Deciding When to Buy the Next Property
For many mortgagees the lowering of interest rates has been a real bonus. But not everyone is rejoicing with this development. Indeed, there are two groups of people who do not benefit from the lower interest rates.
There are the retirees, or other people living off investment income, as well as those that took out a fixed interest mortgage at any amount over 4.5%.
People who took a fixed interest mortgage out as the interest rate was rising, are finding themselves suffering from one of the negative affects of a fixed interest loan. The difference of what their loan is and what they could be paying in interest now with a variable loan could be quite substantial.
We have used this example to show you how, no matter how well you do your research, and how well you plan your future, it just does not always go the way you planned.
When setting up your property investment strategies you need to allow for this type of financial problem.
Often we get asked how soon people should buy their next property (usually the 1st or 2nd), and in theory it could be as soon as you get your deposit, or equivalent equity, and finance organised. In practice though, this may not be the right time to move. The above example shows you how changeable the market is and how, if you run your finances too tight, you could get into trouble.
Growing your property investment portfolio should be viewed over a number of years, and done with a certain amount of caution.
Filed Under: Interest Rates • Property Investment Tips
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