Sunday, September 30, 2012

Steve Blank: How to launch a succesful startup!

The professor who popularized the "lean" movement describes his Lean Launchpad course.

Steve Blank is a Silicon Valley-based retired serial entrepreneur, founding and/or part of 8 startup companies in California’s Silicon Valley. A prolific educator, thought leader and writer on Customer Development for Startups, Blank teaches, refines, writes and blogs on “Customer Development,” a rigorous methodology he developed to bring the “scientific method” to the typically chaotic, seemingly disorganized startup process.

"The Startup Owner’s Manual" was Blank's second book and is a step-by-step guide to building a successful startup, offering practical advice for any startup founder, entrepreneur, investor or educator.
His Customer Development methodology launched the lean startup movement. It is rooted on startups "getting out of the building," talking to customers and using that feedback to develop and refine their product.
I think I saw my guru Gerry Engel in the video! 

Neil Blumenthal & Jenn Hyman: Why Transparency & Openness Wins

What separates a remarkable customer experience from a so-so experience? Behance CEO Scott Belsky talks with Jenn Hyman (Rent the Runway) and Neil Blumenthal (Warby Parker) about how to deliver killer customer service. It turns out that making mistakes (and admitting them) is okay, being open is better than always staying on message, and listening to customers and adapting isn't a bad idea.

About Jennifer Hyman

Jennifer Hyman has been the Chief Executive Officer of Rent the Runway since the company's inception in November 2009. Jennifer co-founded Rent the Runway with her Harvard Business School classmate Jennifer Fleiss. After receiving approximately $31 million in venture capital, they quickly built the company to include over 2 million members, 60 employees and 150 designer brands. Rent the Runway is a members-only online fashion community that builds customer loyalty for designer brands by enabling women to rent dresses and accessories for all the special occasions in their lives.

About Neil Blumenthal

Neil Blumenthal loves helping people see. Determined to radically transform the eyewear industry, Neil and three friends launched Warby Parker in February of 2010. Warby Parker designs and sells vintage-inspired frames and prescription lenses for $95 whereas comparable quality glasses cost $500. For every pair sold, a pair is given to someone in need. To date, Warby Parker has distributed over 100,000 pairs to those in need around the world.

Lower volatility, higher returns in direct property: report

A comprehensive report commissioned by the Property Fund Association of Australia (PFA) and released today compares the  performance of unlisted and direct property versus listed property over a range of periods in the past 25 years.

With a primary focus on income and total returns, the research looked at the volatility of the unlisted sector and its correlation with other asset classes, including equities and listed property.
PFA president Robery Olde says that since the GFC (global financial crisis), direct property has demonstrated the kind of resilience and positive total returns that other asset classes simply haven’t.”
Trends indicate investors are catching on. There has been a “significant increase” in direct property compared to the listed sector in the past 12 months, he says.
In Australia, there’s currently more than $55 billion in direct property assets under management.

The Difference Between Goals, Strategies and Action Plans

I have often been asked what the difference between goals, strategies and action plans. On the face of it, they seem similar, however they are very different, but interrelated.
Ryll Burgin Doyle - 10X founder - talking this week  about goals , strategies and tactics
An awesome group

10X Strategies to Grow your Business
What are your Goals?

An example of some business goals... 

  • Financial goals – “To achieve revenue of $XX” or “Profit of $Y”.
  • Staffing goals – “To have XX number of staff” or “To have a full time staff member in the position of XYZ”.
  • Social Media Goals - To have 10,000 people following your blog within 2 years
  • Market Share – “To have 70% market share of the SME market in Austraia within 5 years”.

There are many different types of goals you can set.  Goals should be SMART (
specific, measurable, action orientated, realistic and within a specific timeframe)

What is your Strategy?

The next step is to look at strategy.  Stuff or things you can do to achieve your goals.
At 10X, we have a growth chart with 660 strategies you can implement for each section of your business, helping you improve your sales, profit and cash flow. 

