How To Get A Good Result At An Open House

Open HouseArranging regular times for prospective buyers to inspect sale properties in groups has proven to be a very effective marketing technique. While most people now search online for suitable properties, they still like to inspect in person, and an open house allows them to have a close look without feeling under pressure.

Large Visitor Numbers at an Open House Creates Urgency

The best result for an agent is to have large visitor numbers. This generates a sense of urgency among genuine buyers. Even if many of the crowd are just looking, people assume that everyone there is a potential rival for the property. Often, the buyer who gets the property will be the one who has decided to out-manoeuvre the others by offering more than originally intended.
To get such an excellent result there are a few things that need to happen and we have drawn on our experience as agents to offer some suggestions. Position One Property is a property agency serving the greater Brisbane area and we have found that some techniques work better than others to get a successful open inspection.

For Best Results, the Owners Should not be Present

We said earlier that potential buyers like this method because they can look around without feeling any pressure from an agent. This also goes for the owners as well, so it is important, if the property is yours, to make yourself scarce. Your agent will look after the place, so go to the movies, visit a friend or go for a long walk.

Temporarily remove all Signs of Pet Ownership

If you have pets, make sure all their toys, beds, blankets, water and food bowls are out of sight. The pets also need to be out of sight. A bird aviary in the back yard will not be a problem but a couple of large, protective dogs in the house will be. Leave them with a friend for the couple of hours of the open house.

Clean, Tidy and De-Clutter

It is surprising that some sellers leave beds unmade and dirty dishes in the kitchen sink during inspections. Please make sure that everything is neat, tidy and clean. First impressions are vital, so get rid of clutter. This allows buyers to assess the amount of space you have, which cannot be seen if it is hidden by unnecessary items.

Allow Light to Flood the Interior

The final touch is to turn on the lights, even during the day; open the curtains and pull up the blinds. Allow light to flood into the interior. This also adds to the feeling of spaciousness and eliminates any dark spots that detract from the overall ambiance.
We find that a well-organised and run open house can generate a lot of interest. Do your part in getting the property in tip-top condition and trust your agent to find genuine buyers from among the visitors.

Deciding Maintenance Priorities – Where To Start?

Every property investor wants high occupancy figures for their rental properties.  Placing tenants with a good financial and rental history is essential to achieving that result. These days, however, good tenants expect their dwellings be of a high standard.  They expect it to be well presented, clean and tidy and with all the modern conveniences expected in an advanced society.  A professional property manager, such as Position One Property, is your key to achieving this outcome effectively.

Absentee Owners Rely on Property Managers to Maintain their Rental Properties

This makes the role of the professional property manager more challenging than just collecting the rent and doing inspections. Owners, especially those who live interstate or overseas, rely on us to keep an eye on the overall state of the property. They know that to keep good tenants, they cannot allow their asset to deteriorate below a minimum standard.

We have found that one of the best ways to do this is to establish a list of repair priorities for the properties under our management. Position One Property manages dwellings across south-east Queensland. They range from newly built homes to older style Queenslanders and all styles in between as well as units, duplexes and others.

Essential Services and Security at Top of Repair Priorities

Any repair that involves essential services such as electrical, water supply, plumbing and issues with sewerage should always be the highest priority. Security comes a very close second.  Doors that won’t lock, security screens that are broken and alarm systems that don’t work should all be repaired as quickly as possible.

Smoke Detectors and Pool Fencing Need Immediate Attention

Every rental property must be fitted with working smoke detectors.  Smoke detectors are an item that should be checked regularly and there are regulations around this. Repairs or replacements, where necessary, are essential and immediate. If the property has a swimming pool, the pool fencing must be on the priority list. Too many very young children have drowned in poorly maintained pools at rental properties where they lived or were visiting.

Border Fences and Gates on the List

Poorly maintained border fences can quickly become unsafe for tenants with young children. Missing palings leave gaps through which young adventurers can squeeze  General fencing and gates must go onto the list. Gate safety is essential in high-set houses to prevent injury in a fall down the stairs if the latches fail.

