To fix or not to fix?????????????

[AnyDream]

Another option I was thinking about was staying variable but making our repayment amounts the same as if it were fixed (ie paying $100 per week extra on top of our current variable amount) that way we'd wack more off our principal and if times got tight we would be ahead and could re-draw if absolutely necessary.

Good thinking 99. Chop as much off your principal now while the interest rates are lower.

[entreat]

:yeahthat:

If you can pay more earlier - why wouldn't you?

Fixing the interest is making the bet - "For the given time, I bet that interest rates will rise above what I'm fixing" but the condition of the 'win' is that the variable rate has to be higher than your fixed rate long enough to make the $$ balance out.

Personally, I'd only fix if I was sure (as you can be ) the variable rate will get to be higher than your fixed rate sooner rather than later, otherwise you risk breaking-even, or worse.

(incidentally, we are variable)

[2CheekyMonkeys]

i'm confused as what to do also! we are kinda already pushing the limits of our weekly budget and its only gonna go up from here! i think fixing it at least means security in budgeting.

[helle]

We bought our place 2 years ago and fixed for 3 years at 7.28%. At the time interest rates were going up, and so by fixing we missed that spike which we were pretty stoked with.

When they came right back down we went back and looked into remorgtaging and it was going to cost us 6k, so we've left it. We only have 12 months at our fixed rate left... lets hope we don't get hit with a high variable! In the perfect world we'll get a smaller interest rate, fix at that, and keep paying at 7.28% - i did say the perfect world though

It's all a big gamble! Do what your comfy with, ask your lender LOADS of questions... even if you think they're stupid, ask them anyway.

GL! xx

[AngelPunks]

not fixing - it cost me $8k to break the fixing on mine when I had to get it changed from joint names to my name.

Shortly it will become an investment property again - so it isn't going to bother me too much if the rates get higher

[~mamaspice~]

thanks for your replies everyone.

DH and I talked about it last night and we've decided not to fix, but to pay the extra $100 per week like we have fixed. we've made the right decision.

Lets hope todays reserve bank anouncement is only a .25% rise . . .

[~Raven~]

I think we're better off leaving it variable because when it's fixed you aren't allowed to pay to much extra off the loan and if you want to sell/refinance/redraw you get slugged with high exit fees. I like knowing that I can have the flexibility to do it my way and not how the bank dictates