  • Improve your Sales
  • Strategies to Increase your retention rate
  • Strategies to Increase your leads
  • Strategies to increase your conversions
  • Strategies to Increase your Prices
  • Strategies to Increase the frequency for your customers to buy

  • Improve your Cash Flow
  • Strateges to reduce your expenses
  • Strategies to reduce cost of sales
  • Strategies to collect debtors faster
  • Strategies to improve your inventory turnover

You may have 20 strategies in place to achieve your one goal.

What is your Action Plan - What are your Tactics – how you’ll do it

Tactics are the last piece of the puzzle. For every strategy, there will be a number of tactics or actions. 

These are the individual steps you’ll take to execute the strategy and achieve your goals.
Tactics could be based around activity i.e. every week contact X number of customers.  

They’re the steps you need to take to achieve a goal.

When deciding on your tactics, include every part of the process - every step you can think of how long it will take to complete and who is responsible for completing it.

Goals, Strategy and Tactics – an example

Let’s assume one of your goals is to increase your clients  in the fashion industry who are interested in Exporting their products and services by 36 clients in a year (3 per month) .

One strategy you may adopt to do this is to define a specific offering.  In this example, your strategy is to create an e-book on export grants  that you can give away  to increase leads.

Let’s think through the actions/ tactics (or steps) you need to do to write the e-book.  Your tactics may include:

  • Decide on a topic for the book (Export Grants for the Fashion Industry)
  • See who your competition is and analyze their products
  • Decide on the relevant content to include
  • Find sources for the content
  • Write a chapter a week (or outsource this)
  • Find a designer to help with the design of the book
  • Decide how you’ll distribute the book
  • Complete the book three months from today on 1 January 2013
  • Have the book distributed by 10 January 2013
  • Develop a marketing plan to promote the book

Tactics are usually inter-related and you’ll find yourself working on a couple of active tasks at any one time.  In the example above, you may be writing chapters for your book, but you’ll also be working on a plan to market the book once it’s complete.

Next Step 

Take some time out to think about your goals, and work on at least one strategy and set of actions to achieve them.
If you are interested in a copy of the 10X strategies, leave a comment below to let me know how you go.
Your goals are defined objectives - which clearly identifies where you want to be within a specific timeframe.

Saturday, September 29, 2012

Swans - there can be only One

Swans win in an amazing final in front of 99k+ people at the MCG 

There an be only 1!!!!!!!!!!!!

Will Buddy curl up into a ball and cry like a baby on Saturday when Chokethorn lose?  

Tuesday, September 25, 2012


From JM Blog
Steve Jobs - You can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something - your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life. Steve Jobs

 Deborah Carey TRUST is expensive. Protect your investment at all times. TRUST is being secure in your own value and having enough "cushion" that protects you when it comes down to the account of trusting someone else. Be honorable. Be valuable. Be TRUST today.

 Nuel C Ikeakanam · Trust is the concrete that holds relationships at all levels. The more people trust you, the more they allow you into their world. The more a leader is trusted the easier it is to lead his team. Once broken, almost impossible to rebuild.

 Nancy Delfin Amores · TRUST speeds up everything! (by JCM) TRUST is a gentleman's agreement, it is without paper and pen.It is your word and my word, It is your promise and is your commitment and mine.So, TRUST is believing someone, that what you have agreed upon, YOU WILL CARRY THROUGH BECAUSE YOU BOTH has put in your integrity, your name without the need to go in contract. In any relationships, parents and children, husband and wife, friend to a friend, or between two lovers, TRUST is the most important factor...basically if you do not trust a person, you can not give or show love at all, if you can not trust your child that he can now cross a busy street, you can not leave him and will continue to help him it limits you or hastens you to do other things..meaning you are slowed down because you do not trust.For friends, you will forever keep or with hold who you are if you do not trust. So for me, TRUST is KNOWING A PERSON WELL FIRST AND FOREMOST, learn of his ways, his character, his capacity, his intention, and maybe his that you can SLOWLY and CAREFULLY establish your TRUST.i SAID "CAREFULLY, because trust can only be given if you are already seeing that HE IS WORTHY OF YOUR TRUST...and when trust has been established...Faith follows..

