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To fix or not to fix (your loan)

By Olivia Shead โ€ข Leave a Comment

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If youโ€™re planning a renovation, just finished one, or youโ€™re right in the thick of one, you may well be re-evaluating your mortgage options. And if you are, you are also probably asking yourself the question: “Should I fix my loan rate?”

Credit
Credit: Three Birds Renovations

There are always questions around fixed and variable rates, because people really want to know what they should do!

Some people take the crystal ball perspective โ€“ they try and predict whatโ€™s going to happen in the future, but to be honest, itโ€™s a bit like being at the casino table and trying to figure out whether the ball is going to drop on a red or black number.ย Banks employ rooms full of economists who try to figure this out every day and they still get it wrong!

After: backyard
Credit: Three Birds Renovations

The most accurate (and thereโ€™s still plenty of room for error) approach is probably the rear vision mirror view, which is to look backwards at what has happened with rates historically.

At the moment, interest rates are at an almost-60-year interest rate low, which is great for buyers right now. But if you speak to people who were buying houses in the ’80s, theyโ€™ll be able to talk to you about the pain of borrowing on rates of 18%.ย Iโ€™m 35 and in my ten-year borrowing life Iโ€™ve seen a big fluctuation with rates. One of my first loans sat in the 8 or 9% range and now we are seeing them halve to sit in the 4% range.

With all of that in mind, what looking in the rear vision mirror tells us is that right now interest rates are incredibly low and if it suits you, it is probably a great time to lock in a fixed low rate.

Credit: The Block Shay and Dean's kitchen
Credit: The Block Shay and Dean’s kitchen

The third approach to take is to have a good look at your plans for the next few years and see what is on the radar that may dictate or limit the choices you make about whether or not to fix your rates.

Statistics show that every three years people adjust their home loan. And thatโ€™s usually because they are doing something in their life that requires them to make changes to their loan โ€“ they are renovating, getting married, divorced, having a baby, moving house etc.

For some people, the certainty of knowing what they will be paying out for their loan every month and that their rates wonโ€™t change over the term of their loan suits them perfectly.ย But for others โ€“ especially when you bear in mind the three-year average loan adjustment โ€“ locking into a loan may not be the way to go.

You might be planning on flipping the house and buying again, you may want to renovate, you may be planning on having another baby. For whatever reason, locking into a fixed loan might not suit your life at the moment.

Credit: The Block Caro and Kingi's kitchen
Credit: The Block Caro and Kingi’s kitchen

If you do settle on a fixed rate and then decide to change things, the bank will charge you for breaking the contract of your loan. This is called a fixed-rate break cost and it is set at a rate that covers what the bank will lose out on by you breaking the contract.

Something else to keep in mind when thinking about a fixed rate is while you do have the certainty of knowing what youโ€™ll be paying on your mortgage for the term of your loan, a fixed rate means that you will not have the flexibility of a variable loan.

And that means you cannot pay extra off the loan. You can only make the scheduled payments over the life of the loan (although some do give you a capped additional amount, usually around $10,000).

So if you get a bonus at work, or you come in to an inheritance etc, you will be penalised with a fixed-rate break cost if you pay a lump sum into your loan.

BecJudd02
Credit: Rebecca Judd

But the good news is, you can have your cake and eat it too!

You can do this by fixing a proportion of your loan and leaving the balance on a variable rate. That way, whichever way rates move, one half of your loan is always winning.ย If you are going to do this, have a really good look at what you have planned in the next few years to ascertain the best proportion of fixed to variable.

The final thing to consider once you have decided to fix all of your loan โ€“ or just a proportion โ€“ is how long you want to fix it for.ย This is the million-dollar question.ย Different terms will have different costs โ€“ sometimes the longer the term, the cheaper the rate, while at other times, the shorter the term, the cheaper the rate.

Your plans will be a good guide to the length of your term as well.ย If you plan on flipping your property and buying again, you donโ€™t want to be locked in to a loan and incur a break cost when you sell.

On the other hand, if you plan on renovating and holding on to the property as an investment or as an owner-occupier for a few years, now is probably a great time to lock down a loan at historic low rates, keep your repayments low and maybe even use some of the extra cash you are saving to buy yourself a second property.

