Paul Glossop: Good day and welcome again to Pure Property Investment one on one. I’m joined today by Scott Le Quesne. Scott, thanks for joining us mate. Scott is the principal at Aussie Home Loans in Paramatta and Rouse Hill. We wanted to talk a little bit and Scott you probably know more or know less qualified then anyone that I know of to speak about a couple of these aspects. Specifically, though, quite topical at the moment, one in particular that I get asked a lot in our business of Pure Property Investment is; fix versus variable and right now I guess the environments changing every other week but some of the pros and cons that are available to certain, both investors and owner occupiers and things, people need to start considering.
Scott Le Quesne: Yes, it’s a big question that we get asked a lot and traditionally our answer has been, well it’s like insurance. If you take a fix line generally you pay for it but you’re locking in that rate and you’re sure of what exactly it’s going to be. But generally, you’ve paid a bit of a premium for it. So, we talk about fixed like it being an insurance policy.
But now with the change of the environment of lending, we’re really speaking to people about saying lock in your yield. For an investor, if you’re fixing you can lock in your yield by knowing exactly where your rates are at and the other changing market with rates moving up, particularly on the interest only side of things on the variable loans, it really is a good thing for people to be locking in and locking away that yield.
Paul Glossop: Yes, for sure and I think there’s probably a word to the wise if your broker’s not talking to you about the options you’ve got available, give him a kick in the butt to start to talk about what they can do and what some of the options are available to you and how that’s going to reflect.
Scott Le Quesne: I guess one of the cons to fixing is having an understanding of what purpose you’ve got for that property. If you are going to do a renovation on that property and then you want to get some equity out of it, you’ve to got have a think about whether you’re going to fix, because whether that lender is going to lend you some extra money when you’re tapping back into that property.
So, if it’s a set-in figure property we’re generally saying to people, consider fixing with the way the rates are moving at the moment. But if you’ve got some plans for that property or it’s a potential flip property, obviously you don’t want to be fixing in. You need that flexibility of the variable to either refinance to a lender that will lend you the money to access the equity or if you’re going to sell it off, you obviously don’t want to be paying break costs on a fix line.
Paul Glossop: Very, very vital I think, the couple things that break cost aspect and understanding it goes back down, I mean I almost say the same thing to every single question that we ask or every single aspect of property investment that comes down to is; what’s your objective and if you don’t understand that, understand it before you fix a line, before you flip it over variable, before you do anything regarding that property.
Understand what your purpose is. Majority of the time your objectives and your purpose for that property are going to remain pretty consistent. So, understand those, once you understand them, speak to your broker to make sure you understand what’s available to you and how that’s going to reflect on the financial ramifications.
So, if you do want to contact Scott or anyone from his team, feel free to give him a call at the contact details at the bottom of your screen now and you can also contact us on the details at the bottom of the screen as well. So, thanks for joining us, cheers!