Dr Richard Norris Trust is talked about but has generally gone on walk about! As leaders, be that at work, rest and play, trust starts with you. If you cannot trust others then do not be surprised that those who follow do so slowly, poorly or not at all. Note though that you must trust yourself. The level to which you can trust yourself will impact how much you trust others. A healthy trust of self will ensure you trust others healthily. My wife, Nancy, has always said that I tend to trust people too much. I have paid the price for that on several occasions (it has cost me time, energy, money and relationships). As such a caveat on trust surely must be to give trust initially in proportionately to what is being asked of those you are leading. In due time as you increase your trust in others they will increase their trust in you and your leadership will flourish. Trust is a test. My first day as an officer in the army, the experienced soliders tested me. The first game a new quarterback comes off the bench his team will be establishing their level of trust in him. Trust is learned and earned.

 Nilvia Felipe ·Without trust it is nearly impossible to accomplish anything greater than ourselves. We need a team of people that believe in us enough to follow us and trust us enough to help us manifest our vision. Without trust all else fails... love, hope, loyalty, character, etc... Trust is a building block from which all else can then grow from. Gambrill Communications "A man who trusts nobody is apt to be the kind of man nobody trusts." -

Harold MacMillan. Oftentimes in order to establish trust, the leader must go first and set the example. When you begin to trust the people you lead, they will begin to trust you.

Sunday, September 23, 2012

How to save between $30,000 and $300,000 without major changes to your lifestyle!

I have been playing around with Liquidity’s mortgage and financial calculators (free online – see 

As I have said before, as people earn more, they spend more.
This is corroborated by an Australian Securities and Investments Commission (ASIC) study that indicates that one in seven Australian families spend more than they earn and  only 54 per cent of Australian householders know exactly what their money is spent on.
ASIC estimates that Australians spend $69,000 per household annually - $1290 a week - on living costs. (based on an article by Mark Bouris in the SMH today)

Paying extra amounts towards our mortgage can save hundreds of thousands of dollars!!
An extra monthly repayment of just $50 a month on  a $400,000, 30-year mortgage paying the average variable rate of 6 per cent could take 1 year and 7 months and $30,000 off your mortgage!

Where can I find savings?
Costs during the working Week
  • ·         I generally spend $12 a day on a takeaway lunch and drink. By bringing  a packed lunch from home twice a week (from the previous nights dinner) , I save $24, or $96 a month -
  • ·         Cutting just one cup of takeaway coffee at $3.20 a day equates to $69 in savings a month.

Saving = $165 per month

  • ·         Taking the train ($130 per month) vs taking my car (garage $500, tolls $80, petrol and maintenance $200)

Saving  =  $650 per month (I would save more if I sold my car – but let’s not get carried away!!)
An extra $650 per month towards your mortgage will save you $210,950.73 abd 12 years and 1 month off your mortgage

Home Cost Savings
  • ·         phone costs and internet plan -  We have just signed up to the Telstra Bundle – Saving $150 per month
  • ·         Foxtel – we have 2 foxtel lines in 2 rooms, we only really need 1 – Saving $50 per month
  • ·         reduce the number of times we eat out from, say, twice to once a week and we could save $300 a month;
  • ·         time our petrol refills to the cheapest days,
  • ·         shop for groceries at lower-cost supermarket and look for specials

Saving – say  $500 per month
  •  Reviewing our insurance costs and funding our life insurance from our Superannuation saved $1,000 per month from our operating cash flow

Saving $1,000 per month
If I achieve this each month, we will go for an amazing meal for 2 at a cost of $165!
Cumulative Monthly Savings – say  $2130 per month.
Investing this in a $400,000  mortgage  will save  $334,210.66 in interest payments and 20 years off our mortgage!

A key to wealth creation is understanding what you are spending and preparing a budget and a financial plan. 
Its about cutting small costs that will probably not make a difference to our lifestyle  so we can save thousands of dollars off our mortgage.
Have a look at liquidity’s mortgage and financial calculators to show you how much you can save by paying extra off your mortgage!!