Kitchens and Bathrooms too Expensive to Neglect

It is said that the two rooms that sell a home are the kitchen and bathroom.  These also happen to be the most expensive to renovate. For that reason, we believe that they should be high on the list when repairs become necessary. The only exception is if the repair is urgent because of a safety issue, in which case it must be undertaken immediately.

Even in the newest homes there will be repairs required. By not allowing them to accumulate, the repair costs will be more easily absorbed; more expensive repairs later on will not be necessary and the owners will get to keep their excellent tenants.

Renting in Brisbane – Your Quick Start Guide

Renting in BrisbaneMany people prefer renting in Brisbane because they can get safe and reliable housing without the responsibility or expense of owning a house. They may also opt to rent when they’re building their own home.  When people are in the city temporarily they may choose to rent and there can be various other reasons.  Whatever the reason, we’ve made it easier for you to rent a home in Brisbane.  One in which you can feel comfortable, safe, and happy.  We give you this simple and straightforward process to follow.

Renting in Brisbane – What You Need to Know

1 Decide What Kind of Property to Rent

Deciding what kind of home you want to be renting in Brisbane requires that you ask yourself several important questions.  Your foremost question should centre on what type of dwelling you would prefer to live in.  Is it an apartment, townhouse, duplex, or stand alone house?

After you decide what kind of home you would like to live in, you must then consider other details.  These are factors that could impact how comfortable and happy you will be during your tenancy. These factors may include:

  • How many bedrooms you will need
  • How much rent you can afford to pay each month
  • Whether or not you will need or want to live with a roommate
  • If there are features – like a fenced-in yard for your pets  (and will the landlord permit pets?)
  • If maintenance like lawn mowing is included with your monthly rent
  • What utilities are included with rent
  • What amenities like nearby schools, shops or hospitals are found in the neighbourhood

Once you have all of these criteria outlined, you can then start looking for properties available for renting in Brisbane. If you’re like the bulk of the population, you’ll head online first for your search.  If you have access or time, it’s still worth looking in the local newspaper and real estate agent windows for listings. Some landlords still list this way!  Of course, at Position One Property we have our available rentals on our website under Find a Rental.

2 Apply for Tenancy

So you’ve found a great new home!  We strongly recommend personally inspecting the property to be sure it suits your needs.  Photographs online can be phenomenal and by law must be an accurate representation of the property.  But there’s nothing like seeing the place ‘in the flesh’.  If you simply cannot be preset, there are businesses who provide a personal concierge service to out-of-towners who need to secure something prior to their arrival in town.

Do Note:

There are also strict laws around taking photographs of currently rented properties.  Photographs that show any of a tenant’s possessions may not be used by property managers/owners in advertising unless the tenant provides prior written agreement.  It follows that a prospective tenant inspecting a property that is becoming available for rent, but is not yet vacated by the previous tenant, is not permitted to photograph the property without written permission of the current tenant.  Often taking video or still photos is popular so prospective tenants can ‘remember what was there’ after they’ve left – and particularly when overload occurs as a result of inspecting a number of properties in quick succession!  Our advice is to never assume it’s okay – please always ask for permission to photograph to avoid any disputes.  This legislation is covered in greater detail on the Residential Tenancies Authority website under photographs of the property.


The next step of the process for renting in Brisbane calls for you to apply to live in your chosen rental home. Most Brisbane landlords or lessors require that prospective renters complete a paper application and submit to a background check. This check ensures that you meet all of the qualifications to satisfy your lease.  It also checks that you do not have any past evictions on your rental record.

If your application is denied, you have every right to ask for what reason so that you can correct the issues before applying for another rental home. However, if your application is approved, well done – you are one step closer to moving in!

