Rise High Investor Weekly Video #34 Fixed versus Variable

Let’s tackle a big question for property investors: Should you go fixed or variable with your investment loans? While there’s no one-size-fits-all answer, here’s how to decide:

Variable Loans: Pros and Cons

Variable loans are flexible, allowing you to pay them off faster and link an offset account to reduce interest costs. However, they come with the risk of fluctuating interest rates, which can make repayments unpredictable.

Fixed Loans: Pros and Cons

Fixed loans give you certainty by locking in an interest rate for a set period. This stability is great for risk-averse investors but comes at the cost of flexibility. Early repayments or refinancing can be expensive, and offset accounts are often unavailable.

Finding the Right Balance

A mix of fixed and variable loans can offer the best of both worlds. Fixed loans provide stability, while variable loans give you the flexibility to manage your finances. Personally, I aim for a 50/50 split to balance the impact of interest rate changes.

Tailoring Your Choice

The right mix depends on your financial situation. If cash flow is tight, fixing more of your loans can provide peace of mind. If you have strong cash flow, keeping more loans variable gives you greater flexibility.

The decision between fixed and variable loans should align with your financial goals and risk tolerance. A mix can help balance flexibility and certainty. Work with your property investment advisor to find the best structure for your needs.