1 00:00:00,000 --> 00:00:00,399 [Music]2 00:00:00,399 --> 00:00:02,040 many times people refinance because they3 00:00:02,040 --> 00:00:05,040 want a better deal and the broker sends4 00:00:05,040 --> 00:00:07,520 them a comparison and says this is you5 00:00:07,520 --> 00:00:10,320 know these are the rates you can get6 00:00:10,320 --> 00:00:13,960 well that may not be the only product7 00:00:13,960 --> 00:00:16,000 you can get that's just the one that8 00:00:16,000 --> 00:00:19,160 broker is recommending due to you know9 00:00:19,160 --> 00:00:22,160 your objectives and also due to them10 00:00:22,160 --> 00:00:24,400 being comfortable using those lenders11 00:00:24,400 --> 00:00:26,199 welcome to the debt to Financial Freedom12 00:00:26,199 --> 00:00:28,519 podcast I'm your host Victor Lagos and13 00:00:28,519 --> 00:00:30,640 the founder of Lagos Financial14 00:00:30,640 --> 00:00:32,159 I've been in the finance and lending15 00:00:32,159 --> 00:00:34,320 industry for 16 years and I've16 00:00:34,320 --> 00:00:36,079 personally made Financial mistakes and17 00:00:36,079 --> 00:00:38,920 learned from them I started this podcast18 00:00:38,920 --> 00:00:40,879 to share stories and lessons on my own19 00:00:40,879 --> 00:00:43,280 journey and to share insights that may20 00:00:43,280 --> 00:00:45,399 help others on their journey and I21 00:00:45,399 --> 00:00:47,239 interview people that I've connected22 00:00:47,239 --> 00:00:49,160 with that share the same values and23 00:00:49,160 --> 00:00:51,399 Mission to help others create Financial24 00:00:51,399 --> 00:00:53,960 Freedom my goal with this podcast is to25 00:00:53,960 --> 00:00:57,520 share raw honest transparent and helpful26 00:00:57,520 --> 00:00:59,559 stories that you can relate to and27 00:00:59,559 --> 00:01:01,199 inspire spires you to take control of28 00:01:01,199 --> 00:01:03,640 your finances and only have debt that29 00:01:03,640 --> 00:01:05,920 brings you closer to Financial30 00:01:05,920 --> 00:01:08,640 Freedom all right we are back with the31 00:01:08,640 --> 00:01:10,920 Financial Freedom series my name is32 00:01:10,920 --> 00:01:13,720 Andrew bean and I'm here with my man top33 00:01:13,720 --> 00:01:16,200 mortgage broker and financial expert34 00:01:16,200 --> 00:01:18,080 Victor Lagos how are you35 00:01:18,080 --> 00:01:20,759 mate good Andrew how are you Happy New36 00:01:20,759 --> 00:01:22,640 Year Happy New Year to you mate it's37 00:01:22,640 --> 00:01:24,799 been a while but I'm glad we're back to38 00:01:24,799 --> 00:01:27,840 it even though this is the the final39 00:01:27,840 --> 00:01:30,479 episode in our financial fre40 00:01:30,479 --> 00:01:33,079 series I know I can't believe it's uh41 00:01:33,079 --> 00:01:35,560 coming to an end it's been great yeah42 00:01:35,560 --> 00:01:37,720 all all good things do have to come to43 00:01:37,720 --> 00:01:40,320 an end but uh we've got the the final44 00:01:40,320 --> 00:01:42,119 episode coming for you right now which45 00:01:42,119 --> 00:01:44,960 is a top episode um because we're46 00:01:44,960 --> 00:01:47,600 basically talking about how we can47 00:01:47,600 --> 00:01:49,880 refinance the property that we purchased48 00:01:49,880 --> 00:01:51,600 putting it all together so it can keep49 00:01:51,600 --> 00:01:54,840 the portfolio going and buy more cash50 00:01:54,840 --> 00:01:56,479 flowing real51 00:01:56,479 --> 00:01:59,039 estate so mate can you just explain what52 00:01:59,039 --> 00:02:01,920 it means to refinance your property and53 00:02:01,920 --> 00:02:04,280 and why homeowners and investors might54 00:02:04,280 --> 00:02:05,719 consider doing55 00:02:05,719 --> 00:02:08,758 that yeah so refinancing is basically56 00:02:08,758 --> 00:02:12,680 getting one loan to pay out another and57 00:02:12,680 --> 00:02:14,400 usually the most common reason someone58 00:02:14,400 --> 00:02:16,160 we refinance is just to get a better59 00:02:16,160 --> 00:02:18,360 interest rate um and then that would60 00:02:18,360 --> 00:02:20,959 also mean to lower their repayments but61 00:02:20,959 --> 00:02:23,400 when you're an investor there's other62 00:02:23,400 --> 00:02:25,239 objectives it's not just about the63 00:02:25,239 --> 00:02:27,040 interest rate and lowering the64 00:02:27,040 --> 00:02:28,879 repayments it's about setting up the65 00:02:28,879 --> 00:02:30,319 right structures66 00:02:30,319 --> 00:02:33,760 so interest only um you know it's also67 00:02:33,760 --> 00:02:36,040 about extracting Equity so if you're68 00:02:36,040 --> 00:02:38,040 wanting to use equity as a deposit to69 00:02:38,040 --> 00:02:39,879 keep growing your portfolio that's70 00:02:39,879 --> 00:02:43,159 another reason why people would71 00:02:43,319 --> 00:02:46,319 refinance okay awesome so like in terms72 00:02:46,319 --> 00:02:48,040 of using Equity can you just explain73 00:02:48,040 --> 00:02:49,519 this is a conversation that I have with74 00:02:49,519 --> 00:02:52,599 a lot of um clients as well um can you75 00:02:52,599 --> 00:02:56,159 just explain the um flow and effect of76 00:02:56,159 --> 00:02:58,680 using equity for an investment property77 00:02:58,680 --> 00:03:02,319 how that you know go 100%78 00:03:02,319 --> 00:03:04,159 financed yeah79 00:03:04,159 --> 00:03:07,560 so I think the general rule of thumb is80 00:03:07,560 --> 00:03:10,720 to consider that even if your property81 00:03:10,720 --> 00:03:13,680 is say worth a million dollars you can82 00:03:13,680 --> 00:03:17,200 only access 80% of it so a million is an83 00:03:17,200 --> 00:03:18,879 example obviously could be worth less84 00:03:18,879 --> 00:03:20,920 than that or more but a million dollars85 00:03:20,920 --> 00:03:23,720 if you were to access 80% that's86 00:03:23,720 --> 00:03:28,000 $800,000 total so if you owed already on87 00:03:28,000 --> 00:03:30,319 your mortgage say88 00:03:30,319 --> 00:03:33,400 600,000 that means you've got $200,00089 00:03:33,400 --> 00:03:37,280 of accessible Equity so so misconception90 00:03:37,280 --> 00:03:39,159 is that people can obviously borrow the91 00:03:39,159 --> 00:03:41,560 full million well the equity is92 00:03:41,560 --> 00:03:44,200 obviously important for the for you93 00:03:44,200 --> 00:03:46,280 that's your skin in the game for the94 00:03:46,280 --> 00:03:48,200 bank it's obviously the risk not95 00:03:48,200 --> 00:03:50,680 exceeding the 80% you can go higher if96 00:03:50,680 --> 00:03:52,680 you pay mortgage insurance but when97 00:03:52,680 --> 00:03:54,920 you're if you're going to access Equity98 00:03:54,920 --> 00:03:57,319 to buy another property it's typically99 00:03:57,319 --> 00:03:59,200 capped at the 80% and that's because100 00:03:59,200 --> 00:04:00,920 you've got less less restrictions in how101 00:04:00,920 --> 00:04:03,319 much cash you can access and another102 00:04:03,319 --> 00:04:05,840 thing another way um what we call it is103 00:04:05,840 --> 00:04:09,400 is cash out so Cash Out is when you when104 00:04:09,400 --> 00:04:12,079 a bank will lend you the equity as cash105 00:04:12,079 --> 00:04:14,879 so then you can use that to put as a106 00:04:14,879 --> 00:04:17,120 deposit or obviously you can use it for107 00:04:17,120 --> 00:04:19,199 other things as well but the other way108 00:04:19,199 --> 00:04:21,079 around it is if you bought a property at109 00:04:21,079 --> 00:04:23,080 the same time and you don't have access110 00:04:23,080 --> 00:04:25,639 to the cash that's what's called cross111 00:04:25,639 --> 00:04:27,759 collateralization and a lot of investors112 00:04:27,759 --> 00:04:29,639 don't like doing that because it ties113 00:04:29,639 --> 00:04:31,639 the two properties together and it114 00:04:31,639 --> 00:04:34,360 actually uh puts it puts the borrower or115 00:04:34,360 --> 00:04:36,639 the investor at risk because if one116 00:04:36,639 --> 00:04:38,320 property goes up in value and the other117 00:04:38,320 --> 00:04:40,400 one goes down you can't access the118 00:04:40,400 --> 00:04:41,960 equity of the one that just went up119 00:04:41,960 --> 00:04:43,440 because the other one went down does120 00:04:43,440 --> 00:04:44,400 that make121 00:04:44,400 --> 00:04:46,919 sense yeah 100% so if you're with the122 00:04:46,919 --> 00:04:49,520 same bank you're cross collateralizing123 00:04:49,520 --> 00:04:51,199 those uh those124 00:04:51,199 --> 00:04:53,720 assets yeah yeah and you can still use125 00:04:53,720 --> 00:04:57,160 the same rule around the 80% so say you126 00:04:57,160 --> 00:04:59,560 you know you borrowed another property127 00:04:59,560 --> 00:05:03,320 so you bought another property up to say128 00:05:03,320 --> 00:05:06,639 let's just use an example of129 00:05:06,639 --> 00:05:09,919 600,000 you bought a $600,000 property130 00:05:09,919 --> 00:05:11,199 and you borrowed131 00:05:11,199 --> 00:05:13,560 $400,000 uh from the bank to buy that132 00:05:13,560 --> 00:05:16,199 property you still need another $2,000133 00:05:16,199 --> 00:05:19,039 to cover the deposit so therefore if you134 00:05:19,039 --> 00:05:21,520 had equity on another property that you135 00:05:21,520 --> 00:05:23,600 use as cash that's how you end up136 00:05:23,600 --> 00:05:25,759 borrowing 100% because now You' borrowed137 00:05:25,759 --> 00:05:28,199 200,000 from your existing property138 00:05:28,199 --> 00:05:30,120 400,000 against the one that you're139 00:05:30,120 --> 00:05:32,199 buying combined you're borrowing the140 00:05:32,199 --> 00:05:34,880 full 600k of course there's stamp Duty141 00:05:34,880 --> 00:05:36,520 and other costs but we can you know142 00:05:36,520 --> 00:05:38,560 account for that um by increasing the143 00:05:38,560 --> 00:05:40,319 equity that you're taking144 00:05:40,319 --> 00:05:42,880 yeah yeah and this is the conversation145 00:05:42,880 --> 00:05:46,000 what I have with a couple of um clients146 00:05:46,000 --> 00:05:49,319 um with the buyer agency is that like147 00:05:49,319 --> 00:05:51,720 like you know that if you use equity um148 00:05:51,720 --> 00:05:52,759 you know you're going to be paying149 00:05:52,759 --> 00:05:54,600 interest on the the deposit the equity150 00:05:54,600 --> 00:05:56,160 that you've drawn out and you're also151 00:05:56,160 --> 00:05:58,479 going to be getting a loan for your next152 00:05:58,479 --> 00:06:00,560 property so essentially you're 100%153 00:06:00,560 --> 00:06:02,759 finance and it's going to be very hard154 00:06:02,759 --> 00:06:04,960 for that property to cash flow um155 00:06:04,960 --> 00:06:07,520 because you're literally 100% finance so156 00:06:07,520 --> 00:06:08,840 if you're only getting a six to six and157 00:06:08,840 --> 00:06:11,400 a half% return and you're paying 7%158 00:06:11,400 --> 00:06:14,560 interest rate you are underwater and um159 00:06:14,560 --> 00:06:16,759 it's funny that like I don't know if160 00:06:16,759 --> 00:06:19,080 like it's just strange people don't161 00:06:19,080 --> 00:06:22,599 realize that um that you know being 100%162 00:06:22,599 --> 00:06:24,039 finance that's that's a lot of Finance163 00:06:24,039 --> 00:06:25,080 against that164 00:06:25,080 --> 00:06:27,520 property yeah I have that conversation165 00:06:27,520 --> 00:06:30,080 all the time um where people like y I166 00:06:30,080 --> 00:06:31,720 asked them you have you got access to a167 00:06:31,720 --> 00:06:34,199 deposit they say y got I've got Equity168 00:06:34,199 --> 00:06:35,560 I'm like okay have you already got169 00:06:35,560 --> 00:06:37,520 access to the cash or is it just sitting170 00:06:37,520 --> 00:06:39,000 in equity they're like no I've got it171 00:06:39,000 --> 00:06:40,759 INE Equity I'm like all right so that172 00:06:40,759 --> 00:06:42,639 means we have to borrow the funds to use173 00:06:42,639 --> 00:06:44,720 that as a deposit so therefore the the174 00:06:44,720 --> 00:06:46,560 rent now needs to cover the interest on175 00:06:46,560 --> 00:06:48,639 the the purchase loan say it's a176 00:06:48,639 --> 00:06:49,919 commercial property it needs to cover177 00:06:49,919 --> 00:06:52,360 that and it needs to cover the equity uh178 00:06:52,360 --> 00:06:54,160 equity loan that you're taking out to179 00:06:54,160 --> 00:06:56,080 cover the deposit so once you actually180 00:06:56,080 --> 00:06:59,520 put the cash flow in to see how that181 00:06:59,520 --> 00:07:02,680 looks a lot of the time it's negative um182 00:07:02,680 --> 00:07:04,280 so people need to be prepared for that183 00:07:04,280 --> 00:07:06,120 but at least it's tax deductible and of184 00:07:06,120 --> 00:07:08,080 course for commercial property the rent185 00:07:08,080 --> 00:07:10,560 will go up with fixed increases Etc and186 00:07:10,560 --> 00:07:12,520 also we're working off today's rates and187 00:07:12,520 --> 00:07:15,039 rates will likely reduce at some point188 00:07:15,039 --> 00:07:17,000 so it's not always going to be negative189 00:07:17,000 --> 00:07:18,680 and it's still better than residential190 00:07:18,680 --> 00:07:20,560 in terms of cash flow but still191 00:07:20,560 --> 00:07:22,199 something to consider192 00:07:22,199 --> 00:07:24,879 upfront your what I what I say is that193 00:07:24,879 --> 00:07:26,319 like what we need to do is we need to194 00:07:26,319 --> 00:07:28,680 put put together a pay down strategy so195 00:07:28,680 --> 00:07:30,360 there needs to be an aggressive pay down196 00:07:30,360 --> 00:07:33,199 strategy to pay down that deposit or the197 00:07:33,199 --> 00:07:35,000 part of the deposit so it could be 20 or198 00:07:35,000 --> 00:07:37,280 30% of the commercial property or it199 00:07:37,280 --> 00:07:39,720 could be just 10% of the the residential200 00:07:39,720 --> 00:07:42,560 property but for a commercial property201 00:07:42,560 --> 00:07:44,280 to do what it's supposed to do which is202 00:07:44,280 --> 00:07:46,720 cash flow um there needs to be an203 00:07:46,720 --> 00:07:48,520 aggressive pay down strategy if you're204 00:07:48,520 --> 00:07:51,680 using all Equity to buy that205 00:07:51,680 --> 00:07:53,800 property yeah yeah that makes total206 00:07:53,800 --> 00:07:56,159 sense yeah you can't keep it in the207 00:07:56,159 --> 00:07:58,800 negative cash flow position for too long208 00:07:58,800 --> 00:08:01,080 especially if you're wanting to keep209 00:08:01,080 --> 00:08:04,800 growing your portfolio in your own name210 00:08:04,800 --> 00:08:08,520 and you've just borrowed say um in in in211 00:08:08,520 --> 00:08:11,120 a trust right we've talked about this in212 00:08:11,120 --> 00:08:14,199 a previous episode where if if it's213 00:08:14,199 --> 00:08:16,520 positive cash flow or if it's214 00:08:16,520 --> 00:08:18,840 self-sufficient and and an accountant or215 00:08:18,840 --> 00:08:20,240 your particular accountant will actually216 00:08:20,240 --> 00:08:21,560 write and say that that is217 00:08:21,560 --> 00:08:23,199 self-sufficient and able to meet its218 00:08:23,199 --> 00:08:25,319 Financial commitments well then we can219 00:08:25,319 --> 00:08:26,960 exclude it from your personal borrowing220 00:08:26,960 --> 00:08:29,000 capacity but if you're carrying it and221 00:08:29,000 --> 00:08:30,960 it's negative well the accountant is not222 00:08:30,960 --> 00:08:33,440 going to put their name at risk and say223 00:08:33,440 --> 00:08:35,399 that it's positive when it's not so224 00:08:35,399 --> 00:08:37,000 that's why you got to have that strategy225 00:08:37,000 --> 00:08:38,640 to get it into positive as quickly as226 00:08:38,640 --> 00:08:42,440 you can yeah 100% And this is not like227 00:08:42,440 --> 00:08:44,600 um a magic formula you will need outside228 00:08:44,600 --> 00:08:47,000 money um to be able to pay that down the229 00:08:47,000 --> 00:08:48,440 property is not going to be able to pay230 00:08:48,440 --> 00:08:50,920 itself off um so when I talk about an231 00:08:50,920 --> 00:08:52,880 aggressive pay down strategy that's232 00:08:52,880 --> 00:08:55,440 outside funds from that asset from the233 00:08:55,440 --> 00:08:57,320 from the actual property to be able to234 00:08:57,320 --> 00:08:59,760 really um keep putting down that that235 00:08:59,760 --> 00:09:01,560 cash and then once you get it to a point236 00:09:01,560 --> 00:09:04,839 where it's about 20 or 30% paid down um237 00:09:04,839 --> 00:09:06,040 that's when the property will start238 00:09:06,040 --> 00:09:07,480 doing what it's supposed to do cash239 00:09:07,480 --> 00:09:10,000 flowing and um you can kind of sit back240 00:09:10,000 --> 00:09:12,160 and then start accumulating that cash241 00:09:12,160 --> 00:09:13,760 either for another deposit or even242 00:09:13,760 --> 00:09:16,440 paying down the loan even more um but in243 00:09:16,440 --> 00:09:19,800 terms of like um interest rates or like244 00:09:19,800 --> 00:09:21,279 uh you know rates that we're going to be245 00:09:21,279 --> 00:09:24,519 seeing for refinancing say a residential246 00:09:24,519 --> 00:09:27,040 property right now Victor what what will247 00:09:27,040 --> 00:09:30,680 be seeing the market right now248 00:09:30,680 --> 00:09:32,160 so at the moment we're looking at sort249 00:09:32,160 --> 00:09:34,320 of uh mid to high250 00:09:34,320 --> 00:09:37,839 sixes and it's hard to know if that's251 00:09:37,839 --> 00:09:39,880 going to continue or if there going to252 00:09:39,880 --> 00:09:43,360 be more rate Rises before they start253 00:09:43,360 --> 00:09:45,800 reducing uh I think254 00:09:45,800 --> 00:09:48,680 the the the media out there is sort of255 00:09:48,680 --> 00:09:51,519 changing the story quite a bit um and256 00:09:51,519 --> 00:09:53,360 then also we've got to consider Global257 00:09:53,360 --> 00:09:55,079 markets as well so it's it's really hard258 00:09:55,079 --> 00:09:57,160 to know exactly which way it's going to259 00:09:57,160 --> 00:09:59,240 go but I think it's good when you're260 00:09:59,240 --> 00:10:01,959 doing your numbers to stress test it as261 00:10:01,959 --> 00:10:04,200 well I think maybe a general rule of262 00:10:04,200 --> 00:10:07,120 thumb would be 1% above the current rate263 00:10:07,120 --> 00:10:09,079 so that you're prepared for a few more264 00:10:09,079 --> 00:10:09,959 rate265 00:10:09,959 --> 00:10:12,800 Rises but it may not hit that but it's266 00:10:12,800 --> 00:10:14,600 always important to stress test it for267 00:10:14,600 --> 00:10:16,200 yourself268 00:10:16,200 --> 00:10:19,959 too so like just your general feel of269 00:10:19,959 --> 00:10:23,279 being in you know Finance for so long um270 00:10:23,279 --> 00:10:25,320 is your general feel that we're somewhat271 00:10:25,320 --> 00:10:27,120 at the top of where the interest rates272 00:10:27,120 --> 00:10:29,600 could go and they'll start stabilizing273 00:10:29,600 --> 00:10:32,160 2024 um what's I know this is like a bit274 00:10:32,160 --> 00:10:33,880 of a prediction or you know take it with275 00:10:33,880 --> 00:10:35,920 a grain of Sal but I just want to I want276 00:10:35,920 --> 00:10:38,160 to understand how you feel about where277 00:10:38,160 --> 00:10:41,880 we are in in the cycle of interest278 00:10:41,880 --> 00:10:45,320 rates yeah yeah I mean it's a it's a279 00:10:45,320 --> 00:10:48,480 good question because from my P or280 00:10:48,480 --> 00:10:51,240 professional experience I started in281 00:10:51,240 --> 00:10:53,320 finance during the282 00:10:53,320 --> 00:10:57,760 GFC and in that period of time there was283 00:10:57,760 --> 00:10:59,560 aggressive rate hikes284 00:10:59,560 --> 00:11:00,839 similar to what we're going through285 00:11:00,839 --> 00:11:04,079 right now and from memory we were286 00:11:04,079 --> 00:11:07,160 hitting these sort of levels as well287 00:11:07,160 --> 00:11:10,079 sort of that six seven I believe I used288 00:11:10,079 --> 00:11:12,720 to see 8% rates as well but that was for289 00:11:12,720 --> 00:11:14,440 for non-banks and non-banks at the290 00:11:14,440 --> 00:11:18,959 moment are sort of at that 8 n% anyway291 00:11:18,959 --> 00:11:23,120 so I think it's a fine line between if292 00:11:23,120 --> 00:11:26,160 you go too high and no one can afford to293 00:11:26,160 --> 00:11:30,240 buy anymore and the economy stops moving294 00:11:30,240 --> 00:11:32,480 so that's the game that they're playing295 00:11:32,480 --> 00:11:34,480 right they want to reduce spending but296 00:11:34,480 --> 00:11:36,920 if they go too far and nobody can buy297 00:11:36,920 --> 00:11:38,399 because they cannot because they can't298 00:11:38,399 --> 00:11:41,200 borrow well then another man's spending299 00:11:41,200 --> 00:11:43,399 is another man's income so then income300 00:11:43,399 --> 00:11:46,360 starts to you know to drop across the301 00:11:46,360 --> 00:11:48,480 board for everyone and then unemployment302 00:11:48,480 --> 00:11:50,040 starts to drop because people aren't303 00:11:50,040 --> 00:11:53,360 receiving the income to pay stuff uh so304 00:11:53,360 --> 00:11:56,519 therefore it's a flow on effect and as305 00:11:56,519 --> 00:12:00,680 we know