If you are interested in getting a quote on your mortgage - click here

Venture Capital in Australia: Come and Network - Theme "Inspiring Leaders!"

Venture Capital in Australia: Come and Network - Theme "Inspiring Leaders!":   Join us for our  10X Sydney Rooftop Networking Night - Inspiring Leaders Wednesday, 26 September 2012 from  5:30 PM to 8:00 P...

Saturday, September 22, 2012

Mandela Behind Bars

Artist Marco Cianfanelli installation commemorating the 50th anniversary of Nelson Mandela’s capture by the apartheid police. The installation, showing Mandela’s profile and made up of 50 anchored steel columns, was built 90km south of Durban. The columns symbolize Mandela’s prison bars for the 27 years of his life sentence.

Friday, September 21, 2012

Money and the Value of Coaching

Many  people say that they cannot afford coaching?

The question of what one can afford is highly subjective … look at how you spend your money compared to others   – and you will find a wide variety of choices and priorities based on implicit or explicit values. 
My experience is that as ones income goes up… so does their expenses !!

Some people spend 50% more on organic products, but can’t afford a $100/month gym membership. Some people buy fancy coffees ($3.50 per cup)  and $10 a day for lunch, while others travel at every opportunity. Some buy expensive gifts for others but never treat themselves. Many of us place such a high value on home-ownership, invest in property because we see them as an investment in the future, and we actually borrow most of the money required to pay for them.

Most of us  pay 9% of our salary into superannuation, and many of us  spend copious amounts of money on their children’s education.  

When someone tells me they “can’t afford” coaching, it is because they cannot see the value of what coaching will bring to them.

Can you “afford” coaching? Before you answer, consider what purpose the coaching serves, and what personal or family values it supports.

Is the coaching directed at career or leadership skills, personal development, sustainability, balance, happiness, family harmony, financial security? Are these areas worth investing in?
·         Can you measure the benefit you will get from an improvement in the above -  what is your return on investment (ROI). 
  • ·         What if investing in leadership coaching meant that you got a job that paid $5000-20,000 more than you would otherwise have gotten? or helped you get a job (and a paycheck) a month or more sooner than you would have on your own?  Leadership coaching offers a clear potential return on investment, and it is tied to your financial security.
  • ·         What if investing in a business coach for your SME could add 20% more sales and a 10% improvement on your gross profit? Could this ROI be measured?
  • ·         It is harder to quantify the ROI on personal development coaching, but it is there — reduced stress, happier children, better relationships, healthier habits, better sustainability, more joy. Do you regard these as luxury items or necessities? What are they worth to you?
  • ·         A fitness coach – you would live longer, feel better, look better and have more energy. Would this generate an ROI? What is this worth to you?

·         What is the cost of not making a change   — financially?  Personally?   Or in terms of your health or relationships?  Do you have life balance?  You will not find a successful athlete, sportsman, actor, investor or businessman without a coach.

Coaching is an investment in yourself, and in order to make that investment, you have to believe that you are worth it. 

I refuse to believe it is a function of affordability! 

What is the 10X GrowthPac?

Thursday, September 20, 2012


You will start doing business with a Chinese Company, when there is a trusted relationship such that they would be prepared to invite you to their daughter's wedding. This takes time, commitment, trust and an ability to communicate and connect!
First business meetings are crucial .  If you muck them up, you won’t get any further.
This is a lesson my friend Rohini Kapur understands, who is on the mission with Vanessa Xing's colleague  David Thomas and 600 other delegates, on Australia’s largest-ever trade mission to China this week.(good on you Vic Government - leading Innovation in Australia!!) They’re about to meet a whole lot of people in a very short period of time. and need to make a good impression!!