โ€” Paul is the director ofย CVG Finance, a leading brokerage offering financial services across all areas.ย 

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November 26, 2015

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SALE ALERT! Listen up Sydneysiders, one of my fav SALE ALERT!

Listen up Sydneysiders, one of my favourite home stores @shack.furniture.homewares are having their annual warehouse sale this week, from Thursday until Saturday.

HUGE savings on furniture, homewares and decor with 30 to 80% off. Wowsers!

I'm a big fan of SHACK and can never leave one of their stores without a few styling goodies for my place! It's just too tempting!

While you're at the sale, mention Interiors Addict for an extra 10% off!

Unit 16a, 1801 Botany Rd, Banksmeadow NSW 2019

Thursday 1st to Saturday 3rd June 2023, 9am to 4pm. Not online.

#sydneyshopping #sydneysale #sydneysales #sydneyfurniture #shackfurniture #shackfurniturehomewares #interiorsaddict #theinteriorsaddict #jenbishop #heartyourhome #comeshoppingwithme
A door to door continuous curved stone ledge in th A door to door continuous curved stone ledge in this bathroom is one of the cleverest designs we've seen in a while!

This mega ledge, made of Corian, even incorporates a sink, seamlessly.

Combined with venetian plaster on the walls, it's no wonder this Illawarra bathroom by @birdblackdesign feels like a day spa!

Come check it out via link bio.

Lead designer Stuart Gibson says: "One smooth curve, right around the room, from either side of the door opening. As it moves around, it creates a ledge for the bath: for bath oils, lotions, a book and a champagne glass. The ledge continues around and becomes the vanity, widening out to create a custom seamless basin."

#bathroomhappiness #bathroomdetails #bathroomshelves #bathroomshelf #venetianplastering #coriandesign #coriansolidsurface #spalikebathroom #spabathroom #sustainablebathroom
Catch the season finale of @sellinghousesaus last Catch the season finale of @sellinghousesaus last night?

We have all the before and afters for you on the blog now, via link in bio (and swipe for a taster).

#sellinghouses #sellinghousesaustralia #foxtel #lifestylechannel #beforeandafterkitchen #beforeandafterlivingroom #beforeandafterrenovation #realitytv #housetours #interiorsaddict #theinteriorsaddict #jenbishop #heartyourhome
๐Ÿ˜ Not sure what's better: the custom mirror abo ๐Ÿ˜ Not sure what's better: the custom mirror above the fireplace in this Art Deco one-bedder or the wallpaper in the kitchen (swipe)?!

It's been a while since we featured an apartment makeover on IA. Would you like to see more apartment interiors? Head to the blog now to see more of this one. Via link in bio.

#artdecoapartment #artdecointerior
#artdecomirror #artdecofireplace #artdecomelbourne #artdecofurniture #artdecobuilding #artdecointeriors #apartmentrenovation #apartmentinterior #smallspaceliving #melbourneapartments #melbourneairbnb #kitchenwallpaper #wallpaperaustralia
Low tox and planet friendly laundry liquid (and sh Low tox and planet friendly laundry liquid (and sheets and soap and powder!). We have a great roundup of the best options on the blog today. 

A whole host of brands are offering eco-friendly, low tox alternatives to the more chemical-laden ones. Not only that, they often smell amazing, look good on your shelf and come in recycled or recyclable (or even better, both) packaging. 

Good for your skin, your clothes and the planet: whatโ€™s not to like?

Do you use any of these?

COMPARE THEM ALL VIA LINK IN BIO NOW.

#lowtoxliving #lowtoxlife #lowtoxlifestyle #lowtoxhome #lowtoxlaundry #lowtoxswaps #naturallaundry #naturallaundrydetergent #naturallaundrysoap #ecolaundry #lowtoxcleaning #ecofriendlyhome #ecofriendlyhouse #laundryliquid #laundrypowder #laundrysoap #naturalcleaning #chemicalfreecleaning #interiorsaddict #theinteriorsaddict #jenbishop #heartyourhome
Play room goals!๐Ÿ‘Œ๐Ÿป This is just one room fr Play room goals!๐Ÿ‘Œ๐Ÿป

This is just one room from today's real house tour which I really love because in employing interior designer @issyandhcreative the owners weren't looking for a complete rip out and re-do but rather to work with what they had in their new suburban home (including a dated kitchen) and give it a largely cosmetic glow up with styling and new furniture (some of which was upcycled). 