you know our entire economy is306 00:12:00,680 --> 00:12:03,480 tied around property you know including307 00:12:03,480 --> 00:12:05,800 state governments with stamp Duty308 00:12:05,800 --> 00:12:08,279 including construction industry which is309 00:12:08,279 --> 00:12:10,120 a massive industry and how many tradies310 00:12:10,120 --> 00:12:13,240 get employment and jobs so it keeps the311 00:12:13,240 --> 00:12:16,519 Australia moving so I don't think they312 00:12:16,519 --> 00:12:17,920 my feel is that they're not going to313 00:12:17,920 --> 00:12:19,480 push it so high that they're going to314 00:12:19,480 --> 00:12:21,320 crash the entire Market because nobody315 00:12:21,320 --> 00:12:24,120 wins so I do think we're sort of at that316 00:12:24,120 --> 00:12:27,279 peak level because even right now317 00:12:27,279 --> 00:12:29,760 there's less and less people that318 00:12:29,760 --> 00:12:32,320 um can show borrowing319 00:12:32,320 --> 00:12:35,040 capacity to even demonstrate what they320 00:12:35,040 --> 00:12:38,000 currently owe and these are people that321 00:12:38,000 --> 00:12:40,720 can still comfortably feel like they can322 00:12:40,720 --> 00:12:43,000 borrow again and buy something else but323 00:12:43,000 --> 00:12:45,399 according to the bank they can't and324 00:12:45,399 --> 00:12:47,800 that's because of the stress test that325 00:12:47,800 --> 00:12:50,320 exists right now is 3% above the current326 00:12:50,320 --> 00:12:53,839 rate so if you're borrowing at seven and327 00:12:53,839 --> 00:12:56,440 the bank's assessing at 10% principle328 00:12:56,440 --> 00:12:59,480 and interest well how many people can329 00:12:59,480 --> 00:13:02,240 afford 10% right so that's why not many330 00:13:02,240 --> 00:13:04,360 people can actually borrow even though331 00:13:04,360 --> 00:13:07,040 that's just to work out you know their332 00:13:07,040 --> 00:13:09,160 current loans once you throw on extra333 00:13:09,160 --> 00:13:10,880 debt yeah it's it's getting really334 00:13:10,880 --> 00:13:12,399 really tough at the moment so yeah I335 00:13:12,399 --> 00:13:15,199 think we're definitely at that towards336 00:13:15,199 --> 00:13:18,360 the peak there could be one or two left337 00:13:18,360 --> 00:13:21,160 but others say that that's338 00:13:21,160 --> 00:13:23,639 it what do you think and weren't they339 00:13:23,639 --> 00:13:25,279 talking about I remember in in a340 00:13:25,279 --> 00:13:28,079 previous episode um we were talking341 00:13:28,079 --> 00:13:31,519 about how the the rate that they were342 00:13:31,519 --> 00:13:33,199 actually going to assess you would only343 00:13:33,199 --> 00:13:35,720 be 1% above the rate right now because344 00:13:35,720 --> 00:13:39,279 of like just the the common sense Factor345 00:13:39,279 --> 00:13:42,399 um has that not come into346 00:13:42,399 --> 00:13:47,079 play some in some instances yes but only347 00:13:47,079 --> 00:13:50,680 for for big Banks APPA has given a348 00:13:50,680 --> 00:13:53,480 special ruling for refinances uh just to349 00:13:53,480 --> 00:13:55,000 allow people to get out of the mortgage350 00:13:55,000 --> 00:13:57,759 prison where they'll just give them a 1%351 00:13:57,759 --> 00:13:59,560 buffer that that's the special352 00:13:59,560 --> 00:14:01,320 circumstance not all banks only a353 00:14:01,320 --> 00:14:03,680 handful that allow that okay and then354 00:14:03,680 --> 00:14:05,800 and a and a couple of non-banks have355 00:14:05,800 --> 00:14:09,800 adjusted their buffers to 1% uh above356 00:14:09,800 --> 00:14:13,440 actual but the majority are still using357 00:14:13,440 --> 00:14:17,759 3% uh so it it's not official so you358 00:14:17,759 --> 00:14:20,920 know Common Sense yeah makes sense I359 00:14:20,920 --> 00:14:23,240 agree with you only put three uh 1%360 00:14:23,240 --> 00:14:25,399 because how how high could the rates go361 00:14:25,399 --> 00:14:27,519 but imagine they they applied that two362 00:14:27,519 --> 00:14:29,279 and a half years ago363 00:14:29,279 --> 00:14:31,880 and they said oh let's only go up 1%364 00:14:31,880 --> 00:14:33,320 like it would be in a very different365 00:14:33,320 --> 00:14:35,279 position right now if if they were366 00:14:35,279 --> 00:14:37,199 lending people oh can they stress test367 00:14:37,199 --> 00:14:39,880 3% let's give him the money and now368 00:14:39,880 --> 00:14:41,880 we're sitting at six and above like369 00:14:41,880 --> 00:14:43,839 that's that's a massive jump compared to370 00:14:43,839 --> 00:14:45,160 what they calculate they've already371 00:14:45,160 --> 00:14:48,160 exceeded the stress test uh 3% above say372 00:14:48,160 --> 00:14:51,880 2% was like five maybe five and a half373 00:14:51,880 --> 00:14:55,040 so now we're above that so you see why374 00:14:55,040 --> 00:14:57,560 it exists it's for that particular375 00:14:57,560 --> 00:14:59,680 reason yeah yeah and are you are you376 00:14:59,680 --> 00:15:02,240 seeing seeing or hearing that um there377 00:15:02,240 --> 00:15:04,199 are foreclosures and there's blood in378 00:15:04,199 --> 00:15:05,600 the street where people are losing their379 00:15:05,600 --> 00:15:08,600 houses cuz it's not really widely380 00:15:08,600 --> 00:15:10,680 reported um that that's actually381 00:15:10,680 --> 00:15:12,880 happening but I know that it it somewhat382 00:15:12,880 --> 00:15:14,000 is in the383 00:15:14,000 --> 00:15:16,160 background no I'm actually not hearing384 00:15:16,160 --> 00:15:19,000 anything like that right now so I385 00:15:19,000 --> 00:15:22,199 actually think that that hasn't happened386 00:15:22,199 --> 00:15:25,959 because we had Co where people were387 00:15:25,959 --> 00:15:29,199 building up cash buffers and388 00:15:29,199 --> 00:15:31,440 people yes they were spending when they389 00:15:31,440 --> 00:15:34,279 were able to but they were also390 00:15:34,279 --> 00:15:37,319 saving people weren't able to travel to391 00:15:37,319 --> 00:15:39,160 Europe or America or wherever they used392 00:15:39,160 --> 00:15:41,319 to take their annual trips and some of393 00:15:41,319 --> 00:15:43,319 these trips can cost you know tens of394 00:15:43,319 --> 00:15:45,000 thousands if you're a395 00:15:45,000 --> 00:15:48,800 family um and people um were able to396 00:15:48,800 --> 00:15:52,360 keep that in their offset accounts so I397 00:15:52,360 --> 00:15:55,920 do believe that there is some stress out398 00:15:55,920 --> 00:15:58,600 there but the reports that we're getting399 00:15:58,600 --> 00:16:00,360 from Banks and the data that they're400 00:16:00,360 --> 00:16:02,720 sharing is it's a very very low401 00:16:02,720 --> 00:16:04,160 percentage of of402 00:16:04,160 --> 00:16:07,399 delinquencies and my theory is that it's403 00:16:07,399 --> 00:16:09,399 not just the fact that they they've got404 00:16:09,399 --> 00:16:11,120 some cash to cover the you know the405 00:16:11,120 --> 00:16:13,120 shortfall in the in the mortgage406 00:16:13,120 --> 00:16:15,160 repayments and they're adjusting their407 00:16:15,160 --> 00:16:17,560 household budget but I think it's my408 00:16:17,560 --> 00:16:19,800 theory is that they're actually people409 00:16:19,800 --> 00:16:22,720 know what happened in Co and that they410 00:16:22,720 --> 00:16:25,040 said it was going to crash but it did411 00:16:25,040 --> 00:16:28,600 the opposite and prices went crazy so412 00:16:28,600 --> 00:16:31,079 because they know that they don't want413 00:16:31,079 --> 00:16:33,759 to exactly let go of their houses right414 00:16:33,759 --> 00:16:36,279 now cuz they know if they can hang on415 00:16:36,279 --> 00:16:40,279 for dear life that eventually it will416 00:16:40,279 --> 00:16:42,040 come back and they'll make up their417 00:16:42,040 --> 00:16:46,600 money and more so it is a buyer market418 00:16:46,600 --> 00:16:50,160 right now so therefore sellers aren't419 00:16:50,160 --> 00:16:52,600 getting the prices that they want so420 00:16:52,600 --> 00:16:54,600 they the ones that can afford to hold it421 00:16:54,600 --> 00:16:56,480 will hold it for as long as they can422 00:16:56,480 --> 00:16:58,480 currently because they know if they can423 00:16:58,480 --> 00:17:00,399 and weather this period they're going to424 00:17:00,399 --> 00:17:02,240 make a lot more money so that's that's425 00:17:02,240 --> 00:17:04,199 my theory what do you426 00:17:04,199 --> 00:17:07,199 reckon yeah well there is definitely a a427 00:17:07,199 --> 00:17:09,599 property boom um right around the corner428 00:17:09,599 --> 00:17:12,240 um housing prices uh for residential and429 00:17:12,240 --> 00:17:15,559 Commercial um they haven't really gone430 00:17:15,559 --> 00:17:17,959 down um it's more like stayed stable or431 00:17:17,959 --> 00:17:20,119 or gone up um there are a lot of great432 00:17:20,119 --> 00:17:22,119 places and markets across Australia with433 00:17:22,119 --> 00:17:25,039 residential property particularly um434 00:17:25,039 --> 00:17:27,599 that they've seen 8% growth in 2023 and435 00:17:27,599 --> 00:17:30,840 8% grow growth is classed as a property436 00:17:30,840 --> 00:17:32,480 boom it's just because it's not in437 00:17:32,480 --> 00:17:34,720 Sydney or Melbourne it's not widely438 00:17:34,720 --> 00:17:36,919 reported but there are so many different439 00:17:36,919 --> 00:17:39,440 markets in Australia that are uh you440 00:17:39,440 --> 00:17:41,280 know officially booming with a 8%441 00:17:41,280 --> 00:17:43,080 increase on last year on442 00:17:43,080 --> 00:17:47,039 2023 um and once interest rates start do443 00:17:47,039 --> 00:17:49,640 start stabilizing and there's a bit more444 00:17:49,640 --> 00:17:52,120 clear um you know sentiment in the445 00:17:52,120 --> 00:17:53,640 market where people are sure that446 00:17:53,640 --> 00:17:55,400 interest rates have stabilized and447 00:17:55,400 --> 00:17:57,159 they're going down um there's going to448 00:17:57,159 --> 00:17:58,720 be a flood of investors back to the449 00:17:58,720 --> 00:18:01,400 market um that's only going to push uh450 00:18:01,400 --> 00:18:03,520 housing prices and commercial property451 00:18:03,520 --> 00:18:06,919 prices up um so you know there are some452 00:18:06,919 --> 00:18:09,080 U very very good Minds uh that have been453 00:18:09,080 --> 00:18:11,640 looking at um you know the property454 00:18:11,640 --> 00:18:15,360 Market um for a very long time um and455 00:18:15,360 --> 00:18:17,520 everything I'm reading and hearing and456 00:18:17,520 --> 00:18:19,600 