During the meeting with the property manager, it will work in your favour if you:

  • Be on time for the inspection, particularly if it is a personal appointment rather than an “open for viewing”
  • Dress nicely and be polite, this will be representing you to the owner, should you apply to rent the house
  • Introduce yourself and anyone accompanying you to the meeting
  • Have your questions about the home ready
  • Respect the property as you tour it
  • Have available all of the documentation needed, such as proof of your identity and income, to confirm your tenancy for the home if you plan to apply right away
  • Pay the deposit to hold the home

It is important that you get a receipt for the deposit, and Position One Property will always ensure you receive this. Also find out for how long the deposit will hold the home for you. You must inform the landlord of your decision to take or to pass on the home before the end of that hold period. If you decide to pass on the home, you will receive your deposit back from the property manager.  The property manager will have it held in a trust account.

3 Sign Your Lease and Move Into Your New Home

The inspection you’ve made of the property gives you the chance to look for damages or parts of the home that need to be repaired or serviced. You should request that these issues be addressed before you sign the rental agreement.  If certain conditions exist – say a mark on the carpet – this will be noted on the Entry Condition Report which will be completed by the property manager.  If there is anything you would like to be noted, now is the time to bring it up.  Normal wear and tear occurs and is allowed for, but Entry and Exit Condition Reports are designed to protect both tenant and landlord.  You’ll find more details on Entry and Exit Condition Reports at the Queensland Government Website under Renting.

The lease on your new rental home will cover topics like:

  • Who is the primary lease holder
  • Who is permitted to live at the residence
  • The term of the lease
  • The amount of any bond required prior to moving in
  • The amount of the rent and how often and on what date the rent should be paid
  • What payment forms are allowed to be used to pay rent, such as a cheque, credit card, etc
  • Other terms as outlined by your landlord

Do make sure you read the details carefully so you know what is expected of you.  The contract is a two-way-street – both landlord and tenant have obligations and both have rights.  The contract is to protect both parties and make life easier.  If you don’t understand something, do get assistance and clarification.

4 Buy any Necessities and Be Sure to Notify of Change of Address

You will receive a copy of your lease agreement upon moving in. After you have signed this agreement, you can then hunt down the necessities that you will need to live happily and comfortably in your new home.

We also recommend you take out renters insurance to protect you and your possessions against theft and damages.  If you happen to acquire additional belongings prior to moving in – such as housewares, new linens, furniture, and other belongings, your policy should be updated to include these items.

You should also change your address at the post office and notify important places about your move. You will want to change your address at work, school, the bank, Centrelink, the electoral commission, the doctor’s and dentist’s office, Medicare, the driver’s license office, and other locations that impact your daily life.

Here’s a handy checklist for making your change of address exercise a breeze :

Change of Address Checklist 29 July 2016

The process for renting in Brisbane requires a focused effort for a short period of time, but is not onerous or unreasonable.  You can find the ideal place to call home and move in quickly by following these easy and straightforward steps. This process can be expedited by choosing homes that are professionally managed in Brisbane by a reputable company like Position One Property.  Call Us Today on 07 3843 4511.


What to Look for in a Property Management Agency

Property management is made a whole lot easier when property owners engage the services of a reputable property management agency.

A good agency will guarantee that your interests are protected and will also ensure that relevant legislation is adhered to.  We make absolutely sure of that.

But what criterion does one use in the selection of a good property management agency?

What Constitutes a ‘Good’ Property Management Agency?

There are a number of ways to identify a good property management agency.

As a property owner, you will benefit by being conversant with the agency’s appointment terms.  The services they offer to their clients should be completely transparent.  These should be readily available to you for your consideration.

It goes without saying that their commissions, charges and fees are a paramount consideration as well.  There are recommended levels for these and you should be wary of any large deviations from the norm.  It is okay to question why!  And consider why an agency will have super-cheap commissions, charges and fees.  Some offer introductory free periods.  A landlord should question why this is. What are the implications for the agency?  For your property?  For the tenants?  How will your invesment return be affected?

The agency should also be ready to give detailed procedures about how they carry out repairs and maintenance as well as how they handle complaints, evictions, and terminations of tenancy.

