Homeloan interest rates - fixed or variable?

[Barbarian Conan]

Second rate hike now, I'm getting blasted on my repayments

Sorry to be an *******, but surely you knew that the low interest rate wasn't here to stay, and you calculated whether you can afford your payments at 10% prime lending rate?
Right about now you should have quite a bit more disposable income than you budgeted for.

As for fixing rates... the bank has some pretty smart people they pay quite a bit of money to ensure that the chance of them losing on fixing an interest rate is very low.

 

[P924]

Second rate hike now, I'm getting blasted on my repayments

Yeah, you should prepare yourself for a bunch more in the next 2 years.

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[zerocool2009]

Second rate hike now, I'm getting blasted on my repayments

So with 0.25% up... its R161 more. 0.50% up its just over R300

I really wish for at least 3 to 4% up!

We all were spoilt with low rates......

 

[RedViking]

I wonder how many of the people who went for the low interest rates to save on paying rent, actually planned ahead. Those who I know, didn't really.

 

[Harmonic]

Eagerly waiting for more property deals in the next year or two

 

[zerocool2009]

Just a tip.... if you fix with fnb, you forfeit your flexi leg! Remember that

Even bankers dont know that rule!

 

[Halogen]

Just a tip.... if you fix with fnb, you forfeit your flexi leg! Remember that

Even bankers dont know that rule!

Just a question, wouldn't flexi rate be bad in a hyperinflation situation compared to fixed?

 

[zerocool2009]

Just a question, wouldn't flexi rate be bad in a hyperinflation situation compared to fixed?

Flexi is variable. You cant have best of both worlds. Fixing it is a huge risk (my own view personally).

I always say you can simulate a lower rate (just being smart)

 

[Jehosefat]

Flexi is variable. You cant have best of both worlds. Fixing it is a huge risk (my own view personally).

I always say you can simulate a lower rate (just being smart)

Paying more in doesn't "simulate a lower rate", it shortens the duration (or lowers the borrowed amount depending on whether you pay extra monthly or as a lump sum). Hence the lower total interest charge. The rate per period does not change.

 

[zerocool2009]

Paying more in doesn't "simulate a lower rate", it shortens the duration (or lowers the borrowed amount depending on whether you pay extra monthly or as a lump sum). Hence the lower total interest charge. The rate per period does not change.

A simple example, I am paying my salary into my bond for DECADES. When it goes up, my rate goes down, or rather, my monthly debit order plus fees is less (so what does that say) ?

 

[Jehosefat]

A simple example, I am paying my salary into my bond for DECADES. When it goes up, my rate goes down, or rather, my monthly debit order plus fees is less (so what does that say) ?

In that case it is reducing the borrowed amount (assuming the adjusted debit order maintains the original term of the bond). You are paying the same interest rate on a smaller balance, not a lower interest rate on the same balance.

 

[Not_original]

Just a question, wouldn't flexi rate be bad in a hyperinflation situation compared to fixed?

No sane bank would over you a fixed rate for the entire period (unless it is ridiculously high), hyperinflation is not something that is going to happen overnight (yeah it could but it is highly unlikely) so usually fixed is for a period of say 3 years. So if you fix it, you are basically betting something serious goes wrong in the next few years.

 

[rh1]

The recent rise in the repo rate has bumped our Homeloan interest rates but will there be more and would it not be prudent to fix ones homeloan interest rate? the first part of the question for me is yes, but the second part is difficult to decide. I recently received a quote from FNB offering a fixed interest rate of 11% for the next 5 years. I have 18 hours remaining to accept or decline...

Dude my interest rate is 6.5% up until R1.65mill, there after its 6.45%. This is after the interest rate increase.

 

[Halogen]

Flexi is variable. You cant have best of both worlds. Fixing it is a huge risk (my own view personally).

I always say you can simulate a lower rate (just being smart)

So just to be clear, I am a complete noob when it comes to real estate. I am currently in the baby steps learning phase.

Your healthy view interests me the most, to be honest, saw your responses on other threads I searched on MyBB to get a South Africa perspective, so your username has been burned into my memory.

Wanted to ask you, are there any books / podcasts / courses you would recommend for complete beginners to real estate? Doesn't help that I have no wisdom before buying something as risky as real estate. There are some mistakes better to avoid, even though one will inevitably make other mistakes while gaining experience.

 

[Halogen]

No sane bank would over you a fixed rate for the entire period (unless it is ridiculously high), hyperinflation is not something that is going to happen overnight (yeah it could but it is highly unlikely) so usually fixed is for a period of say 3 years. So if you fix it, you are basically betting something serious goes wrong in the next few years.

Oh wow thanks, I actually never knew it was fixed only for short durations. Also, the thing that hyperinflation doesn't just happen usually overnight also rings true. I am against living in fear, to me though it is more important to actually know what you are doing before diving in, was just curious.

 

[zerocool2009]

So just to be clear, I am a complete noob when it comes to real estate. I am currently in the baby steps learning phase.

Your healthy view interests me the most, to be honest, saw your responses on other threads I searched on MyBB to get a South Africa perspective, so your username has been burned into my memory.

Wanted to ask you, are there any books / podcasts / courses you would recommend for complete beginners to real estate? Doesn't help that I have no wisdom before buying something as risky as real estate. There are some mistakes better to avoid, even though one will inevitably make other mistakes while gaining experience.

Thanks, taking that as a compliment