and seeing um points that there's going457 00:18:19,600 --> 00:18:21,919 to be is a big property boom around the458 00:18:21,919 --> 00:18:25,159 corner yeah well so there you go more459 00:18:25,159 --> 00:18:27,120 and more people are probably coming to460 00:18:27,120 --> 00:18:29,480 that same conclusion and AR in a rush to461 00:18:29,480 --> 00:18:32,000 sell so462 00:18:32,000 --> 00:18:35,120 good yeah so mate in terms of like463 00:18:35,120 --> 00:18:37,440 refinancing um what are some of the464 00:18:37,440 --> 00:18:40,159 asset types that people can use like465 00:18:40,159 --> 00:18:42,360 refinance their property to buy I mean466 00:18:42,360 --> 00:18:44,799 it's not just property um surely so can467 00:18:44,799 --> 00:18:46,000 you just go through a couple of the468 00:18:46,000 --> 00:18:47,760 different asset types that you know469 00:18:47,760 --> 00:18:50,919 people do um use the equity from their470 00:18:50,919 --> 00:18:52,720 houses or their you know commercial471 00:18:52,720 --> 00:18:56,120 properties um to further their472 00:18:56,120 --> 00:18:59,200 Investments yeah so I guess I guess if473 00:18:59,200 --> 00:19:02,480 you think about some examples um if474 00:19:02,480 --> 00:19:05,000 someone's owner occupied property has475 00:19:05,000 --> 00:19:08,640 gone up in value um they want to buy476 00:19:08,640 --> 00:19:11,640 another property you know commercial one477 00:19:11,640 --> 00:19:13,799 as an example I'm doing one right478 00:19:13,799 --> 00:19:18,200 now and they're sitting on about 300K in479 00:19:18,200 --> 00:19:20,880 equity so that480 00:19:20,880 --> 00:19:24,360 300K is to cover the deposit on a481 00:19:24,360 --> 00:19:26,679 commercial property for482 00:19:26,679 --> 00:19:30,520 700,000 so that's able to cover uh483 00:19:30,520 --> 00:19:33,880 45% deposit plus stamp Duty plus buyers484 00:19:33,880 --> 00:19:36,840 agent fees and costs so therefore it485 00:19:36,840 --> 00:19:39,720 becomes a staged scenario we we have to486 00:19:39,720 --> 00:19:43,280 do a residential loan first ask the bank487 00:19:43,280 --> 00:19:46,120 to refinance their existing loan and488 00:19:46,120 --> 00:19:47,400 give them another489 00:19:47,400 --> 00:19:52,039 300K as as cash out and then what we do490 00:19:52,039 --> 00:19:54,640 is we split the loan and we give them a491 00:19:54,640 --> 00:19:58,039 second loan split for the cash out and492 00:19:58,039 --> 00:20:00,000 we structure that as interest493 00:20:00,000 --> 00:20:02,240 only and the reason why we do it as494 00:20:02,240 --> 00:20:04,240 interest only for the second loan for495 00:20:04,240 --> 00:20:06,960 the equity portion is because they're496 00:20:06,960 --> 00:20:08,360 not going to use that money straight497 00:20:08,360 --> 00:20:10,679 away it's going to sit there until they498 00:20:10,679 --> 00:20:12,440 find the property that they that they're499 00:20:12,440 --> 00:20:14,720 ready to buy the next one and you don't500 00:20:14,720 --> 00:20:16,679 want to be paying they don't want to be501 00:20:16,679 --> 00:20:20,200 paying interest or making repayments502 00:20:20,200 --> 00:20:22,600 until they've used the money so by503 00:20:22,600 --> 00:20:24,840 having an interest only loan and an504 00:20:24,840 --> 00:20:27,159 offset account linked to it they can505 00:20:27,159 --> 00:20:29,919 essentially pre- borrow the money and506 00:20:29,919 --> 00:20:32,640 have it sit there waiting until they're507 00:20:32,640 --> 00:20:35,480 ready to use it so that's a typical508 00:20:35,480 --> 00:20:38,240 scenario that I work with um and that509 00:20:38,240 --> 00:20:40,520 money doesn't have to be used for510 00:20:40,520 --> 00:20:42,320 residential it can also be used for511 00:20:42,320 --> 00:20:44,440 commercial512 00:20:44,440 --> 00:20:46,640 properties and what about other asset513 00:20:46,640 --> 00:20:49,360 types what what what else can we invest514 00:20:49,360 --> 00:20:52,919 in So when you say other assets time515 00:20:52,919 --> 00:20:54,280 you're talking about outside of516 00:20:54,280 --> 00:20:56,360 property yeah that's right so like you517 00:20:56,360 --> 00:20:58,720 could obviously refinance um and you can518 00:20:58,720 --> 00:21:00,400 ultimately use the money for pretty much519 00:21:00,400 --> 00:21:03,080 whatever you want um in some most cases520 00:21:03,080 --> 00:21:04,720 so what are the other things that people521 00:21:04,720 --> 00:21:07,240 do use there there to like refinance522 00:21:07,240 --> 00:21:09,840 cash that they're line of credit for um523 00:21:09,840 --> 00:21:12,520 that's you know outside of the property524 00:21:12,520 --> 00:21:16,880 realm yeah so it depends on on the525 00:21:16,880 --> 00:21:19,960 client's investment strategy and what526 00:21:19,960 --> 00:21:21,600 sort of help that they're getting and I527 00:21:21,600 --> 00:21:26,520 guess also their um experience but if528 00:21:26,520 --> 00:21:28,520 you you're also going to be mindful of529 00:21:28,520 --> 00:21:30,919 what you tell the bank right because530 00:21:30,919 --> 00:21:33,120 what you tell them yeah sometimes you531 00:21:33,120 --> 00:21:36,360 can't untel them right so for example if532 00:21:36,360 --> 00:21:39,120 you told them you want to invest into533 00:21:39,120 --> 00:21:40,640 into534 00:21:40,640 --> 00:21:42,440 cryptocurrency the bank's not going to535 00:21:42,440 --> 00:21:45,279 agree to that because it's considered536 00:21:45,279 --> 00:21:49,320 speculative and it's high risk um it's537 00:21:49,320 --> 00:21:51,960 borderline gambling so Banks don't want538 00:21:51,960 --> 00:21:55,159 to support that um if you're wanting to539 00:21:55,159 --> 00:21:58,799 invest in say ETFs540 00:21:58,799 --> 00:22:01,400 or manage541 00:22:01,400 --> 00:22:04,880 funds or you know542 00:22:04,880 --> 00:22:07,279 stocks a bank will give you cash they'll543 00:22:07,279 --> 00:22:09,640 let you access them but it all depends544 00:22:09,640 --> 00:22:12,120 on how much you're asking for you know545 00:22:12,120 --> 00:22:14,840 I've done cash outs for over a million546 00:22:14,840 --> 00:22:17,600 before and but not all banks will allow547 00:22:17,600 --> 00:22:20,360 that some will cap it at say two or548 00:22:20,360 --> 00:22:23,440 300,000 and some will ask for549 00:22:23,440 --> 00:22:25,480 evidence so550 00:22:25,480 --> 00:22:28,279 evidence what what can they provide to551 00:22:28,279 --> 00:22:29,760 show that they're actually going to buy552 00:22:29,760 --> 00:22:31,000 the shares or they're actually going to553 00:22:31,000 --> 00:22:32,640 buy the ETFs do they have something from554 00:22:32,640 --> 00:22:36,000 a financial advisor or an accountant to555 00:22:36,000 --> 00:22:38,840 verify that so yeah that's usually the556 00:22:38,840 --> 00:22:41,120 type of other Investments you can put it557 00:22:41,120 --> 00:22:43,679 into in saying that you know doesn't558 00:22:43,679 --> 00:22:44,960 have to be income559 00:22:44,960 --> 00:22:47,440 producing um you can obviously use it to560 00:22:47,440 --> 00:22:51,400 buy a car right um things like that or561 00:22:51,400 --> 00:22:53,840 even a holiday I wouldn't suggest it562 00:22:53,840 --> 00:22:58,000 right but but but ultimately once you563 00:22:58,000 --> 00:22:59,760 have access to it you can use it for564 00:22:59,760 --> 00:23:01,600 whatever you like um it's only if the565 00:23:01,600 --> 00:23:04,720 bank controls it and and they ask for566 00:23:04,720 --> 00:23:06,919 evidence that they'll have to pay it to567 00:23:06,919 --> 00:23:09,919 whatever you've decided to invest568 00:23:09,919 --> 00:23:12,600 in yeah it's it's interesting how like569 00:23:12,600 --> 00:23:14,320 you've just got to kind of keep it a bit570 00:23:14,320 --> 00:23:16,520 dark on what you you know ultimately571 00:23:16,520 --> 00:23:20,120 intend to use it for um because you can572 00:23:20,120 --> 00:23:21,480 use it for like Renovations on your573 00:23:21,480 --> 00:23:23,120 house which would you know the bank574 00:23:23,120 --> 00:23:25,960 actually um in some cases will encourage575 00:23:25,960 --> 00:23:27,720 that um because it's obviously going576 00:23:27,720 --> 00:23:29,440 back into the property the asset that577 00:23:29,440 --> 00:23:32,320 they're you know securitizing um but I578 00:23:32,320 --> 00:23:33,600 thought it was funny when I was talking579 00:23:33,600 --> 00:23:36,000 to a bank one time they wouldn't allow580 00:23:36,000 --> 00:23:38,679 me to refinance to buy commercial581 00:23:38,679 --> 00:23:40,600 property but they said yeah we're happy582 00:23:40,600 --> 00:23:43,039 for you to buy a car um that'd be cool583 00:23:43,039 --> 00:23:45,640 you know like why would you try and like584 00:23:45,640 --> 00:23:47,799 why would you want me to buy a terrible585 00:23:47,799 --> 00:23:49,559 asset like that but you wouldn't want me586 00:23:49,559 --> 00:23:51,600 to buy a real asset that produces cash587 00:23:51,600 --> 00:23:53,880 flow that I could definitely like easily588 00:23:53,880 --> 00:23:55,799 pay you back with like it's just those589 00:23:55,799 --> 00:23:59,200 things that are like nuances it's just590 00:23:59,200 --> 00:24:00,760 you know banking's a big business they591 00:24:00,760 --> 00:24:02,200 just want you to go further and further592 00:24:02,200 --> 00:24:04,200 in debt and keep on paying interest593 00:24:04,200 --> 00:24:08,000 that's all they want you to do well I594 00:24:08,000 --> 00:24:11,080 can also tell you the reasoning why they595 00:24:11,080 --> 00:24:13,279 couldn't help you release cash for596 00:24:13,279 --> 00:24:16,520 commercial property it's because it's uh597 00:24:16,520 --> 00:24:19,760 the regulations you've got consumer598 00:24:19,760 --> 00:24:21,120 lending and you've got commercial599 00:24:21,120 --> 00:24:22,799 lending and they fall under two600 00:24:22,799 --> 00:24:26,480 different Umbrellas of Regulation um601 00:24:26,480 --> 00:24:29,320 consumer is you know Home Loans602 00:24:29,320 --> 00:24:32,480 residential investment loans uh personal603 00:24:32,480 --> 00:24:37,000 loans personal car loans credit cards um604 00:24:37,000 --> 00:24:40,399 and and even buy now pay later um605 00:24:40,399 --> 00:24:44,720 whereas commercial is unregulated606 00:24:44,720 --> 00:24:47,640 lending it's because unregulated means607 00:24:47,640 --> 00:24:48,919 it's still regulated but it's608 00:24:48,919 --> 00:24:51,159 unregulated outside of the outside of609 