Is it time to lock in your home loan rate?
propertyman | May 29, 2009 | Comments 0
Is it time to lock it in ? Westpac just recently raised its fixed rate home loans rate. Normally when banks do this sort of thing , its is an indicator to the possible rise of the variable rates. This only could mean one thing the home loan rates are definitely not going downwards anymore and there is the chance that bank home loan rates would continue only in the upward direction.
Which brings us to the question “ Do we lock in the rates for our home loan now?” the only risk seems to be “ what if”. Well we all know that these low rates are not going to last forever , so its definitely the time to be locking in rates at the risk of possibly one more rate decrease , which would possibly never come.
I was speaking to my better half the other day and she said that she was concerned how a lot of people are going to be affected by this. We discussed how when we calculated before we were eligible for a loan of $450,000 but now since interest rates have dropped we could get a loan upto $650,000 , now that’s a big $200,000 grand borrowing raise . There has been no raise in our salary , which means we could just go ahead and borrow that new big amount based on current low rates now and get jacked later. which means when the rates are back to normal and higher rates moe like 7% or even more we wound be scrounging around for loose change.
so what can be done to avoid this , borrow only how much you can repay taking into account possible higher lending rates or then just be conservative and borrow less than the banks tell you what you can borrow.
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Filed Under: borrowing capacity • Example • home loans • loan to value ratrio • Real Estate
