Real Estate and Mortgage Broker Decisions

by CRE on 28 Jun 2016

Should you use a real estate agent or mortgage brokers? The following questions are a guide to understand whether you're getting the most from your investment.

1. Is it time to review your rental return?

Always make sure that you’re getting the best rental return possible. Do your research on other property rental prices in the area and talk to your property manager about a reasonable increase in rent if the lease on your property is due for renewal.

2. Can you add value to your property?

There’s plenty of cost-effective ways to add value to your rental property which may consequently enable you to increase the rental price. Anything from a fresh coat of paint throughout to a kitchen or bathroom revamp are great ways to add value to a property.

3. Are you maximizing the equity on your property?

It’s no secret that Australian property prices have been on the rise now for some time, particularly around the major cities of Melbourne and Sydney. Now is a good time to assess how much equity you have on your property. You can speak to a Liberty Adviser today about using your increased equity to further grow your assets.

4. Is your loan structure working for you?

Having the right loan for your investment property can play a vital role in how well your property performs. It’s a good idea to seek expert advice about your existing loan arrangement and the many potential options to ensure you are getting the most from your investment property.

Australian interest rates have been at historic lows for some time, prompting much debate on whether or not now is the time to ‘fix’ the interest rate on your home loan.

Should You Fix Rates?

Everyone has one eye on the banks' fixed rates. Since 2012 the interest rate has been plummeting and has now been maintained at extraordinarily low levels. Is now the best time to switch to a fixed rate home loan or should you continue to make savings with a variable rate loan option?

Fixed Rates

A fixed interest loan allows you to ‘lock in’ an agreed interest rate with your lender. This way you don't have to worry about the rising and falling interest rates of your loan over time, or even if the Reserve Bank of Australia decides to raise the national base rate of interest. Usually ‘fixed’ for a set period (often from one to five years), the benefit of having a fixed rate home loan is that you always know exactly what your repayments will be each month.

Whilst having fixed monthly repayments is great for your peace of mind, there are some disadvantages to taking a fixed (rather than variable) home loan option. Fixed rate home loans often have less flexibility than a variable rate loan arrangement; you may be restricted from making extra repayments and, if the interest rate falls, you will miss out on any incremental savings.

Partially Fixed Loans

For those still sitting on the fence, it’s well worth considering a partially fixed or split rate home loan option. This type of loan arrangement is split, with a portion of your loan being paid at a fixed rate and the remainder being paid at a variable rate. This type of loan will give you some reassurance in knowing roughly how much you will need to pay each month - whilst also making some financial savings if interest rates fall. If interest rates rise, you won’t incur any great cost as only part of your loan is fixed.

The decision to fix or not to fix your home loan interest rate really comes down to each of us as individuals and how much financial risk we are willing and able to take. As with all such decisions, you should consider speaking with an expert. If you’re thinking about investing in Australia view the Liberty website today - why not discuss your options with a Liberty Adviser today.

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