DATE: 13/12/2012
CATEGORY: Blog, Interest rates, Mortgages, NZ Economy

fix or float? is your home loan right for you?

Before deciding what home loan is right for you and whether you should fix or float or do both, here are a few things it’s important you consider:

  1. How much certainty and peace of mind you want should be your first priority.
    What impact will any rise in interest rates have on your lifestyle and your ongoing ability to meet financial commitments? For greater cost certainty fixing longer term may give you important peace of mind.
  2. Running a close second is what flexibility do you want?
    Do you want the option of repaying your loan faster? All banks offer some flexibility to pay extra on fixed rate loans and this may be sufficient for your plans. If not, then having some floating or a portion fixed short term may be ideal.
  3. Do you intend selling in the short to medium term?
    You could be exposed to hefty break costs by repaying a fixed rate loan early. If repaying early is a possibility again fixing short-term (i.e. 6-12 months) or floating may be the right choice.
  4. Are you thinking about taking on more debt or buying another property?
    It’s important to be sure that your existing bank is the right fit for your future plans. Imagine fixing and then, because of criteria or policy limitations needing to switch banks. Break costs are likely to sting!



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Posted in Blog, Interest rates, Mortgages, NZ Economy

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