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Redraw mortgage to buy USD?

Discussion in 'General Investing Discussion' started by allie181, 8th Oct, 2010.

  1. allie181

    allie181 New Member

    8th Oct, 2010
    I have a question that sounds like a maths exam question and was hoping a maths wiz could figure out the answer ;)

    I currently have $7000 extra dollars sitting in my mortgage that I can redraw. It is money I am planning to use when I visit the USA in September next year but I am wondering whether now is a good time to redraw it and convert it to USD.

    I have a variable mortgage at 6.71%pa rate.

    What would the USD rate have to drop to in September 2011 in order for it to have been better for me to convert now rather than in September 2011?

    I hope someone can do the sums for me. Thanks :)
  2. Johny_come_lately

    Johny_come_lately Well-Known Member

    1st Jul, 2009
    SE Queensland
    What rate will it be in September 2011?

    J. :p
  3. Billv

    Billv Getting there

    15th Jul, 2007
    Sydney, NSW
    The $7K should cost you approx $450-500 in interest.
    Assuming our $ is 1:1 at the moment so you'll get US$7K for your money and the AUD wil have to drop to approx 0.93 or lower for to lose money.

    Is the AUD going to pull back?
    I doubt it but many money making games are played behind the scenes so you never know.

    The fact though is that the US isn't in good shape atm and there isn't much they can do other than to keep printing money so the USD in my opinion will keep falling and you could be better off keeping your AUD.

    I hope this helps