A message from our General Manager, Tam Wrigley on making informed property decisions
There’s a lot of noise around interest rates and the property market right now. My advice? Don’t let the headlines make your decisions for you. At Carolans, we’re speaking with homeowners, buyers, sellers and investors every day and one thing is clear: a changing market doesn’t necessarily mean a bad market. It simply means understanding your position, knowing your options and making decisions based on good information rather than fear.Whether you’re concerned about mortgage repayments, considering selling, looking to buy or reviewing an investment, you may have more options than you think.
Interest rate rises inevitably bring a wave of headlines about mortgage stress, falling property prices and homeowners being forced to sell.
For households already feeling the pressure of higher living costs, those headlines can make an uncertain situation feel even worse.
At Carolans Real Estate, we think there’s a more useful conversation to have.
Don’t panic. Get informed. You may have more options than you think.
An interest rate rise doesn’t automatically mean you need to sell your home or investment property. And before making a major financial or property decision, it’s worth understanding the full range of options available to you.
Before you sell because you’re worried, talk to someone
If mortgage repayments are becoming difficult, selling may be one option but it doesn’t have to be the first one. Start by speaking with your lender, mortgage broker or qualified financial adviser. Depending on your circumstances, there may be opportunities to refinance, restructure your loan, consolidate debt or change the way repayments are managed.
The important thing is to understand your position before making a decision based on fear.
Review your home loan, not just your grocery bill
When household budgets get tight, it’s natural to look for savings. We might change supermarkets, cancel subscriptions, eat out less or spend hours comparing prices to save $20 or $30 a week.
But when was the last time you reviewed your mortgage? For many households, the home loan is their largest ongoing expense. Reviewing your interest rate, loan structure and available alternatives with a mortgage professional could potentially have a much greater impact than trimming smaller expenses around the edges.
Could changing your repayment frequency help?
It may also be worth discussing repayment frequency with your lender or broker.
Some borrowers choose to make weekly or fortnightly repayments rather than monthly repayments. Depending on how the lender calculates and applies repayments, paying more frequently particularly where this results in additional repayments over the course of a year may help reduce the loan balance faster and lower total interest.
The important part is checking the numbers for your specific loan, rather than assuming one repayment structure will work the same way for everyone.
Your home is more than this month’s interest rate
Property ownership is generally a long-term decision. Interest rates move through cycles. Property markets change. Household circumstances change too. Making a major decision about a long-term asset purely in response to a short-term change in interest rates may not be the right move for every household.
That doesn’t mean holding onto a property at all costs. It means taking the time to look beyond the latest headline and understand what makes sense for you.
Sometimes selling is the smart decision
There are also situations where circumstances have genuinely changed. Perhaps the family home is now larger than you need. Maybe an investment property no longer suits your financial goals. You might want to move suburbs, reduce debt or free up equity.
Selling, downsizing or restructuring your property portfolio isn’t necessarily a sign that something has gone wrong. Sometimes it’s simply smart financial repositioning.
If you are considering selling, understanding what your property could realistically achieve in the current market can help you make that decision with facts rather than assumptions.
For buyers, a changing market can create opportunity
Higher interest rates can change buyer behaviour. When buyers become more cautious, there can be less urgency and less of the feeling that you need to make a decision immediately or risk missing out.
For prepared buyers, that can create an opportunity to take more time, complete proper due diligence, negotiate confidently and focus on buying the right property rather than simply getting into the market.
For sellers, strategy matters more than ever
When buyers become more selective, simply putting a property online and hoping for the best isn’t enough. Presentation, pricing, marketing and local market knowledge all become increasingly important. The goal isn’t necessarily to wait for the “perfect” market. It’s to understand the market you’re selling in and build the right strategy around it. That means knowing who your likely buyer is, how your property compares with competing listings and how to position it to achieve the strongest possible result.
Investors should look at the whole picture
For property investors, one interest rate announcement shouldn’t necessarily determine the future of an investment. Instead, review the property as a whole. Consider rental income, current and potential rent, finance costs, insurance, maintenance, vacancy, depreciation and tax considerations, as well as your longer-term capital growth objectives.
Speak with the appropriate financial and tax professionals and assess whether the property still fits your overall strategy.
Information is more valuable than panic
There’s no denying that higher mortgage repayments can put genuine pressure on Australian households. But financial pressure and financial panic are two very different things.
Before making a major property decision, get the information you need. Speak with your lender or broker about your finance. Seek professional financial advice where appropriate. And if property is part of the decision, speak with a local agent who understands what is actually happening in your market.
An interest rate rise doesn’t automatically mean you need to sell.
And if selling does turn out to be the right decision, it should be because you’ve considered your options and made an informed choice not because a headline frightened you into one.
Thinking about your next property move? Talk to the team at Carolans Real Estate for an informed, local perspective on your property and the current market.
General information only. Carolans Real Estate does not provide financial, lending or tax advice. Speak with appropriately qualified professionals about your individual circumstances.