00:24:51,159 --> 00:24:54,279 the credit protection code nccp National610 00:24:54,279 --> 00:24:57,919 Consumer Credit protection and it's a a611 00:24:57,919 --> 00:25:01,080 fine line that Banks don't want to risk612 00:25:01,080 --> 00:25:03,720 Crossing because they're at they get in613 00:25:03,720 --> 00:25:06,440 trouble if they if they um cross that614 00:25:06,440 --> 00:25:09,559 line so therefore if they become aware615 00:25:09,559 --> 00:25:10,960 that you intend on using it for616 00:25:10,960 --> 00:25:12,799 commercial purposes they'll just617 00:25:12,799 --> 00:25:15,679 typically just say no they they can618 00:25:15,679 --> 00:25:17,840 actually do it but there's a lot more619 00:25:17,840 --> 00:25:20,000 more red tape and a lot more paperwork620 00:25:20,000 --> 00:25:21,520 required where you have to sign off your621 00:25:21,520 --> 00:25:24,320 rights and you know you have to prove622 00:25:24,320 --> 00:25:25,679 that it is going to be used for623 00:25:25,679 --> 00:25:27,399 commercial reasons under commercial624 00:25:27,399 --> 00:25:30,760 entity like a company or a trust um and625 00:25:30,760 --> 00:25:34,240 a lot of banks just don't have the uh I626 00:25:34,240 --> 00:25:36,000 guess the the other thing is they don't627 00:25:36,000 --> 00:25:39,279 have the the teams talking to each other628 00:25:39,279 --> 00:25:41,679 so like you have the retail side which629 00:25:41,679 --> 00:25:43,880 is your personal consumer lending then630 00:25:43,880 --> 00:25:45,600 you have the commercial side which is631 00:25:45,600 --> 00:25:47,559 the business uh and that's why you deal632 00:25:47,559 --> 00:25:49,159 with business bankers and I deal a lot633 00:25:49,159 --> 00:25:50,880 with them and they don't usually talk to634 00:25:50,880 --> 00:25:53,919 each other and that's why when you tell635 00:25:53,919 --> 00:25:55,000 them you're going to use a commercial636 00:25:55,000 --> 00:25:57,640 they just say no we can't do it and it's637 00:25:57,640 --> 00:25:58,640 it's actually the same way with638 00:25:58,640 --> 00:26:00,320 commercial lending pay in the ass if you639 00:26:00,320 --> 00:26:02,240 went to a commercial so how does like640 00:26:02,240 --> 00:26:05,480 refinancing impact the overall cost of641 00:26:05,480 --> 00:26:07,440 the loan long642 00:26:07,440 --> 00:26:11,080 term so it depends on the loan term you643 00:26:11,080 --> 00:26:11,880 take644 00:26:11,880 --> 00:26:15,200 out so if you consider your you know645 00:26:15,200 --> 00:26:20,159 your existing loan say it has 25 years646 00:26:20,159 --> 00:26:23,320 remaining and you approach the bank and647 00:26:23,320 --> 00:26:25,919 you say I want to access equity and648 00:26:25,919 --> 00:26:28,880 refinance well649 00:26:28,880 --> 00:26:31,880 if you keep the loan term at 25 years650 00:26:31,880 --> 00:26:34,640 then that's actually going to be similar651 00:26:34,640 --> 00:26:36,320 in terms of the amount of interest that652 00:26:36,320 --> 00:26:38,720 you pay it might even be better off653 00:26:38,720 --> 00:26:40,600 because you're usually going to654 00:26:40,600 --> 00:26:42,480 refinance to a lower655 00:26:42,480 --> 00:26:45,919 rate however what you're doing if you do656 00:26:45,919 --> 00:26:47,360 that way is you're reducing your657 00:26:47,360 --> 00:26:49,720 borrowing capacity because the longer658 00:26:49,720 --> 00:26:50,760 the loan659 00:26:50,760 --> 00:26:53,840 term the lower the repayments higher660 00:26:53,840 --> 00:26:57,200 more interest you pay over time and so661 00:26:57,200 --> 00:26:58,880 therefore if you wanting to keep growing662 00:26:58,880 --> 00:27:01,960 the portfolio it may not make sense to663 00:27:01,960 --> 00:27:06,480 keep your loan term 25 years 22 years664 00:27:06,480 --> 00:27:08,600 you know constantly paying it shorter665 00:27:08,600 --> 00:27:11,240 and shorter that's Obviously good if666 00:27:11,240 --> 00:27:12,799 you're wanted to reduce your interest667 00:27:12,799 --> 00:27:15,080 and you're wanting to get out of debt668 00:27:15,080 --> 00:27:17,480 but if you're still in that growth stage669 00:27:17,480 --> 00:27:19,679 well it makes more sense to actually670 00:27:19,679 --> 00:27:23,399 reset the loan term over 30 years and do671 00:27:23,399 --> 00:27:25,120 the same with the equity sorry yeah do672 00:27:25,120 --> 00:27:26,480 the same with equity and do the same673 00:27:26,480 --> 00:27:28,399 with the next purchase674 00:27:28,399 --> 00:27:31,159 um so that's that's sort of the the main675 00:27:31,159 --> 00:27:33,559 impact the overall interest that you pay676 00:27:33,559 --> 00:27:37,840 over the time um and the other thing677 00:27:37,840 --> 00:27:39,919 that I wanted to mention was more around678 00:27:39,919 --> 00:27:42,600 the interest only structure but but679 00:27:42,600 --> 00:27:45,159 actually sorry the fees so each time you680 00:27:45,159 --> 00:27:48,200 refinance you have to pay fees right681 00:27:48,200 --> 00:27:51,200 there's going to be uh discharge fees so682 00:27:51,200 --> 00:27:52,600 the bank that you're currently with or683 00:27:52,600 --> 00:27:53,720 the lender you're with are going to684 00:27:53,720 --> 00:27:55,640 charge a discharge fee if it's685 00:27:55,640 --> 00:27:59,519 residential lending it's typically about686 00:27:59,519 --> 00:28:03,039 you know 250 up to 400 bucks uh that can687 00:28:03,039 --> 00:28:05,559 be per property sometimes uh then688 00:28:05,559 --> 00:28:08,039 there's also government fees that's689 00:28:08,039 --> 00:28:11,519 around 300 bucks thereabouts and then uh690 00:28:11,519 --> 00:28:13,919 the new bank or lender may also charge691 00:28:13,919 --> 00:28:16,480 an application fee or establishment fee692 00:28:16,480 --> 00:28:18,480 so I usually estimate around 1,000 to693 00:28:18,480 --> 00:28:21,559 1,200 bucks just to switch a residential694 00:28:21,559 --> 00:28:24,480 to residential but commercial there's695 00:28:24,480 --> 00:28:25,200 more696 00:28:25,200 --> 00:28:28,360 fees um establishment fees697 00:28:28,360 --> 00:28:31,840 exit fees uh valuation fees so it may698 00:28:31,840 --> 00:28:33,600 not be that feasible to constantly699 00:28:33,600 --> 00:28:35,519 refinance commercial loans because it's700 00:28:35,519 --> 00:28:37,720 just701 00:28:38,559 --> 00:28:42,120 expensive and and in your view when702 00:28:42,120 --> 00:28:44,200 should you actually like look at your703 00:28:44,200 --> 00:28:46,559 loan like how many how how frequently704 00:28:46,559 --> 00:28:48,679 should you be looking at your loan to705 00:28:48,679 --> 00:28:51,679 potentially706 00:28:53,679 --> 00:28:58,519 refinance so it depends on707 00:28:58,519 --> 00:29:02,799 how on top you are of how competitive708 00:29:02,799 --> 00:29:06,039 your Rate rates are at any given time so709 00:29:06,039 --> 00:29:09,120 if if you sit back and just assume that710 00:29:09,120 --> 00:29:10,600 the bank is always going to give you a711 00:29:10,600 --> 00:29:13,919 competitive rate it's highly likely that712 00:29:13,919 --> 00:29:15,480 you know especially in the last 18713 00:29:15,480 --> 00:29:19,080 months that your rates have gone above714 00:29:19,080 --> 00:29:21,720 what new customers new to bank customers715 00:29:21,720 --> 00:29:24,000 are getting so it's worthwhile just716 00:29:24,000 --> 00:29:26,840 checking with your broker um to see if717 00:29:26,840 --> 00:29:30,080 your rate is still competitive um718 00:29:30,080 --> 00:29:31,640 there's a misconception out there that719 00:29:31,640 --> 00:29:34,039 your broker knows what your rates are720 00:29:34,039 --> 00:29:36,960 and will always uh get you a better rate721 00:29:36,960 --> 00:29:40,440 at any given time because before the722 00:29:40,440 --> 00:29:41,399 loan723 00:29:41,399 --> 00:29:44,080 settles we the broker are the customer724 00:29:44,080 --> 00:29:45,080 to the725 00:29:45,080 --> 00:29:48,000 bank once it settles you're the customer726 00:29:48,000 --> 00:29:50,960 to the bank so that means that we don't727 00:29:50,960 --> 00:29:52,880 have the same level of authority that we728 00:29:52,880 --> 00:29:55,720 had at the beginning once it settles so729 00:29:55,720 --> 00:29:58,240 we can't always just call up the bank on730 00:29:58,240 --> 00:30:01,000 your behalf and get information to know731 00:30:01,000 --> 00:30:03,960 what your interest rate is um and what732 00:30:03,960 --> 00:30:05,360 your new repayments are and what your733 00:30:05,360 --> 00:30:07,679 balancer some banks will give us access734 00:30:07,679 --> 00:30:11,159 but the majority don't so therefore you735 00:30:11,159 --> 00:30:13,200 need to stay on top of that more than736 00:30:13,200 --> 00:30:15,960 more than the broker there are some737 00:30:15,960 --> 00:30:17,399 technology and I'll talk more about that738 00:30:17,399 --> 00:30:21,279 later but but at the moment if if you739 00:30:21,279 --> 00:30:23,200 log in and you see your interest rate740 00:30:23,200 --> 00:30:25,200 and you check with your broker to see if741 00:30:25,200 --> 00:30:27,600 there's a better deal out there that the742 00:30:27,600 --> 00:30:30,480 time to refinance but it all depends on743 00:30:30,480 --> 00:30:34,000 how long you've had the loan as well so744 00:30:34,000 --> 00:30:37,240 you want to at least have a year or two745 00:30:37,240 --> 00:30:38,760 with your existing loan before you746 00:30:38,760 --> 00:30:43,720 switch it um few reasons for that um747 00:30:43,720 --> 00:30:45,679 what you could do is actually call your748 00:30:45,679 --> 00:30:48,840 existing bank or your broker can do it749 00:30:48,840 --> 00:30:51,440 and request that they review your rate750 00:30:51,440 --> 00:30:54,159 uh for retention purposes so that means751 00:30:54,159 --> 00:30:56,240 if as long as you've been on top of your752 00:30:56,240 --> 00:30:58,519 repayments and you're a good753 00:30:58,519 --> 00:31:01,440 customer that bank should be able to754 00:31:01,440 --> 00:31:04,760 reduce your rate at least slightly it755 00:31:04,760 --> 00:31:06,840 may not be exactly what the bank what756 00:31:06,840 --> 00:31:08,240 they offer new clients but they should757 00:31:08,240 --> 00:31:10,440 give you some sort of reduction to keep758 00:31:10,440 --> 00:31:12,440 it competitive and then once you get to759 00:31:12,440 --> 00:31:15,240 sort of 12 months or two years then at760 00:31:15,240 --> 00:31:17,000 that point it's probably time to761 00:31:17,000 --> 00:31:19,720 refinance um but the