The brief was to create a family friendly home. "They weren't looking for perfection but rather a warm and relaxing retreat for their busy young family." This playroom though? Pretty close to perfect! And the mum did the colour coded books herself. Love that๐Ÿ˜

Head over to the blog now via link in bio to see the rest of this home.

#playroomideas #playroomgoals #playroomdecor #familyhomes #kidfriendlyhome #kidfriendlyinteriors #familyhomedecor #sustainabledecor #affordablerenovations #interiorsaddict #theinteriorsaddict #jenbishop #heartyourhome #beanbagchair #beanbags #colourcodedbooks #colourcoded #toyroom #kidsroomdesign 

Pix by @tealily
All the heart eyes for this little setup ๐Ÿ˜ Hea All the heart eyes for this little setup ๐Ÿ˜

Head to the blog to shop this and two other gorgeous styled images from @greenhouseinteriors 

The stunning @mrsniceart artwork has already sold but the good news is, you can still get prints of it!

Styling by Aisha Chaudhry for Greenhouse Interiors, assisted by Nikki McGar, Kylie Harris, Rachael Blake and Max Green. Photography by Stephanie Rooney. 

#poolart #sideboardstyling #buffetstyling #consolestyling #vignettes #greenhouseinteriors #barcartstyling #shopthelook #bluehomedecor #poolumbrella #beachumbrella
Bookworms need a cosy book nook! ๐Ÿ“– ๐Ÿ› Seb an Bookworms need a cosy book nook! ๐Ÿ“– ๐Ÿ›

Seb and Charlie had one of those kid size couches in their playroom but frankly, they'd outgrown it! I picked this Aussie made compact 2-seater Ruby sofa from @fantasticfurniture 

I'd usually go for grey to keep it neutral but as it's in a kid's room I went for this heather blue fabric to make it a little more fun while still classic. There's more than 50 fabric choices for Fantastic's Aussie made range so good luck choosing ๐Ÿ˜‚ 

I left the legs off to keep it below the windowsill. I'm super happy with the quality. It looks a lot more expensive than its $699 pricetag ๐Ÿ‘Œ๐Ÿป

Books, natural light and a cosy couch = happy boys! And let's not pretend they won't be watching the odd movie on there too ๐Ÿฟ because #keepingitreal

#FantasticFurniture #FantasticFamily #booknook #booknookstagram #booknook #bookwormsofinstagram #littlereader #littlebookworm #cosycorner #cosycorner #playroomideas #toyroom #interiorsaddictfamilyhomereno #interiorsaddict #theinteriorsaddict #jenbishop #heartyourhome #aussiemade #aussiemadefurniture #twoseater #kidssofa #kidscouch #bluesofa #loveofreading
Last week we interviewed chalk paint pioneer Annie Last week we interviewed chalk paint pioneer Annie Sloan from her UK base about colour and Aussies' relationship with it. (And how's this for a before & after kitchen?! ๐Ÿ˜)

Annieโ€™s latest green hue, Coolabah Green, is inspired by the Eucalyptus trees of her childhood (did you know she was born in Sydney?). โ€œI made it in tribute to Australia and Iโ€™m thrilled to say thatโ€™s been really popular both here in the UK and in Australia. Itโ€™s a kind of smoky, silvery sage green thatโ€™s very easy to work with and would complement accents of Amsterdam Green deliciously.โ€

Sales stats show Aussies are all about greens while elsewhere in the world greys and blues are more popular from her range. So tell me, are you a green lover?

Head to the blog to read Annie's thoughts on upcycling furniture and more. Via link in bio.

#chalkpaint #chalkpainted #chalkpainting #chalkpaintfurniture #chalkpaintlove #chalkpaintmakeover #anniesloanchalkpaint #anniesloanhome #anniesloanpaint #paintedkitchencabinets #paintedkitchen #paintedkitchens #upcycler #upcyclers #upcyclersofinstagram #upcycledfurniture #interiorsaddict #theinteriorsaddict #jenbishop #heartyourhome #anniesloan #greenkitchencabinets #greenkitchens #greenpaint #coolabahgreen #coolabah
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About Olivia Shead

When she's not writing for Interiors Addict, Olivia is now a TV and radio news producer. She's a journalism graduate of UTS Sydney.

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