http://www.prdnationwide.com.au/site/page.cfm?u=57

Why Smart Shoppers are Using Mortgage Brokers

Most people understand that a mortgage broker can help take the work and potential headache out of comparing literally thousands of loans from dozens of different lenders for you. Most brokers do not charge a fee for their service and have obtain a variety of industry qualifications. All brokers at Aussie Joondalup have obtained Certificate IV in Finance, Mortgage Broking and are a member of Mortgage Finance Association of Australia, the peak governing body of professional mortgage brokers in Australia. Currently, all Aussie Joondalup brokers have a minimum of 6 years individual experience writing new home loans.

Check out what local online news source WAToday.com.au had to say about broker in a recent informative article: WAToday

7 First Home Buyer Mistakes to Avoid

Higher levels of savings, increasing rents, stable interest rates, a softer housing market and the banks relaxing their lending criteria have all combined to create a unique opportunity for first home buyers looking to get on the property ladder. There are some common mistakes that first home buyers make, however. Make sure you don’t fall into these traps:

1. Changing jobs or making a major purchase at the same time as applying for finance.
2. Not getting your finance pre-approved, and leaving everything ‘too late’ when the ‘right’ property is found.
3. Borrowing right up to the amount the lender is prepared to loan you, and then being financially over-stretched.
4. Letting emotions take over in the negotiation process, and paying too much for the property—or missing an opportunity to negotiate more favourable purchase conditions.
5. Not doing your diligence and checking out things such as council zoning, building approvals and restrictive covenants.
6. Buying a ‘do-up’ and then running out of money. Renovation is not a cast-iron route to riches, and if it turns out to cost more than you bargained for, you could be living in squalid circumstances for too long.
7. Forgetting to sort out property insurance well before you move in, and forgetting to tell the utility companies!

Aussie Joondalup broker Mike Cormack has been a first home buyer himself and has 6 years home lending experience to draw on. He regularly successfully guides local first home buyers to their first home. Email Mike for a free copy of his Aussie First Home Buyer Guide and see how he can help you too.