other time you'd762 00:31:19,720 --> 00:31:23,600 want to look into it would be when763 00:31:23,600 --> 00:31:27,519 you're wanting to access Equity so we764 00:31:27,519 --> 00:31:29,200 talked about different types of assets765 00:31:29,200 --> 00:31:31,559 you can invest in but if you're growing766 00:31:31,559 --> 00:31:34,760 your portfolio then that's the time when767 00:31:34,760 --> 00:31:36,880 you need to know who's going to give you768 00:31:36,880 --> 00:31:39,120 the most equity and that all depends on769 00:31:39,120 --> 00:31:41,760 the valuations so you might not stick770 00:31:41,760 --> 00:31:44,200 with the same bank you might actually771 00:31:44,200 --> 00:31:46,360 have to switch to another bank that772 00:31:46,360 --> 00:31:48,200 gives you a higher valuation to allow773 00:31:48,200 --> 00:31:50,159 you to access more Equity than the other774 00:31:50,159 --> 00:31:51,960 than the one that you're already with so775 00:31:51,960 --> 00:31:53,679 that's another time to review it the776 00:31:53,679 --> 00:31:54,919 time that you're actually looking at777 00:31:54,919 --> 00:31:56,399 pulling the trigger and actually buying778 00:31:56,399 --> 00:31:59,159 something else779 00:31:59,320 --> 00:32:01,600 yeah fair enough it'd be really good if780 00:32:01,600 --> 00:32:03,720 um you know you had being the broker781 00:32:03,720 --> 00:32:05,600 every single loan that you wrote you'd782 00:32:05,600 --> 00:32:07,519 have it in a portal and you could see it783 00:32:07,519 --> 00:32:09,679 like in real time what interest rate784 00:32:09,679 --> 00:32:11,039 they were charging you so you could785 00:32:11,039 --> 00:32:14,000 basically just go yep yep okay let's uh786 00:32:14,000 --> 00:32:15,760 um fix that one change that one let's787 00:32:15,760 --> 00:32:17,200 call the customer here like bang bang788 00:32:17,200 --> 00:32:18,799 bang and you could stay on top of it and789 00:32:18,799 --> 00:32:21,960 really like you basically managing a uh790 00:32:21,960 --> 00:32:25,279 a book of um you know Investments then791 00:32:25,279 --> 00:32:27,320 um which would be really cool but like792 00:32:27,320 --> 00:32:30,000 so like yeah nowadays what would you793 00:32:30,000 --> 00:32:32,240 consider a good interest rate what's a794 00:32:32,240 --> 00:32:36,159 good interest rate for a residential795 00:32:37,279 --> 00:32:40,960 house um a good interest rate would796 00:32:40,960 --> 00:32:44,039 be low Sixers so797 00:32:44,039 --> 00:32:46,519 between798 00:32:46,519 --> 00:32:50,440 6.09 to799 00:32:50,480 --> 00:32:54,200 6.3 even 6.4 okay if you got the rate at800 00:32:54,200 --> 00:32:56,039 that you you're pretty801 00:32:56,039 --> 00:32:58,120 good802 00:32:58,120 --> 00:33:01,200 yeah okay so what's uh what's your uh803 00:33:01,200 --> 00:33:02,799 commercial wise as well what what would804 00:33:02,799 --> 00:33:04,320 be a good interest rate for commercial805 00:33:04,320 --> 00:33:06,480 right806 00:33:07,399 --> 00:33:09,080 now807 00:33:09,080 --> 00:33:11,559 um mid to high808 00:33:11,559 --> 00:33:16,480 sixes so between 6 and a half to sort of809 00:33:16,480 --> 00:33:18,039 68810 00:33:18,039 --> 00:33:20,880 6.9 that's a pretty good commercial811 00:33:20,880 --> 00:33:23,880 rate anything above that it's usually812 00:33:23,880 --> 00:33:27,679 the higher lvr stuff and the non-bank813 00:33:27,679 --> 00:33:30,519 stuff but if it's typical yeah right you814 00:33:30,519 --> 00:33:33,240 know 60815 00:33:33,240 --> 00:33:36,399 65% mid to high816 00:33:36,399 --> 00:33:39,760 6 I'm just going to log into um one of817 00:33:39,760 --> 00:33:41,840 my loan accounts and this is the the818 00:33:41,840 --> 00:33:44,440 loan that um that you moveed for me819 00:33:44,440 --> 00:33:47,279 Victor the one that um we got a line of820 00:33:47,279 --> 00:33:49,600 credit out against I'm just opening up821 00:33:49,600 --> 00:33:53,440 the account now um for the offset822 00:33:53,440 --> 00:33:57,159 account oh yeah so it's actually uh 6.0823 00:33:57,159 --> 00:34:00,519 4 um% um that it's up to variable so824 00:34:00,519 --> 00:34:01,919 it's right on bang with a good interest825 00:34:01,919 --> 00:34:04,519 rate right now826 00:34:05,320 --> 00:34:07,839 lucky that was a close827 00:34:07,839 --> 00:34:10,079 one me828 00:34:10,079 --> 00:34:12,280 there what about I'll check the line of829 00:34:12,280 --> 00:34:14,440 credit what's the line of credit at hang830 00:34:14,440 --> 00:34:16,879 on a second this on my phone oh the line831 00:34:16,879 --> 00:34:19,040 of credit obviously what would what832 00:34:19,040 --> 00:34:20,800 would a good interest rate be for a line833 00:34:20,800 --> 00:34:23,040 of834 00:34:23,480 --> 00:34:26,320 credit so probably around 6 and a half835 00:34:26,320 --> 00:34:28,520 6.6836 00:34:28,520 --> 00:34:30,199 all right so we're doing not very good837 00:34:30,199 --> 00:34:33,719 for our line of credit then it's at838 00:34:34,359 --> 00:34:37,879 7.14 okay uh after this uh recording I'm839 00:34:37,879 --> 00:34:40,919 going to see if I can get you a840 00:34:41,040 --> 00:34:43,560 discount that's so841 00:34:43,560 --> 00:34:46,159 good it's not changing my life much but842 00:34:46,159 --> 00:34:47,719 yeah it'd be good to try and fix it up843 00:34:47,719 --> 00:34:50,599 but that's okay anyway that's good um844 00:34:50,599 --> 00:34:53,079 I'm glad we did that that's fun um so845 00:34:53,079 --> 00:34:57,000 mate in terms of like um like hang on we846 00:34:57,000 --> 00:35:00,920 going to go to um okay in terms of like847 00:35:00,920 --> 00:35:03,640 implications between like interest only848 00:35:03,640 --> 00:35:07,480 and p& um would you ever take out Equity849 00:35:07,480 --> 00:35:10,720 a line of credit and have a p&i uh loan850 00:35:10,720 --> 00:35:12,760 against that like using it as a p&i loan851 00:35:12,760 --> 00:35:15,440 instead of interest852 00:35:17,359 --> 00:35:21,359 only it's not common uh it depends on853 00:35:21,359 --> 00:35:26,400 your personal circumstances so if you're854 00:35:26,400 --> 00:35:28,119 if you're at a point where you're855 00:35:28,119 --> 00:35:30,240 wanting to pay back856 00:35:30,240 --> 00:35:33,520 debt and you don't really have much you857 00:35:33,520 --> 00:35:37,800 can claim against your personal taxes858 00:35:37,800 --> 00:35:40,320 anymore um it would make sense to859 00:35:40,320 --> 00:35:44,119 actually just do p&i on the equity as860 00:35:44,119 --> 00:35:46,880 well as the main loan861 00:35:46,880 --> 00:35:49,440 um I think that's probably the only862 00:35:49,440 --> 00:35:52,640 circumstances interest only makes more863 00:35:52,640 --> 00:35:55,000 sense because if you're carrying864 00:35:55,000 --> 00:35:58,440 personal debt like a like a home865 00:35:58,440 --> 00:36:01,240 loan um it make you'd actually want to866 00:36:01,240 --> 00:36:03,319 direct all your principal payments to867 00:36:03,319 --> 00:36:07,160 that first because that's not tax868 00:36:07,160 --> 00:36:10,119 deductible so if you're doing p&i on869 00:36:10,119 --> 00:36:12,760 your home loan and you're doing p&i on870 00:36:12,760 --> 00:36:15,720 your investment loan at the same time871 00:36:15,720 --> 00:36:17,440 you're actually shooting yourself in the872 00:36:17,440 --> 00:36:19,920 foot because the principal payments that873 00:36:19,920 --> 00:36:22,720 you're making on the investment loan are874 00:36:22,720 --> 00:36:25,280 reducing your interest and the interest875 00:36:25,280 --> 00:36:26,720 is what's deductible not the princip876 00:36:26,720 --> 00:36:29,480 princial payments so whereas the877 00:36:29,480 --> 00:36:32,560 principal on your owner occupied it's878 00:36:32,560 --> 00:36:34,760 not deductible so therefore that879 00:36:34,760 --> 00:36:36,760 principle that you've been paying the880 00:36:36,760 --> 00:36:38,200 investment should you could have881 00:36:38,200 --> 00:36:39,760 directed that to the owner882 00:36:39,760 --> 00:36:43,680 occupi that extra repayment so that's883 00:36:43,680 --> 00:36:46,079 why it's only if you've you're out of884 00:36:46,079 --> 00:36:48,720 own occupi debt your home's paid off you885 00:36:48,720 --> 00:36:51,440 haven't taken out any equity on it um or886 00:36:51,440 --> 00:36:53,440 even if you have it's all investment887 00:36:53,440 --> 00:36:56,280 debt well there's no point in keep888 00:36:56,280 --> 00:36:57,480 carrying debt is going to have to be889 00:36:57,480 --> 00:37:00,560 paid off eventually right so you should890 00:37:00,560 --> 00:37:02,800 then pay principle and interest for it891 00:37:02,800 --> 00:37:05,480 um but it also helps your borrowing892 00:37:05,480 --> 00:37:09,319 capacity um with bigger Banks to have893 00:37:09,319 --> 00:37:11,640 p&i and not interest894 00:37:11,640 --> 00:37:14,960 only so I'm I want to just you know895 00:37:14,960 --> 00:37:17,839 reemphasize that it's for big896 00:37:17,839 --> 00:37:20,640 Banks and when I say big Banks I'm897 00:37:20,640 --> 00:37:23,119 talking about uh the big four plus you898 00:37:23,119 --> 00:37:25,520 know this um you know your ings your sun899 00:37:25,520 --> 00:37:27,880 Corps your macquaries as as well soon as900 00:37:27,880 --> 00:37:31,880 you start going to non-bank land they901 00:37:31,880 --> 00:37:35,640 actually penalize you for p&i what I902 00:37:35,640 --> 00:37:37,359 mean by penalizes and they let you903 00:37:37,359 --> 00:37:40,119 borrow less so if you did a principal904 00:37:40,119 --> 00:37:41,680 interest over 30 years or you did905 00:37:41,680 --> 00:37:44,880 interest only for say 5 years and then906 00:37:44,880 --> 00:37:49,119 25 years remaining that can actually um907 00:37:49,119 --> 00:37:51,560 hinder your borrowing capacity with a908 00:37:51,560 --> 00:37:53,280 non-bank because they look at the909 00:37:53,280 --> 00:37:54,880 interest only repayment when they910 00:37:54,880 --> 00:37:56,560 calculate their serviceability or their911 00:37:56,560 --> 00:38:01,520 borrowing capacity whereas big Banks um912 00:38:01,520 --> 00:38:03,560 what they're also called is Adis913 00:38:03,560 --> 00:38:05,240 authorize deposit take914 00:38:05,240 --> 00:38:08,400 institutions um what they do is they'll915 00:38:08,400 --> 00:38:11,319 look at the remaining p&i term so if you916 00:38:11,319 --> 00:38:13,960 did say five years interest only 25917 00:38:13,960 --> 00:38:16,920 years left they'll stress test 25 years918 00:38:16,920 --> 00:38:20,560 p&i rather than 30 