At Position One Property we have worked hard to build the perfect team.  Our team are are highly trained and passionate about taking care of your property.  We are a licensed company, compliant with all required regulations by the State of Queensland.  So you can rest assured that your property is in good hands.  We treat your property like it’s our very own property.  We ensure consistency in our processes so that you can be sure you’ll receive appropriate service for each property, and each lease.

What Are Some of The Responsibilities of a Property Management Agency?

There is a lot that is required to be done in a property management agency.

A rental management agency must:

– Act in the property owner’s best interests in all negotiations
– Respond promptly to tenants requests for repairs and maintenance
– Carry out regular inspections while keeping tenants and owners well informed about such events
– Have a clear detailed procedure for dealing with complaints
– Ensure trades and service providers have relevant licences

A rental management agency ought to maintain open communication channels with tenants to facilitate harmonious interactions.  At Position One Property we do this.  Consequently, satisfaction for both parties is a known characteristic of our widely acclaimed property management services.

What Sets Us Apart at Position One?

Our prime focus is centred on providing a refreshing alternative for your property management requirements. We take pride in maintaining an exceptionally high standard of service and so do not take any chances in training our passionate property management team.  This is a team who are dedicated to investing their time and expertise in the management of your property.  We hold our clients – both owners and residents – in high regard.  We approach our relationship with them with the utmost respect.

What else?

We Find You Just the Perfect Tenant

Our team thoroughly screens every prospective tenant while verifying their details.

Zero Tolerance Policy for Arrears

We do not hesitate to follow up with tenants concerning delayed rental arrears.

We Make it a Whole Lot Easier For You

Given that we go the extra mile in organizing lease renewals and sourcing for new tenants, the degree of convenience for the services we offer cannot be overemphasized.

Communication is our priority

Our company maintains regular contact with our clients and informs them of all developments.  We are quick to alert them when any issues come up.

Property Marketing Strategies

As your leading property manager in Brisbane, we have the best property marketing strategies.  These include professional photographs to show your property in its best light.  These go a long way to enhancing the features of your property and showing it to be a desirable residence for tenants.  Consequently, this sets it apart from the rest who are vying for applications from the same pool of tenants.

Consistently Low Vacancy Rate

We also maintain a consistently low vacancy rate which is facilitated and supported by our tenancy renewal policy.

Streamlined Systems and Procedures

The systems and procedures we have put in place are friendly to property owners as well as tenants. Our appointment forms are clear and concise with details of the services we offer as well the charges for these services all inclusive of additional costs such as advertising. We encourage our customers to familiarize themselves fully with our terms, while providing clarification where needed.

Most of all, our professional standards ensure that we maintain a long-term relationship with our property owners and tenants that have had them coming back again and again for repeat business.

Many property owners unwittingly put their property businesses at risk.  This is because they neither have the expertise nor the time to monitor their rental properties to the degree required. Some are gripped with the fear of losing potential business in future and have resorted to managing a handful of properties by themselves. The downside to this approach is that one may in fact be limiting themselves from exploiting all their options. A good property management agency has sufficient experience to stay abreast of changing trends. They are also better placed to know what the market needs. Hence, this is a clear indication that landlords ought to embrace the idea of engaging the experts for maximum benefits.

Forget about the hassles and disappointments you have experienced in the past and call the property managers who will always have your back and your best interests at heart – Position One Property. There is immense gratification and convenience that comes with hiring just the perfect property management agency and we’ve got exactly what you are looking for – and more.

Selling Houses Is Not For The Faint Hearted

Like the retail industry, buying and selling real estate is built around providing a product or service to the customer. Just like retail, it is the process of identifying something people need or desire and providing them with that item. It also involves daily interaction with people, most of whom are polite, friendly and a delight to work with, and others who are not.

Most of Our Clients Are Delightful

As professionals in our industry, our people at Position One Property are experienced at dealing with all types of personalities. Part of their role is to remain calm and level headed when dealing with difficult clients, and to do their best to solve their problems. Sometimes the clients have the right to be upset when something unexpected spoils their plans, but sometimes we deal with clients who no amount of exceptional service will satisfy.
For example, we understand that buying a home is both an exciting time and also a very stressful one. Buyers are making a major financial commitment, either as occupiers or investors, and they want everything to be perfect. From our point of view, we can only assist to the extent of the information they have given us about their wants.