What should one look to get out of a first meeting? 
Start to develop a relationship... You actually have to spend time developing trust . Show that you are genuinely interested in their country, their business and their family - do not simply see your business as a transaction?
Do not expect to do a deal after your first meeting!!!
here are four tips to get started
Your counterpart is likely to give you a beautifully presented bilingual document detailing their company, city or industry. Do the same!! . The worst you can do is offer shoddy documentation with no Chinese translation, says Sydney-based consultant David Thomas.
  • The exchange of cards is taken very seriously in Asia. 
  • Double sided cards work well (one language each side). 
  • Make sure you have the right Chinese character set for your destination. Hand over cards with two hands.
  • Receive them the same way.  
  • Hold onto the card while you speak, or put it down on the table in front of you. 
Don’t stick it in a pocket.

Western business people often start pitching themselves or their products without knowing sufficiently what the other side wants.
“In China, this can come across as arrogant, discourteous and even rude and, whilst it may not be apparent at the time, its likely to cut things off before they’ve even got started!” Thomas says.
When addressing audiences or customers, it is critical that you get the correct message across. The quality of your message depends on the interpreters you have entrusted to translate it. 
A brilliant person to have on your team is my friend Vanessa Xing. She is superb, and comes highly recommended!!
None of these tips guarantee you the end goal of a wedding invitation – or business. But they’re important first steps. A long-term relationship ultimately requires people to invest part of themselves in it – something that not everyone can do.
Sustaining any relationship in business takes time and commitment. But if you don’t hold your business cards the right way, you’re unlikely to even make it a possibility!!

10 Things Not to Do When Interviewing (and 4 Bonus Tips)

    A came across a great article on interviewing today!!! Boy, have I got a lot to learn!!!!
Herb Greenberg and Patrick Sweeney
Sep 19, 2012, 5:19 am ET
  1. Don’t be afraid to ask tough questions. If you uncover anything during the reference check or employment history review process that warrants tough questioning, do not be afraid to ask about it during the interview. Begin your relationship with a new hire on a frank basis.
  2. Don’t oversell your company. Don’t use pat statements such as, “Since the company was founded a little over a decade ago, we’ve been on the right path, and that road is now smoother than ever.” An adept interviewer will lay out the strengths and weaknesses of the firm, putting them in perspective. Do not paint an unrealistic picture of your company in order to lure an applicant on board.
  3. Don’t ask for information you already have. For example, “Why don’t you tell me about yourself? Let’s see, how long ago did you start your current position?” This shows a lack of interest in the candidate because this information was most likely obtained earlier, via the candidate’s resume. The interview should be used to obtain new information or to confirm or reject tentative information already acquired.
  4. Don’t allow yourself to be interrupted unless there is an emergency. Too many interviewers allow the interview to become disjointed by not taking steps to prevent interruptions. Your office door should be closed. Put calls and messages on hold.
  5. Don’t talk too much. For example, “Well, I’m sure you have a lot of questions about the company and the job. Let me try to anticipate some of them for you.” This is a classic case of an interviewer who loves to hear his own voice. At the most, an interviewer should say 1 word for every 10 spoken by the person being interviewed.
  6. Don’t use the interview as your therapy. Too many interviewers use their sessions to spout out their concerns about the company. When an interviewer vents emotions in an interview, he or she may feel better but may lose a prospective employee in the bargain.
  7. Don’t be afraid to spell out in detail the requirements of the position. For example, if an applicant asks about the specific requirements of the job, don’t brush them off with the pat answer, “But then, I wouldn’t be concerned about that if I were you. I’ve always believed that if you can sell, you can sell.” People should know what is required of them before beginning a job. The interview is the time to outline the job’s requirements, as well as your criteria for evaluating success in the role.
  8. Don’t gossip or swap war stories. Many interviewers try to find familiar ground they can tread over with the applicant. Although this might seem like a comfortable way to get an interview under way, inquiring about friends and relatives can get things sidetracked, wasting a huge amount of time. The interview should be devoted to obtaining as much information as possible in order to make a sound hiring decision.
  9. Don’t put the applicant on the defensive. There is no point in creating unnecessary tension during the interview. Knowing an applicant’s personality strengths and weaknesses is vital to making the best hiring decision. For example: an applicant makes a statement about detail on her former job. This might provide valuable insight, particularly if a personality assessment provided evidence that there was indeed a sufficiently strong dislike of detail to create concern. A speech embodying a long-held philosophy is inappropriate, but a frank discussion of the importance of detail in the job and how the candidate might deal with that aspect would be constructive and would allow both people to make a more reasoned decision.
  10. Don’t be afraid to make the interview as long or as short as you deem necessary. To be effective, the interview should make the fullest use of everyone’s valuable time. There are no set guidelines on length as long as you clearly spell out the anticipated length of the interview and as long as the time is spent wisely.