so having a 5year919 00:38:20,560 --> 00:38:22,520 interest only can be detrimental to your920 00:38:22,520 --> 00:38:25,599 borrowing capacity for bigger Bank921 00:38:25,599 --> 00:38:27,680 Lending so that's what I mean it all922 00:38:27,680 --> 00:38:29,880 depends this is where I come in because923 00:38:29,880 --> 00:38:32,200 obviously I need to look at things924 00:38:32,200 --> 00:38:34,359 strategically and consider what where925 00:38:34,359 --> 00:38:36,880 they're at now uh and what impact it926 00:38:36,880 --> 00:38:38,880 will have for the next move because927 00:38:38,880 --> 00:38:40,359 usually they don't want to stop with the928 00:38:40,359 --> 00:38:43,119 next transaction so having a great929 00:38:43,119 --> 00:38:46,760 interest rate long-term interest only930 00:38:46,760 --> 00:38:48,480 may not be the right move for you right931 00:38:48,480 --> 00:38:50,079 now because it might stop you from932 00:38:50,079 --> 00:38:53,000 getting into the next933 00:38:53,040 --> 00:38:56,560 property yeah interesting so what what934 00:38:56,560 --> 00:38:58,000 are some of the misconceptions or the935 00:38:58,000 --> 00:38:58,839 common936 00:38:58,839 --> 00:39:01,440 misconceptions about like transferring a937 00:39:01,440 --> 00:39:03,680 loan to a different lender is there like938 00:39:03,680 --> 00:39:05,240 anything that you always come across939 00:39:05,240 --> 00:39:07,359 where it's like that's you know just940 00:39:07,359 --> 00:39:08,760 wrong like that doesn't work that's941 00:39:08,760 --> 00:39:11,359 doesn't how it942 00:39:12,599 --> 00:39:15,960 is yeah well I think probably the943 00:39:15,960 --> 00:39:17,560 misconception is is probably that it's944 00:39:17,560 --> 00:39:19,000 too945 00:39:19,000 --> 00:39:21,440 hard uh they think that it's a lot of946 00:39:21,440 --> 00:39:23,760 effort and because remember when you buy947 00:39:23,760 --> 00:39:25,839 a property for the first time there's a948 00:39:25,839 --> 00:39:28,000 lot of moving parts right you're signing949 00:39:28,000 --> 00:39:29,440 contracts you're meeting agents you're950 00:39:29,440 --> 00:39:31,040 doing inspections you're talking to951 00:39:31,040 --> 00:39:32,880 conveyances you're doing contract952 00:39:32,880 --> 00:39:34,560 reviews Building953 00:39:34,560 --> 00:39:37,240 Inspections so they people remember that954 00:39:37,240 --> 00:39:38,640 they had to do all that when they got955 00:39:38,640 --> 00:39:40,960 the loan so then sometimes they think956 00:39:40,960 --> 00:39:43,440 they have to do a lot of that again but957 00:39:43,440 --> 00:39:45,119 they don't all of that's done they958 00:39:45,119 --> 00:39:47,560 already own the property so refinance is959 00:39:47,560 --> 00:39:50,200 actually much simpler they just have the960 00:39:50,200 --> 00:39:52,720 same property and one lender now pays961 00:39:52,720 --> 00:39:55,680 out the other one um it's just a so then962 00:39:55,680 --> 00:39:57,240 when I explain that to them they're like963 00:39:57,240 --> 00:39:59,200 okay that makes sense it's actually not964 00:39:59,200 --> 00:40:02,119 that complicated and and then the other965 00:40:02,119 --> 00:40:04,960 misconception is is that it's966 00:40:04,960 --> 00:40:07,640 expensive so when people think oh if I967 00:40:07,640 --> 00:40:09,280 have to pay968 00:40:09,280 --> 00:40:11,640 $1,000 and new969 00:40:11,640 --> 00:40:14,640 fees then they think that that's970 00:40:14,640 --> 00:40:16,920 actually not worth refinancing but when971 00:40:16,920 --> 00:40:18,760 you weigh up the difference between the972 00:40:18,760 --> 00:40:20,960 interest on the new973 00:40:20,960 --> 00:40:25,640 loan um the interest on the new loan and974 00:40:25,640 --> 00:40:28,400 what the fees would be uh and add the975 00:40:28,400 --> 00:40:31,240 fees versus the interest on the old loan976 00:40:31,240 --> 00:40:33,240 they're actually better off the payments977 00:40:33,240 --> 00:40:36,000 are less interest is less so it makes978 00:40:36,000 --> 00:40:38,960 more sense to actually979 00:40:39,680 --> 00:40:42,079 refinance yeah you could imagine like980 00:40:42,079 --> 00:40:44,000 the the life of that loan what it would981 00:40:44,000 --> 00:40:47,040 cost to stay in the original um product982 00:40:47,040 --> 00:40:49,079 that's at a higher interest rate it983 00:40:49,079 --> 00:40:50,839 could be like tens of thousands of984 00:40:50,839 --> 00:40:52,800 dollars difference uh even even hundreds985 00:40:52,800 --> 00:40:54,640 of thousands of dollars difference and986 00:40:54,640 --> 00:40:56,480 then people are like okay um I don't987 00:40:56,480 --> 00:40:58,240 want to move over because it's a $1,000988 00:40:58,240 --> 00:41:01,480 cost like it's just like really just989 00:41:01,480 --> 00:41:04,720 shortterm like short minded thinking um990 00:41:04,720 --> 00:41:07,240 not not understanding the full picture991 00:41:07,240 --> 00:41:09,000 uh that's really992 00:41:09,000 --> 00:41:11,960 interesting yeah oh actually there's one993 00:41:11,960 --> 00:41:16,960 more um and that is it's too hard to994 00:41:16,960 --> 00:41:21,000 switch up switch all my direct debits um995 00:41:21,000 --> 00:41:23,800 and have new cards and have new BSB and996 00:41:23,800 --> 00:41:26,880 account numbers and all all that stuff997 00:41:26,880 --> 00:41:28,680 transfers they think oh I don't want to998 00:41:28,680 --> 00:41:30,960 do it that's too much of a headache well999 00:41:30,960 --> 00:41:34,760 if you spent an hour doing it and it1000 00:41:34,760 --> 00:41:36,800 saves you 10 grand a1001 00:41:36,800 --> 00:41:40,760 year what would you rather right and I1002 00:41:40,760 --> 00:41:42,880 think that's that's another thing that1003 00:41:42,880 --> 00:41:44,680 people also convince themselves that1004 00:41:44,680 --> 00:41:46,400 it's too hard it's not difficult to1005 00:41:46,400 --> 00:41:48,960 change a direct abits I had my my my1006 00:41:48,960 --> 00:41:52,040 card recently that someone you know1007 00:41:52,040 --> 00:41:53,720 nearly accessed my money but then the1008 00:41:53,720 --> 00:41:56,480 bank blocked it and I had to you know1009 00:41:56,480 --> 00:41:59,040 set them all up again like it didn't1010 00:41:59,040 --> 00:42:00,720 take me long you know I just jumped1011 00:42:00,720 --> 00:42:03,319 online and I checked one by one updated1012 00:42:03,319 --> 00:42:07,640 the card done like took me a few1013 00:42:07,640 --> 00:42:09,520 minutes and I think this is what the1014 00:42:09,520 --> 00:42:12,280 banks actually want um people to feel1015 00:42:12,280 --> 00:42:14,880 like they they make it as hard as1016 00:42:14,880 --> 00:42:18,240 possible to move um or give you the the1017 00:42:18,240 --> 00:42:20,119 misconception that it is hard to move1018 00:42:20,119 --> 00:42:22,640 because they obviously want you to stay1019 00:42:22,640 --> 00:42:25,040 um and um yeah I definitely think that1020 00:42:25,040 --> 00:42:28,680 that's a bit of a itic um you know or1021 00:42:28,680 --> 00:42:31,200 like uh you know what they actually want1022 00:42:31,200 --> 00:42:33,800 so can you just walk us through exactly1023 00:42:33,800 --> 00:42:37,760 um the the process of moving a loan to1024 00:42:37,760 --> 00:42:40,440 another lender and and how it might and1025 00:42:40,440 --> 00:42:41,880 how it is simplier than you think1026 00:42:41,880 --> 00:42:44,000 because for me when you helped me out1027 00:42:44,000 --> 00:42:46,520 with one of my loans um you pretty much1028 00:42:46,520 --> 00:42:48,480 did everything like I you know didn't1029 00:42:48,480 --> 00:42:49,760 really do too much I mean I did1030 00:42:49,760 --> 00:42:52,000 obviously put fill out all the documents1031 00:42:52,000 --> 00:42:53,839 um put everything together which you1032 00:42:53,839 --> 00:42:55,319 know probably did take me about an hour1033 00:42:55,319 --> 00:42:57,640 and a half 2 hours was one one uh1034 00:42:57,640 --> 00:42:59,559 evening to get everything loaded into1035 00:42:59,559 --> 00:43:02,559 your portal um but after that I was1036 00:43:02,559 --> 00:43:04,119 pretty much out of the picture and just1037 00:43:04,119 --> 00:43:05,720 getting emails saying this is happening1038 00:43:05,720 --> 00:43:07,280 this is done this is you know bang B1039 00:43:07,280 --> 00:43:09,359 bang you know so can you just explain1040 00:43:09,359 --> 00:43:13,559 the whole process of moving to another1041 00:43:14,119 --> 00:43:17,480 lender yeah well I mean you you sort of1042 00:43:17,480 --> 00:43:19,359 hit the nail on the head right it's only1043 00:43:19,359 --> 00:43:21,280 at the beginning that you had to do the1044 00:43:21,280 --> 00:43:24,920 work and the rest of it I handled so if1045 00:43:24,920 --> 00:43:26,680 you consider1046 00:43:26,680 --> 00:43:30,160 um the borrower all they're really doing1047 00:43:30,160 --> 00:43:32,839 is filling out their details and I do1048 00:43:32,839 --> 00:43:35,119 have a portal electronic portal rather1049 00:43:35,119 --> 00:43:36,960 than an old form that you have to fill1050 00:43:36,960 --> 00:43:40,480 out and print and sign and all that you1051 00:43:40,480 --> 00:43:42,440 fill out in your own time and this is1052 00:43:42,440 --> 00:43:45,480 your address history uh employment1053 00:43:45,480 --> 00:43:48,400 history your assets liabilities your1054 00:43:48,400 --> 00:43:51,359 expenses and then I have a custom1055 00:43:51,359 --> 00:43:54,240 document list that you need to upload1056 00:43:54,240 --> 00:43:56,359 and I only ask for the minimum so1057 00:43:56,359 --> 00:43:58,640 depending on which lender we're going to1058 00:43:58,640 --> 00:44:01,640 many times we don't even need that much1059 00:44:01,640 --> 00:44:06,480 we just need pay slips tax return ID and1060 00:44:06,480 --> 00:44:09,119 uh the loan statements for your debts so1061 00:44:09,119 --> 00:44:12,480 if you can get all that then I gather it1062 00:44:12,480 --> 00:44:14,599 all I check it all I make sure that it1063 00:44:14,599 --> 00:44:17,119 all meets the criteria of the bank and1064 00:44:17,119 --> 00:44:20,240 you know I'm doing my due diligence um1065 00:44:20,240 --> 00:44:23,520 as a broker and then I package all that1066 00:44:23,520 --> 00:44:27,520 up and send it to you to sign customer1067 00:44:27,520 --> 00:44:30,359 would sign it um electronically as well1068 00:44:30,359 --> 00:44:33,559 so eign docy sign and then I submit that1069 00:44:33,559 --> 00:44:36,440 to the bank whoever that bank