I Changed my Mind

After finding the ideal property, we are sometimes confronted with a buyer who asks us to negotiate the purchase, then changes their mind before the contracts are signed. Often they have no appreciation of the effort we have already expended but expect us to do it all over again on another property. Of course we do, because they are our clients and we are professionals.

Did I Have an Appointment?

Everyone is busy these days, so it is quite annoying when we arrange an inspection of a property at a time the client requested, and they either show up late or not at all. These days there is really no excuse. Almost everyone has a mobile phone and a quick call or text to let us know what is happening is just common courtesy.

Last Minute Changes a Frustration

Once we have negotiated sale terms verbally, the next step is to prepare the contracts, most of which are fairly standard, but which also contain additional clauses agreed on by everyone. Some buyers have been known to demand other changes after the contracts have been prepared, requiring us to get agreement from the seller.

Who Me? What Did I Do?

Often the buyer seems blissfully unaware of the drama, but contacts us continually wanting updates and asking what the hold-up is. While we do our best to be patient, this type of buyer wants everything done yesterday, but takes no responsibility for their role in the proceedings.

All is Well that Ends Well

Thankfully, this doesn’t happen often as most buyers are obliging and happy that we have found them a home they love.

Superior People Skills Needed To Manage Some Sellers

Anyone who works in a service industry will tell you that the best part of the job is meeting new people and helping them get the product or service they want. It can also be the worst part of the job, depending on the people you meet. Most will forgive the odd slip up and appreciate that you are doing your best, but others are never satisfied, no matter how hard you try.
We have many delightful clients who are a pleasure to do business with and who offer us repeat business because of the quality of service our staff provide. In the real estate industry this is important because it has helped Position One Property to build our status as a reputable agency.

Difficult Clients a Challenge for Service Industry Staff

Unfortunately, like others in our industry, we also have to deal with difficult people. Whether the issue is with a tenant, a landlord, a seller or a buyer our staff are trained to be courteous and professional at all times. Their conflict resolution skills do get tested and sometimes, the most difficult to deal with are home sellers.

Seller Expectations Often Not in Tune with Market Realities

We understand that every property owner wants the highest price possible, but sometimes their expectations are unrealistic. This is a conversation we have only too often, and one that can be difficult, especially when the seller purports to know more about the movements of the market than we do.

Ignoring Agent’s Advice will Jeopardise a Sale

Arriving at a selling price under these circumstances is a matter of negotiation, where the agent needs to provide current data from properties in the area that have recently sold. The sellers will have heard stories of properties that sold for much higher prices than we are proposing, often at the top of a price cycle. By the time they list their property, market prices have dropped, but this falls on deaf ears. They insist on listing the property for an inflated price, then berate us when there is no interest.
Sellers often view their own property through rose-coloured glasses, as the saying goes. They are convinced that it is superior to anything in the area, and there is no need to spend money to prepare it for sale. We have had sellers who could achieve their asking price if the property was tidied up, some minor repairs undertaken and high traffic areas were painted, but who chose to ignore our advice.

Turn a Difficult Seller into a Grateful One

Thankfully, these are the exceptions rather than the rule, and we work hard to talk these sellers through their issues and find them a buyer. This takes tact, patience and market knowledge but gives us a great sense of satisfaction and turns a difficult client into a happy one.


A Few Ideas To Help Property Buyers Make Better Decisions

Buying property is always exciting, whether you are an experienced investor with multiple properties in your portfolio, or a first home buyer turning the keys in the front door of your new home. Getting the best return for your valuable dollars, however, is a different matter. Even though property is seen as a secure investment, it is still possible to lose money if the purchase is not made for the right reasons.