Additional Mistakes to Avoid

Don’t ask questions that can only be answered by a simple yes or no. Instead, try to ask questions that must be answered at some length and with some explanation. The key to a good question is not only to get a specific answer but to get that answer by listening to the interviewee’s response.
Don’t simply indulge in generalized conversation as though nothing had occurred prior to the interview. The interviewer should have a great deal of information in hand relating to the applicant’s past experience, feedback from references, early impressions from the telephone interview, and of course, the data provided by the psychological test. All these impressions should be checked throughout the interview, and conflicts should be resolved.
If, for example, the résumé speaks about a previous position as a “division manager” and the reference check reveals that the applicant managed no one and the title was simply another name for a salesperson with a territory, that apparent discrepancy should be discussed: “Tell me specifically what you did on the job. Do the best you can to tell me how you functioned on a day-by-day basis.”
If after this explanation the discrepancy is still not resolved, the interviewer should not hesitate to confront the applicant with the evident discrepancy and ask the applicant to discuss it. Obviously, this discrepancy might be more or less important depending on the nature of the job for which the applicant is being considered.
Similarly, if the applicant described his or her previous job as involving hard, frequent closes, and the test indicates some doubt about the applicant’s level of ego-drive, questions could be raised about the discrepancy, giving the applicant plenty of opportunity to sell the interviewer on the fact that he or she was able to close despite what the test says — and getting the applicant to explain precisely how he or she accomplished this. What we are saying here simply is to try to avoid general conversations and home in as precisely as possible on specifics.
Don’t ramble. Although there is no precise ideal length of an interview, it is important to show the interviewee that there is a respect for time, not only the time of the manager but also the time of the interviewee. While being friendly, stay on course, and keep the interview moving in a clearly defined direction.
Finally, unless by the end of the interview you have ruled out the individual,don’t leave him or her with a generalized, “We will be in touch.”Rather, spell out what the next steps will be, even if those steps simply involve a management decision and notification to the applicant. If future interviews are going to be requested, say so. In other words, the applicant should leave the interview knowing, with relative precision, when a decision is going to be made, on what basis it might be made, and what other steps, if any, may be required in the decision-making process.

Congrats to my friend - Joey Benadretti, President SYSPRO USA

Special Guest Speakers:- 

David Pyott, CEO

Allergan is a global +$5 billion multi-specialty health care company that discovers, develops and commercializes innovative pharmaceuticals, biologics and medical devices that enable people to live life to its greatest potential – to see more clearly, move more freely, express themselves more fully. The Company employs over 10,000 people worldwide and operates state-of-the-art R&D facilities and world-class manufacturing plants. Visit



Joey Benadretti, President

Joey Benadretti, co-founder and co-owner of SYSPRO USA, today serves as President and Joint Managing Director for the company. Since 1987 Joey has concentrated on building an in-depth organization to meet the growing needs of both the company's expanding reseller channel and user base of midmarket manufacturing and distribution clients. Benadretti has been a driving factor in gaining significant international industry recognition for SYSPRO, including four "Company of the Year" awards as well as a long list of other top industry honors and accolades. Today, SYSPRO is one of the most respected and notable software companies in the USA. Visit

Blue Chip Sydney Property - Glebe, Dulwich Hill and Marrickville

From the team at Ark!! 

