The story covered the situation of Peta Xanthoudakis, who has spent two and half decades of her life building up a property portfolio of three houses and a commercial property. Xanthoudakis is currently facing challenges in servicing her mortgage debts, which exceed $1 million. As a result, she is exploring options to renegotiate her loans and is even contemplating fixed rates. This comes at a time when thousands of borrowers are apprehensive about significant increases in mortgage costs as their fixed terms come to an end.
According to analysis by Roy Morgan, approximately 25 percent or nearly one in four borrowers are considered to be "at risk" of mortgage stress. This means that they spend between 25 percent and 45 percent of their after-tax household income on their home loan.
With the 10th consecutive rate rise just announced by the RBA this week, it’s now well written about, that a significant number of borrowers who opted for fixed rates two years ago are now approaching a fixed rate cliff. It’s estimated that approximately $400 billion worth of fixed rate loans are set to expire this year, and Australians with fixed-rate loans are likely to experience a painful adjustment, as mortgage debt will be re-priced at much higher rates.
To illustrate the high increase in interest costs, Homebuyers who secured an average 30-year, two-year fixed-rate home loan of $540,000 in April 2021 at a rate of 1.98 percent will see an increase in their payments. When the loan reverts to the standard variable rate next month, they will pay approximately $1000 more, or around $3000 in total.
For families and investors who have spent a significant time building up an investment portfolio, they will be looking at clever moves to soften the impacts. The article in the AFR listed the following suggestions:
Contact your lender and negotiate for a lower rate. It is more cost-effective for lenders to retain existing borrowers. Lenders are especially eager to retain customers who have established equity and a solid repayment record.
Borrowers could opt to extend the term of their loan, which would lower their monthly repayments. Alternatively, they could switch to temporary interest-only repayments.
Consolidating and reducing other non-mortgage debt, such as credit card or car loan repayments can simplify debt management by combining multiple debts into a single payment.
Households are reviewing and cutting down discretionary spending such as eating out, subscription services
Exploring options to increase income is another option. This could involve asking for a pay rise, renting out a portion of a property, or constructing a granny flat to generate additional rental income.
If you would like to explore whether a Granny Flat could help your financial situation, Cubitt’s offer a completely free feasibility study and quote based on detailed onsite assessments. They operate across the East coast of NSW from Taree to Moruya, west into the highlands and Blue Mountains and cover all of the ACT. Visit a showroom or call 1300 721 150.
Free On-Site Assessment at Your Property
Interested in finding out how to make a positive investment from a Cubitt's Granny Flat or Home Extension? Get in touch for a no-obligation site inspection today.
If you are looking to purchase a new property and want to do a Granny Flat Suitability Check - please use this form instead.
We require your name, email and phone number to get back to you - and the more you can tell us about your build project, the more effectively our local teams can help.
VIEW MORE OF OUR
ACT Canberra residential zone 1 (RZ1) blocks measuring 800 square meters or more are now eligible for the construction of two homes. Here is a quick FAQ on some elements of this change to help you start planning your ACT Dual Occupancy
To set up our schedule for 2024 we are offering an amazing $10k off your tender price while it’s still valid.
There could be a million residential properties across the nation with the potential to accommodate a Granny Flat. Is your suburb on the top 50 list?
Take a stickybeak at this Coastal built three bedroom Granny Flat. The highlight of the home is its well-appointed kitchen with a prominent island bench, perfect for entertaining. The central open-plan living area fosters a warm and communal atmosphere, allowing for easy interaction and shared moments with loved ones.
Discover the emerging trend of homeowners utilising granny flats for rental income in Australia’s competitive real estate market. Learn how this strategy can help cover mortgage costs while addressing housing challenges.
In the world of design, creativity knows no boundaries, and every career has a unique trajectory. Meet Jasmin, a talented designer on Cubitt’s Design Team, whose journey commenced in 2014. Her initial projects involved collaborating with builders to craft high-end custom residences, emphasising the importance of aligning designs with clients’ needs and tastes. Jasmin now helps clients at Cubitt’s turn the home they live in, into their forever home.