Save or buy?

[loveshack]

Hi there!
I hope this can be posted here...
In the light of the rate rise recently and fears of more to come,we're not sure what to do...
We wanted to save up a bit for a good deposit,so that our instalments would be less,but with the rate rise,we're thinking of buying sooner so that we get a good deal on interest rates.Very confused at the moment:confused:
What would you suggest?
Thanks in advance for your reply!

[andie_pandie]

Hi Loveshack

I can not advise what is the best option with regards to buying. It is always a hard one as when rates increase as they have been doing and with talk that this may not be the last one before the end of the year I can see why you are starting to feel the pressure.

It can be a double edged sword with the rates increasing and also in some areas the house prices increasing at a level that is getting out of reach for a lot of potential buyers.

One thing you need to look at is with the rates increasing the banks also increase the rate that they service the loans at, hence your borrowing capacity will become less. This is because they need to make sure that if the rates got up to a certain level then they need to make sure that you are going to be able to service the debt.

Another thing to consider if you buy now is what you have discussed, the rates at the present time. If you are worried about future rate increases there are still quite reasonable fixed prices out there and some fixed home loans you have the ability to put extra repayments into and some even have a redraw capacity.

Even though there has been several increases over the last 5yrs they are still reasonable, the difference with further increases is the loan amounts that people are getting are generally a lot higher than they have ever been due to the increase in house prices over the last few years.

I hope this has helped a little, as mentioned I can not advise the best option, it is really a individual choice. If you would like to discuss your options further with me, I am happy to receive a PM from you and we can discuss your options in more detail.

Regards Andrea