Glebe ,  Dulwich Hill and  Marrickville

Ark Total Wealth will be hosting a special event Webinar discussing one of the best performing, blue-chip property areas in Sydney, the inner-west region.

We will analyse and present research as to why this area is a blue-chip area to invest with excellent growth potential, and also look at a number of our previous projects in the area and identify why they have returned such strong capital and rental growth.

Ark will also present three exciting property projects in the area that we currently have available for clients and discuss why we feel these share similar characteristics to our past successes.

In the 45 minute Webinar you will:

  • View the demographic research and research house recommendations in relation to the Inner West.
  • Learn what our previous strong growth projects have been in the region and why they have performed so well
  • View the details, specific floor plans and particulars of three new developments we have in Dulwich Hill, Marrickville and Glebe.
  • Understand why we believe these developments will be strong investment buying opportunities similar to our previous inner west projects.

Ark Total Wealth is conducting the Webinar event on Monday 24th of September @ 5:30pmIf you are unable to attend or wish to review the information at hand before the Webinar please contact us and we will provide you with the development particulars.

We look forward to seeing you there!

click here to like them on facebook  - GOAL 1000 likes in a month... need your help!!!

The Ark Total Wealth Team

Wednesday, September 19, 2012

Interest rates - To Fix or Not to Fix – that is the Question!

Interest rates have been dominating the headlines since the GFC (Global Financial Crisis), but did you know that the latest hot topic is fixed rates? The reason is that there has been a bit of a price war going on between the lenders in the fixed rate market for the last few months and whilst some lenders have recently increased their fixed rates, others have reduced them.

Whilst most competitive variable rate products are currently between 5.80% and 6.00%, some lenders are offering 2 and 3 year fixed rates from as little as 5.59%. So now is an excellent time to consider changing your loan provider or even re-structuring your loan with your existing lender to take advantage of these rates.

Benefits of a fixed rate include:

  • Certainty of monthly repayments - you don’t have to worry about whether the RBA increases or decreases the cash rate and more importantly; you don’t have to worry about what YOUR lender decides to do with their variable rates
  • Allows for precise budgeting (especially if you are on a tight budget)
  • Currently some fixed rates are lower than most variable rates

The Disadvantages of a fixed rate:

  • Reduced flexibility - Additional repayments are limited and redraw is generally not available during the fixed term

Terminating a loan during the fixed rate period may attract hefty fees

Benefits of going with a Variable Rate:

  • You are able to make additional repayments (from bonuses, tax refunds, inheritances or just plain “savings”)
  • You have the option of an Offset account linked to your loan which can help reduce the interest you are charged on a daily basis (reducing both the life of your loan and the overall interest charged)
  • If interest rates drop – you can either make head-way on your loan by keeping your repayments the same or you can choose to reduce your monthly repayments and use the money elsewhere (savings, investment, etc)

The Disadvantages of a variable rate:

  • Of course the downside to all this “flexibility” is that you are at the mercy of interest rate fluctuations and this can cause financial difficulties if rates rise significantly.

Want to have your cake and eat it too?
As you can see, there are pros and cons to both fixed and variable rates when it comes to your mortgage.  There is a way to “hedge your bets” or have your cake and eat it too by splitting your loan.  Of course, what portion to fix will require some thought and planning and your mortgage broker will be able to help you with this as there is no hard and fast rule.

Things to bear in mind 

  • Consider your plans for the next 3-5 years. If you are planning on selling up and moving in the next 2 years, don’t fix for 3 years.
  • Keep the variable split to an amount you anticipate repaying over the fixed term.  There isn’t any benefit to having a $250,000 variable split if you can only manage to repay an extra $20,000 over the time frame that you fix the loan for.
  • If you are on a tight budget – consider fixing a larger portion of your loan.

If you want a better deal on your mortgage or talk through your options, make an appointment with a licenced and MFAA accredited mortgage broker today!

By Sandra Crossland
Sandra is a qualified Mortgage Broker with a Diploma of Financial Services (Finance/Mortgage Broking Management FNS50504) and has been helping people achieve their dreams of home ownership since 2006.