Watch Out The Mortgage Monster


Watch Out The Mortgage Monster

Master Mortgage Broker Kellyville

They Laughed When I Said Interest Rates
Were Going To Go Back
Up Again This Year

Is it Time to Fix My Mortgage?
The world is now starting to emerge from a period of enforced restraints into one where the emerging successes around the globe of Covid 19 vaccines are starting to provide cause for renewed optimism.

Everywhere we turn it seems that politicians and the news media are telling us the recovery is underway and our financial futures are going to be much better than anyone was hoping for.

Some though, remain cautious based on the false economy that has been propping the whole show up.

How Long Will this Property Boom Last?
kellyville mortgage brokerInterest rates are at record lows and the housing markets all across the country are going through the roof. In fact, they’re predicting the housing market capital gain increases will surpass those of 2003.

We all know, what goes up eventually comes down. Now I’m not a doom and gloom type of guy (not normally anyway), but all of this debt has to be paid back.

What is going to happen when all of those subsidies that have been freely handed out, cease?

We’re talking about JobKeeper, JobSeeker, Small Business loans and subsidies, housing and renovation grants (I’m sure I’ve missed some).

Remember What They Told Us, “There’s No Free Lunch”?
What it signals to me is a financial threat that is going to skittle quite a few people, it’s called inflation.

One of the most fundamental triggers on rising interest rates is always inflation. It will be wise to keep a close eye on business activity throughout local and world markets and its effect on inflation rates.

Because, if it continues to maintain positive upward momentum all of that fast money (stimulus cash) that has been thrown into markets around the world is without a doubt going to cease.

Financial media outlets are already reporting that many seasoned investors are deserting sovereign bonds. For example the ten year US bond yield has risen to almost a 1.4% yield. Also, the 10 year Australian yield is now upwards of 1.6%.

Who’s Going to Pick the Tomatoes?
Another concern is the current labour market shortfalls we are experiencing. Some personnel of course are never going to be available, because they are happy to just sit on their butts and suck up Government hand outs.

On the other hand there are those much needed individuals that can’t get into Australia, based on border restrictions. There are armies of long term stayers (seasonal workers and foreign students just waiting to jump in) that we need to bring segments of our econiomy back to full power.

How long will it be until internation tourism is back up to speed again?

With all of the border closures we’ve had, both nationally and internationally we are experiencing prevalent material shortages because of continuing transportation delays.

When Will Interest Rates Start Going Up Again?
We all know the law of supply and demand, the greater the demand gets on a limited supply simply means that inflation is just looming around the corner.

As soon as that happens, interest rates will start to rise!!!

Philip Lowe said (he’s the

present Governor of the Reserve Bank of Australia), there’s probably not going to be any official interest rate increases until somewhere into 2024.

However, the financial markets see it differently, as they have their money on it happening in a lot less time, two possibly one years, or god forbid even sooner.

Take note, because there’s some pretty savvy people that hang around the money markets and they’re suggesting interest rate hikes could happen even sooner than that, like before Christmas.

One of my personal indicators is, I watch the banks and what they’re doing with fixed interest rates. There are some great fixed interest rates available in the mortgage market at the moment. When I see those rates start to creep up, then I know we are in for interest rate rate increases across the board.

‘Lock it In’ – Fixed Rates Will Rise Very Soon
When you look back at thewww.mastermortgagebrokersydney.com.au/mortgage-broker-kellyville history of interest rate cycles it’s not difficult to predict that in the next cycle of increases (where else are they going but up) there will be around 10 individual rate rises.

Now when rates change the standard movement is 0.25%, therefore if we include 10 rises into our calculations we end up with a 2.5% official interest rate increase over time.

This will mean that most variable rate owner occupied mortgages are going to end up somewhere between 5-6%. That should set off alarm bells for most who have a variable rate home loan.

Is it time for you to seriously look at fixing all or part of your home loan?

Don’t Expect that, Which You Don’t Inspect
Before you jump in though, it will pay to do a little comparison rate shopping. In other words, understand what a comparison or true rate is and compare that to the common advertised rate.

To give you an example, Westpac is promoting a fixed interest rate of 1.99% over a fixed term of 4 years, but elsewhere on the promotional material you should be able to hunt down what is known as the comparison rate.

What is a comparison rate? That’s the rate after all fees and charges are included. Keep in mind, banks don’t send you an invoice and give you 30 days to pay, no they just immediately add it to your loan account and start charging you interest on the new fee from day one (what a great profit making business model).

By the way, the Westpac comparison rate on the above example comes out at 3.29%.

Is it Time to Talk to a Savvy Mortgage Broker?
A great place to start is with a savvy mortgage broker, where with leading edge software they can access the details of most fixed and variable rate loans and they won’t be shy about letting you see what the comparison rate will be with any given loan.

Although rates change constantly, one of the most attractive appears to be a three-year fixed-rate loan with a 100% offset account (offset accounts can help you pay your mortgage off faster) from Adelaide Bank at 2.05 per cent – comparison rate 2.49 per cent.

Of course, whenever you switch loan types, especially to fixed rate loans, you should fully verse yourself on any terms and conditions (especially restrictions) those types of loans may impose on you.

