Published on April 09, 2015

No Quick Fix For Fixed Rate Finance

Monumental stuff ups

My 15-plus years of experience doing what I do has left me with no doubt that monumental stuff ups are the norm when it comes to correctly structuring  finances for property investors.

I firmly believe property investors are business owners, and how their business finance is structured can be the difference between failure and success.

One of the first things you’ll need to consider when looking at your finances is to make sure you're in a position to access your equity as it is created.

Not being able to access the equity you've accumulated restricts the further growth of your property investment portfolio, because you're not able to reinvest your asset’s earnings.

Being informed of your options is incredibly important in order for you to achieve the best outcomes for your circumstances – this week we're going to put a spotlight on fixed rate loans.

To fix or not to fix – that is the question

Fixed rate loans mean the interest rate is fixed, generally from one to five years.

These can be good in the sense that they provide you with peace of mind and certainty when maintaining the household budget because the repayments will not change during the fixed period.

They also help with affordability if interest rates are going up, as you have your loan’s interest rates fixed at a certain level.

Although these are the positives of fixed rate loans, their biggest downfall is inflexibility.

So while you can still access your equity through this style of loan, you are very limited in the options that you have for getting the most out of that equity.

For example, if you want to tap into the equity of your loan you can, but you must go back to the same financial institution you have the original fixed term with in order to be able to get the next loan using that equity.

Your financial institution in this instance could allocate you with a valuer that provides a poor valuation, impeding your opportunity for growth and there may be no ways around it.

In these circumstances, you don’t have the flexibility to go to different lenders and seek out better valuations to unlock this equity unless you’re prepared to pay the break fees on your fixed loan, which can be a very costly exercise.

This is precisely why the type of loan you choose is something that needs to be carefully considered before jumping in and signing a contract.

How to choose

The most common question we hear is “how do I know which loan to choose?”.

While we can’t tell you whether or not to fix a loan, over the coming weeks we’ll dedicate our attention to highlighting some of the different loans available to help guide you when it comes time to sign on the dotted line.

In the meantime we’re able to compare what’s currently on offer from many lenders and find the best (variable and fixed loan) for your specific needs - just give us a call for an obligation free appraisal.

MRD offers a full spectrum of services relating to property acquisition, investment options, superannuation and insurance, and can help you develop clarity around your short, medium and long term financial goals.

Speaking to MRD Finance is a good starting point to find out which loan is most appropriate for your individual circumstances, and if we can help we’ll also guide you through the paperwork and application requirements.

Pick up the phone and call us on 1300 883 854 or send an email to with your name and best contact phone number and we'll provide you with more information, including a complimentary consultation to establish what loan structure best suits your needs.

Partnering with you for your investment success.

Nick Lockhart.