What happens if interest rates rise?

If this is a concern take out a long term or fixed interest loan. This gives the investor two advantages:

• The amount of repayment is known in advance, it is easier to plan financially.
• The amount of interest paid will remain constant for the duration of the fixed term, despite a rise in interest rates.

Remember, whenever interest rates rise, property prices also increase providing the capital growth which protects investors. We only have to look back to 1988 to see an example of the parallel between a rise in interest rates and a peak in property prices.