Should you have a mortgage currently, whether it’s an owner occupied or an investment property loan, as a priority you should undertake doing what I call a stress test on what your future monthly/fortnightly/weekly repayments are going to come out at, once interest rates go back up.

You can go to our website, mastermortgagebrokersydney.com.au, where you will find all kinds of calculators you can play around with.

The first calculation we would suggest is to consider what it would be like if mortgage rates were already at 5%. To many, the number they see will come as a bit of a shock.

Learn How to Become Mortgage Fit
While interest rates are at record lows, a very smart move is to immediately start making repayments as if interest rates were already at 5% (or thereabouts). Doing that will make it all that much easier on your household budget when that day does arrive.

Should you do that, another bonus you will discover is, how much faster you will be paying your mortgage off.

At the moment the property market is going through the roof, mainly courtesy of record low interest rates. But, most of us have seen it all before but, once those mortgage rates start going back up, it’ll potentially stop the property market in its tracks.

If you remember, prior to 2004 and 2005 the market also went through the roof, then it went backward and was flat for the next 10 years after that.

If we can help, give us a call 02 8861 1689

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Top 5 tips for standing out on Airbnb

Mortgage Broker KellyvilleThe short term rental market is booming. Each year, tens of thousands of Australians list their properties on Airbnb to make a tidy buck on the side. Here are our top five tips on how to stand head and shoulders above your competition.

Most people who own an investment property prefer to rent it out long term. It’s more of a set and forget approach, if you like.

But for some, such as those who own one home and/or those who travel for long periods, renting out their property on platforms such as Airbnb and Stayz is becoming an increasingly appealing option.

In fact, in 2017 more than 30,000 people listed their homes on Airbnb across Sydney and Melbourne alone.

These numbers have made the Australian Taxation Office (ATO) sit up and take notice. So much so that the ATO recently declared they’ll be ramping up their enforcement activities and will undertake 4,500 audits of taxpayers they suspect may not be declaring Airbnb income.

Suffice to say, when the ATO starts paying attention to a marketplace, you know money is being made.

Here are our top 5 tips on how to make more money than the next person.

1. Professional photos

First impressions last, and these days the first impression is the webpage impression on your Airbnb listing.

You don’t see real estate agents walking around with outdated camera phones taking dank snaps of the living room. And neither should you!

A good photographer has the skills and equipment to highlight the beautiful little details that makes your property sing, and crop out the less than desirable qualities that may turn a potential guest away.

Obtaining high quality images from a professional real estate photographer costs between $150-$300 via websites such as Snappr or Airtasker.

If they get you just one extra two to three night booking they’ll have already paid themselves off.

2. The devil is in the details

There’s no point in having a photographer take wonderful photos of your property only for the guest to show up and feel like they’ve been conned by the old bait and switch!

You need to put in that extra bit of effort to make their stay memorable. After all, they’ve chosen your place ahead of a hotel, not to mention all the other Airbnb competition out there.

There’s a good chance your guest is visiting your local area to check it out. So try and include as much (classy) local artwork, local guidebooks, decorations and information as possible.

The bathroom should also always be spotless, make sure good quality tea and coffee is available for free, and ensure all the basic kitchenware is easy to find.

Other tips include providing menus for local takeaway, tips for local sightseeing, entertainment such as books and boardgames, all necessary electrical appliances such an iron and hairdryer, and some basic cleaning equipment and products in case something gets spilled.

3. Play host, but don’t smother your guest

It’s important that you’re available to your guest should they need to check anything.

That might range from “where is the frying pan?” all the way to “where’s the local hospital?”.

It’s critical that you never show irritation, no matter how trivial or inconsiderate a guest’s inquiry might appear.

That’s because one scathing review can undo a lot of the money, time and effort you’ve invested.

It’s equally important to give your guest the privacy they require. Be on hand to offer any simple tips or suggestions, but don’t pin them down for hours on end chatting to them about your own travels.

This is their holiday after all!

4. Consider using a property management service

If you’re going to be away from your property for a while it’s worth considering taking the hassle and stress out of trying to manage your property from afar by outsourcing to a professional service.

There are plenty of options out there to choose from, including (but not limited to) Hey TomHometimeHomeHost and Airsorted.

Expect to pay about a 15% to 20% (+ GST) commission to them, however most boast that they can help increase your Airbnb income.

5. Thank guests for their reviews

Taking the time out to thank every single guest for their review shows you’re a super attentive host who’s always aiming to please.

The best thing is it also gives you the opportunity to further highlight the positive aspects of your property.

For example, if a guest writes in their review that they had great ocean reviews, reply: “Thanks for the review Craig! Stoked that you enjoyed the ocean views from your bedroom!”

The best thing about this trick is that it even works for negative reviews.

That’s because most negative reviews will also mention something positive about the property. So make sure you thank them for that, acknowledge their complaint and thank them for bringing it to your attention, and advise that you’ve taken steps to rectify the issue for future guests (and actually do so!).

This shows other guests that you’re a very reasonable person who takes all concerns seriously – and will be approachable if they need you during their stay.

Guess who else is approachable?

We are!

If you have any queries or questions about your property and think we might be able to help out, don’t hesitate to get in touch – we’d love to help out.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

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