First Things First – A Clear Intention

So what should a buyer be considering before signing a contract to buy property? From our perspective, the first step should be having a clear intention. It’s the place our people start when Position One Property is first approached by clients looking for property. The answers will be different for a first home buyer, a family upsizing to a larger home, a sole occupant with a busy work and social life, and an investor.

Check Your Financial Position

With a picture of the type of dwelling they want clear in their minds, buyers should next consider their financial situation. Do they have a sufficient deposit to avoid paying for mortgage insurance? Have they approached a lender to find out how much they can borrow? Do they have extra funds on hand for legal fees and any other contingencies?

With their finances in order, we recommend that buyers turn their attention to the three most important words in real estate – location, location, location. Realistic buyers who know what they want and how much they can spend narrow their search area and intensify their focus. They avoid the common scenario that other buyers sometimes fall into, jumping from one suburb and property to another, trying to meet all their wants but ending up completely confused.

Choose a Desirable Location Within Your Budget

A location close to work opportunities and amenities such as shopping centres, medical facilities, schools, recreational and entertainment pursuits is a wise choice. This is just as important for an investor as it is for owner-occupiers. Rental properties in rundown areas will be cheaper to buy, but harder to keep rented, as good tenants need these same facilities.

Owner-occupiers looking for future capital gain should consider the general appearance of the whole suburb and not just the street where the property is located. An area with street after street of well-maintained properties with plenty of green space will hold its value much better than a suburb that looks untidy and neglected.

Set Emotion Aside for Better Choices

Choosing a suitable property is often an emotional decision, especially for owner-occupiers who promise they will be rational then fall in love with something completely unsuitable for their needs. Hopefully, these few suggestions will help them make better choices.

Smart Packing The Secret To A Successful Move

Packing up your home to move to a new area is one of those life changing events that can be exciting, but it can also be very stressful. Everyone who has moved house has a story about family heirlooms lost or broken. They also describe chaotic scenes in the new home when no one can find the soap or toothpaste on the first night.

This can all be avoided with some planning and a few tips from seasoned veterans. How do we know this? At Position One Property we have assisted hundreds of clients to find their perfect home. Many of them were tenants renting property through our agency, so we were able to follow their progression into their own homes.

Packing Begins with the Right Type of Boxes

A correct packing technique is the secret to a stress-free moving experience. Our first tip is to find the right type of boxes for your possessions. This is critical to them arriving at the new destination undamaged. Moving companies sell boxes with dividers for crockery, large boxes for flat screen TVs and wardrobe boxes with hangers so you don’t have to fold your clothes. They also have strong, heavy duty bags that won’t split open and spill out the contents.

With the right type of boxes, cartons and bags on hand, packing can begin in earnest. It is best to pack up a room at a time, starting with the items least needed. Label the outside of every box so you don’t have to unpack every time you are looking for something.

Do Not Overfill – Heavy Boxes are Difficult to Move

Do not overfill the boxes, especially with heavy items. Books, for example, should be put into several small boxes rather than one large one. Very heavy boxes are hard to lift and move around, and you risk having the bottom fall out, damaging the contents.

Tightly Wrap Breakables

Protect fragile items by wrapping them in bubble wrap. Crystal, fine china and the like must be packed tightly to prevent them moving around in transit. Fill any incidental spaces in the boxes with tightly crushed newspaper to keep the contents in one position.

Pack an Essentials Box for a Smooth First Night

On your first night in the new place, you will be too tired to unpack anything other than an essentials box. This should contain everything you will need until the real unpacking starts next day. Items such as pajamas, toiletries, linen, towels, food, drinks, toilet paper and a change of clothes, and for very young children, their favourite toys, will spare everyone from the drama of a meltdown.

We hope you will be very happy in your new home, and if you follow our suggestions, everything will arrive in one piece.

Personal Judgements Based on Perceived Wealth Often Flawed

Everyone naturally wants the best lifestyle and opportunities for themselves and their families. The statistics on poverty and environmental influences on children seem to support the theory that growing up in undesirable surroundings can have a detrimental effect on their development. Is solving this problem just a matter of moving into a “rich” neighbourhood?

