I remember in March 2020 when we thought the world was ending, and the term “pre covid” became part of the common language. I couldn’t wait to start using the term “post covid” and thankfully, I really think now we can…
Property prices across the country have gone through the roof – which doesn’t make a great deal of sense given we were in a pandemic – but hey, from someone who owns a heap of property, I’ll take the win!
We’ve been a little quiet on the blog front – mainly due to just being too busy, but that’s changing – we plan on reaching out and providing more updates on a regular basis.
If there’s a subject you want us to discuss and break down – please let us know!
Today I want to talk about interest rates increasing… yes, they are going up – whether we voted Liberal, Labor or the Greens etc – they were always going to go up…
While no one was watching, fixed rates started moving up late 2021, and most recently the variable rates. The difference in the fixed rates now, in some cases, is 1% to 2% higher than the variable rates – but that doesn’t mean you can’t get a better deal.
For our Home Loan Clients
When we talk cashflow – if you’re paying the minimum repayment on your home loan – then an interest rate rises will 100% affect the household budget – so rather than waiting for the repayment to go up – why not increase the repayment in line with say a 2% rate increase now?
By doing this, not only are you forecasting where interest rates could go, but you’re budgeting today, and any extra you pay will reduce the interest on your home loan and build up a nice little buffer.
Owner Occupier Home Loans – If today’s interest rate is 2.6%, on a $500,000 mortgage over 28 years, your loan repayment is $2,096 per month. If interest rates went to 4.6%, your minimum repayment jumps to $2,649.
So, if you make this the new loan repayment ($2,649pm) now, you’re budgeting for future rate rises, and in doing so, reducing the interest on your home loan today and building up a nice little buffer.
Investment Home Loans – you should be paying interest only anyway, so your repayments will just increase in line with interest rates increasing, as the interest is calculated daily and charged monthly.
For many of our clients, we’ve been doing re-price on their existing loans – hey if we can keep the banks honest, we will. This week we had 4 clients get a 0.45% rate cut with their existing bank just by asking… it costs nothing, and we do it every day!!
But we can help to find a better deal elsewhere too! There’re still some awesome offers out there, you may be paying fees for products and features you really don’t need – we can review this with you and get you paying less!
For our Investor Clinets
Rents – Wow… everyday we’re blown away by seeing how many clients have not taken advantage of the rental increases across absolutely every one of our previous buying locations. Just this week I increased the rent on a property we own by $90 per week – why hasn’t everyone been doing this?!
Because the market dictates it… you need to be increasing the rent on your property – and not just by what the property manager tells you – by what the area is renting properties like yours at!
A real life example…
A property manager in QLD who managed one of our properties, told me my four bedroom house that was getting $410 per week should only have a rental increase to $430 per week max and the tenants wouldn’t accept anything else…
Here’s me thinking the property manager works for the me not the tenant.
I quickly looked on realestate.com.au to see what properties that are the same as mine were renting for in the area… and guess what – no less than $540 per week – that’s a difference of $110 per week or $5,720 per year in my pocket from what the PM suggested.
P.S We’re not with that property manager now, and our new property manager has just re-signed the tenant at $540 per week for a 12 month lease…
Keep in mind, property prices have increased, so too has the land rates, the water charges, and insurance, not to mention the interest rate increase – so the cost to hold your property now is more – so increasing the rent needs to happen to combat these increases, yes?
Who buys property in a pandemic? We never stopped!
It was a bit of a challenge working around boarder closures, mask mandates, G2G boarder passes – but… working closely with some of our awesome clients, we achieved some great results across Brisbane, Melbourne and in the last 12 months, areas of Perth and WA, achieving over 6% rental yield with some properties…
If you’re thinking, maybe I should look at a property – now is the time!
Get ahead of everyone else, start making money from property. Don’t let another year pass sitting back and thinking, maybe next year we will look at it…