RBA gives APRA’s use of macro tools a tick of approval
Ahead of an expected move to impose tougher lending rules on the banks, the Reserve Bank has looked into previous attemp...
The Smart Property Investment portfolio is in a bit of a holding pattern. We’re just waiting, so we had the time to check our mortgages. With some moves from variable to fixed rates, we ended up finding savings of $18,000. Here’s what happened.
In this period where we’re not buying property, we’re spending quality time and considerable energy and efforts just looking at how we can improve the cash flow position of our portfolio, which spans from Sydney, Brisbane and Melbourne – you can take a look here. It’s a very diversified portfolio.
So, we went through a period of reflection late last year in conjunction with our mortgage broker, Ross LeQuesne; he’s done all our mortgages and assessed our interest rates, where they sit, how they’re falling. In doing so, we identified some potential savings we could undertake by shifting from variable rate loans into interest-only fixed rates.
We sat down and we looked at the portfolio and worked out what we’re not going to touch, what we might touch in the future, whether we need some capacity or flexibility, and we’ve fixed a lot of the rates associated with some of these properties in three-year terms.
For example, we have a couple of units in Mount Druitt, and we shifted from interest-only variable to fixed, and they went from 4.79 per cent to 4.25 per cent; 5.29 per cent down to 4.29 per cent; and 4.79 per cent to 4.29 per cent.
With our property out in Cambridge Park, we shifted that down from 4.34 per cent to 4.02 per cent, and with a large property we have up in Mount Ku-Ring-Gai, we shifted that one down to 4.19 per cent from 5.35 per cent.
Then there’s the one in, Queensland, which went from in the range of 5.8 per cent to 6 per cent down to 4.34 per cent fixed. Another property in Lawton shaved the rate from 4.86 per cent to 4.34 per cent. Some other properties up that way went from 5.31 per cent to 4.19 per cent.
When we started this process, we wanted to find savings of between $15,000 to $20,000 a year, and we ended up with about $18,000.
It was hard work to get to this point, though; the exercise sucks. It’s a pain in the a**e and there’s so much information required, so I actually had to give a fair bit of effort and attention to it.
I was, thankfully, supported by other people in this business who helped me out, and in particular our mortgage broker Ross, who did all the heavy lifting on it.
Anyway, I’m pretty happy with it. $18,000, $15,000, $20,000 whatever it is, it’s a lot of money. So, I much prefer doing the hard yards now to deliver greater positivity to our cash flow position going forward.