Property
Does It Make Sense To Take a Fixed Rate over Floating Rate For Home Loan?
By Doctor Wealth  •  June 12, 2014

For a typical 1 milion dollar housing loan, deciding between  3 year fixed rate loan of 1.8% against the floating rate loan of 0.8% is about 10k a year. Take that and multiply it by 5 for a 5 million dollar loan that a friend of mine has and it becomes 50k which can cause more sleepless nights even if we assume that it is loose change for someone with a 5 million dollar loan.

New Home

That is the dilemma a friend of mine had recently in deciding whether to hedge his housing loan.

He was deciding in whether to put on a 5 year interest rate swap at 1.6% to pay a fixed rate and receive a floating rate that would be used to service his floating rate loan. That difference worked out to be just about 65k per annum in interest difference, to his disadvantage.

Why ...

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By Doctor Wealth
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