Affluent Suburbs More Expensive to Live In

There are a few issues to confront before making that decision. The most obvious one is financial. Well-to-do suburbs typically have access to the best in the way of facilities, schools, transport and other opportunities. They are also more expensive to live in, which for some people, removes the element of choice.

Everyone Wants a Home

As a property management agency with rental properties right across Brisbane in all socio-economic areas, our staff at Position One Property meet people from all walks of life. They all agree from conversations they have had with clients, that everyone wants a place to live where they feel safe, secure and comfortable. The type of place usually depends on their economic circumstances.

Give Everyone an Equal Chance

The other thing our staff members also agree on is that the people who are financially able to live in an exclusive neighbourhood are typical of the broader community. That is, they have the same attributes as people who live in a rundown suburb. Some of them are reserved but most are very friendly, some are religious and some are not, some do charity work and some don’t, most keep their properties tidy but some don’t, some get involved in crime but most don’t.

The point is that in every gathering of people, whether at work, in a sporting club, at social events, family celebrations and others, everyone is different with diverse backgrounds, opinions, ideals, values and expectations. There will be good and bad to differing degrees in any group, just as there is in humanity as a whole.

Just Be Yourself – Still the Best Advice

If your reason for moving into a rich neighbourhood is to cultivate your inner snob, you will probably be disappointed, and you may even be found out as an insincere person who thinks social climbing is the way to the top. If, however, you have the financial ability to pay the higher rents in these areas and you genuinely believe that the move will expand your horizons and offer your family the chance to experience a different environment, then do it.

Whatever your motives, we are here to assist you find the right type of property for your situation. Position One Properties has an entire portfolio of rental properties for you to choose from, so talk to our staff about your needs.

How Interest Rate Changes Affect Mortgage Repayments

Interest rates in Australia have remained at unusually low levels for several years. Many home owners with existing mortgages took advantage of the situation by continuing to pay their original repayments, negotiated when interest rates were much higher. As a result, they have cut years off the term of their mortgage and saved thousands of dollars in interest.
As property agents, we know that at some time in the future, interest rates will rise. Those new to the home mortgage market may not realise this, and could over-commit themselves. At our agency, Position One Property, we are getting steady enquiries, so this is of concern to us. Understanding how mortgage interest works is important so people can make informed decisions regardless of what the market does in the future.

Making Sense of Interest Rates

The Reserve Bank of Australia sets what is called the “cash” interest rate. This is one of a range of tools used by economists to regulate the economy. They increase the cash interest rate if the economy is overheating and inflation is a danger, or they decrease it to reduce costs overall to stimulate a flagging economy. Since the global financial crisis in 2008, inflation has not been an issue, so the cash rate has stayed low to keep the economy moving.

Variable and Fixed Interest Rates – Which One is Best?

Credit providers take their cue from the cash interest rates, and set their lending rates a few points higher. They also offer two different types of interest rates – variable and fixed. It is important to understand the difference between these two types, as they both have advantages and disadvantages.

Fixed Rates Offer Certainty

A fixed rate allows home owners to lock in a mortgage rate for one to five years. The advantage is that, for those years, home loan repayments are known and can be budgeted for with certainty. The disadvantage is that if the rate is locked in at a high point, and interest rates plummet, home owners must still pay the higher rate.

Variable Rates Rise and Fall with the Market

Variable rates, as the name suggests, usually go down if the cash rate decreases, reducing the interest to be paid. They often don’t have restrictions on making additional payments, and this has been the situation for those home owners mentioned earlier who have kept making the same payments and dramatically reduced their loans over the past few years. With a variable rate, however, when the cash rate rises, so does the mortgage interest rate. Lenders can also raise the mortgage interest rate in response to other market factors. The disadvantage of a variable rate is the lack of certainty as well as how that will affect home budgets.
We caution home buyers to understand this before arranging a home loan. As an ethical real estate agency, we know this is not our responsibility, but we want our clients to be happy with their new property. If Position One Property can help them with some timely information, we are happy to do so.