is and1070 00:44:36,440 --> 00:44:38,920 then that bank checks it1071 00:44:38,920 --> 00:44:41,640 all um if it Al oh sorry there's also1072 00:44:41,640 --> 00:44:43,760 valuation required at some point or1073 00:44:43,760 --> 00:44:45,680 another the good news is that a lot of1074 00:44:45,680 --> 00:44:48,079 the time it's desktop valuations so you1075 00:44:48,079 --> 00:44:49,440 don't even need to send out in1076 00:44:49,440 --> 00:44:52,079 independent value to your house and the1077 00:44:52,079 --> 00:44:54,920 bank accepts that they tick it all off1078 00:44:54,920 --> 00:44:56,720 they approve it1079 00:44:56,720 --> 00:44:58,559 and then at that point you sign a1080 00:44:58,559 --> 00:45:01,119 discharge form uh so you as a borrower1081 00:45:01,119 --> 00:45:02,880 or customer you sign a discharge form1082 00:45:02,880 --> 00:45:05,440 with your current bank to notify them1083 00:45:05,440 --> 00:45:07,359 that you're switching and you give1084 00:45:07,359 --> 00:45:10,200 Authority for that new bank to1085 00:45:10,200 --> 00:45:12,800 communicate with the old bank and allow1086 00:45:12,800 --> 00:45:16,079 them to you know pay out the other and1087 00:45:16,079 --> 00:45:18,640 allow them to transfer the mortgage and1088 00:45:18,640 --> 00:45:21,599 the title to the next uh next bank so1089 00:45:21,599 --> 00:45:23,359 that's why you didn't really have to do1090 00:45:23,359 --> 00:45:26,200 anything until you heard back later and1091 00:45:26,200 --> 00:45:27,640 said okay it's been approved now you1092 00:45:27,640 --> 00:45:29,720 need to sign these documents so then you1093 00:45:29,720 --> 00:45:31,960 sign a letter of offer which is a loan1094 00:45:31,960 --> 00:45:33,960 agreement sign the discharge form get1095 00:45:33,960 --> 00:45:37,119 sent to the bank they check it you might1096 00:45:37,119 --> 00:45:39,480 need to update your insurance so if you1097 00:45:39,480 --> 00:45:42,760 have a stand um you know detached house1098 00:45:42,760 --> 00:45:44,839 not strata then you'll need to call your1099 00:45:44,839 --> 00:45:47,760 insurance company to make sure that the1100 00:45:47,760 --> 00:45:51,200 um you know insurance policy shows the1101 00:45:51,200 --> 00:45:53,920 new bank as the interested party and1102 00:45:53,920 --> 00:45:56,559 then you just have to allow that bank to1103 00:45:56,559 --> 00:45:58,359 pay out the other one that's pretty much1104 00:45:58,359 --> 00:46:00,599 it and then it settles you have access1105 00:46:00,599 --> 00:46:03,119 to new net banking new cards and then1106 00:46:03,119 --> 00:46:04,680 you start setting up all your direct1107 00:46:04,680 --> 00:46:07,400 debits uh and pay your of your salaries1108 00:46:07,400 --> 00:46:09,280 into your new bank accounts and that's1109 00:46:09,280 --> 00:46:11,760 it nice and easy and if you access1110 00:46:11,760 --> 00:46:15,599 Equity you'd also see that available on1111 00:46:15,599 --> 00:46:17,160 net1112 00:46:17,160 --> 00:46:20,040 banking yeah 100% I mean at the end of1113 00:46:20,040 --> 00:46:24,319 the day is a pain in the ass to have to1114 00:46:24,319 --> 00:46:26,599 set up all like the new bank accounts1115 00:46:26,599 --> 00:46:29,599 and change all direct debits from a new1116 00:46:29,599 --> 00:46:32,960 like uh expense account or whatever but1117 00:46:32,960 --> 00:46:34,920 you know in that instance we were1118 00:46:34,920 --> 00:46:37,280 drawing out 100K that I was using for1119 00:46:37,280 --> 00:46:39,680 another investment um you know so it was1120 00:46:39,680 --> 00:46:43,200 well worth it you know what I mean like1121 00:46:43,200 --> 00:46:46,359 um you know for for a little bit of time1122 00:46:46,359 --> 00:46:49,400 um I'll I'll take 100K for you know to1123 00:46:49,400 --> 00:46:51,760 say let's just like accely like three1124 00:46:51,760 --> 00:46:54,800 hours of work I'll take 100K every1125 00:46:54,800 --> 00:46:59,960 day exactly that's right you know I1126 00:46:59,960 --> 00:47:01,880 don't know people are like H I'd rather1127 00:47:01,880 --> 00:47:03,880 not spend the 3 hours and not keep1128 00:47:03,880 --> 00:47:05,960 growing my portfolio and not have access1129 00:47:05,960 --> 00:47:08,480 to cash yeah that's it like1130 00:47:08,480 --> 00:47:12,440 why yeah funny where are we going to now1131 00:47:12,440 --> 00:47:14,000 hang let me just find a good question1132 00:47:14,000 --> 00:47:16,599 for do you know you I'm sure you realize1133 00:47:16,599 --> 00:47:18,599 that it's a little bit laggy can I1134 00:47:18,599 --> 00:47:20,079 sometimes can't hear you talk and then1135 00:47:20,079 --> 00:47:21,240 it comes back to you and I'm just1136 00:47:21,240 --> 00:47:22,720 waiting for you to1137 00:47:22,720 --> 00:47:24,440 finish1138 00:47:24,440 --> 00:47:28,960 yeah so you're aware of that yeah1139 00:47:33,839 --> 00:47:36,960 cool all right so here we go all right1140 00:47:36,960 --> 00:47:38,920 mate so what are the some of what are1141 00:47:38,920 --> 00:47:41,839 some of the the risks and pitfalls uh1142 00:47:41,839 --> 00:47:44,920 associated with um refinancing and and1143 00:47:44,920 --> 00:47:47,640 how can they be1144 00:47:48,520 --> 00:47:50,119 mitigated1145 00:47:50,119 --> 00:47:52,040 okay1146 00:47:52,040 --> 00:47:55,750 so I guess the risks would be1147 00:47:55,750 --> 00:47:58,040 [Music]1148 00:47:58,040 --> 00:48:01,800 um I guess the real risk is not if you1149 00:48:01,800 --> 00:48:03,960 execute and if you follow through and1150 00:48:03,960 --> 00:48:05,800 then realize that you it wasn't it1151 00:48:05,800 --> 00:48:07,400 wasn't the most competitive product or1152 00:48:07,400 --> 00:48:09,680 it wasn't the right product for you or1153 00:48:09,680 --> 00:48:13,319 the structure wasn't correct so like but1154 00:48:13,319 --> 00:48:14,599 I don't know how often that actually1155 00:48:14,599 --> 00:48:16,680 happens it's probably more often if if1156 00:48:16,680 --> 00:48:20,359 somebody goes directly to the bank and1157 00:48:20,359 --> 00:48:22,280 and not through a broker especially one1158 00:48:22,280 --> 00:48:23,000 that1159 00:48:23,000 --> 00:48:24,960 specializes uh with with property1160 00:48:24,960 --> 00:48:26,240 investors1161 00:48:26,240 --> 00:48:29,520 uh but say for example interest only if1162 00:48:29,520 --> 00:48:32,720 somebody you know was accessing Equity1163 00:48:32,720 --> 00:48:34,599 but they didn't do it as interest1164 00:48:34,599 --> 00:48:36,880 only they can't just change it over1165 00:48:36,880 --> 00:48:38,680 later once it settles they have to apply1166 00:48:38,680 --> 00:48:41,359 for a new loan again so they have to1167 00:48:41,359 --> 00:48:44,079 actually do that at the beginning so1168 00:48:44,079 --> 00:48:47,200 that's why I would say it's worthwhile1169 00:48:47,200 --> 00:48:50,359 understanding the structure educating1170 00:48:50,359 --> 00:48:52,960 yourself and also talking to your broker1171 00:48:52,960 --> 00:48:56,480 about it before you you know you hit go1172 00:48:56,480 --> 00:48:59,000 um so that you're 100% certain on the1173 00:48:59,000 --> 00:49:02,119 structure before you you submit anything1174 00:49:02,119 --> 00:49:05,160 um and then the the cost1175 00:49:05,160 --> 00:49:08,720 Factor look many times people refinance1176 00:49:08,720 --> 00:49:11,200 because they want a better deal and the1177 00:49:11,200 --> 00:49:13,400 broker sends them a comparison and says1178 00:49:13,400 --> 00:49:15,480 this is you know these are the rates you1179 00:49:15,480 --> 00:49:17,319 can get1180 00:49:17,319 --> 00:49:20,920 well that may not be the only product1181 00:49:20,920 --> 00:49:22,880 you can get that's just the one that1182 00:49:22,880 --> 00:49:26,160 broker is recommending due to you know1183 00:49:26,160 --> 00:49:29,160 your objectives and also due to them1184 00:49:29,160 --> 00:49:32,480 being comfortable using those lenders so1185 00:49:32,480 --> 00:49:34,880 if you want to also do your own research1186 00:49:34,880 --> 00:49:36,640 if it's all about price well it's1187 00:49:36,640 --> 00:49:39,400 worthwhile telling that broker is this1188 00:49:39,400 --> 00:49:40,720 actually the most competitive on the1189 00:49:40,720 --> 00:49:43,599 market because otherwise I will probably1190 00:49:43,599 --> 00:49:45,440 want to look into it further so then1191 00:49:45,440 --> 00:49:47,640 they might present to you options that1192 00:49:47,640 --> 00:49:50,240 they're not necessarily used to using1193 00:49:50,240 --> 00:49:52,319 they might go to a bank that it's not1194 00:49:52,319 --> 00:49:53,760 someone that they're comfortable using1195 00:49:53,760 --> 00:49:56,520 but because you've made that clear that1196 00:49:56,520 --> 00:49:58,280 you're all about the rate and the lower1197 00:49:58,280 --> 00:50:00,799 fees then they have to consider using a1198 00:50:00,799 --> 00:50:03,040 lender that they they you know more1199 00:50:03,040 --> 00:50:05,119 often than not don't use or maybe1200 00:50:05,119 --> 00:50:08,359 they've never used them um so there's1201 00:50:08,359 --> 00:50:10,240 that1202 00:50:10,240 --> 00:50:13,680 and I guess the other risk is saying too1203 00:50:13,680 --> 00:50:15,839 much you know when we're talking about1204 00:50:15,839 --> 00:50:18,760 earlier you can't unsay certain things1205 00:50:18,760 --> 00:50:21,160 so you want to have the communication1206 00:50:21,160 --> 00:50:22,240 with your1207 00:50:22,240 --> 00:50:25,240 broker uh and be clear about what's1208 00:50:25,240 --> 00:50:27,520 going to be presented to the bank that's1209 00:50:27,520 --> 00:50:29,319 going to you know allow you to get the1210 00:50:29,319 --> 00:50:32,200 outcome so when you sit down at a branch1211 00:50:32,200 --> 00:50:33,920 and you start opening up about all your1212 00:50:33,920 --> 00:50:36,720 plans that may not be the best thing for1213 00:50:36,720 --> 00:50:39,960 you in case you're doing uh something1214 00:50:39,960 --> 00:50:42,160 that you know the bank won't lend you1215 00:50:42,160 --> 00:50:46,160 money for um but of course you want to1216 00:50:46,160 --> 00:50:47,880 use your Equity to benefit your own1217 00:50:47,880 --> 00:50:49,839 financial future so you need to work1218 00:50:49,839 --> 00:50:53,079 with with lenders that will support1219 00:50:53,079 --> 00:50:57,119 that yeah that's probably it1220 00:50:57,119 --> 00:50:59,920 yeah I reckon that for me one of the1221 00:50:59,920 --> 00:51:01,799 biggest risks that I would would think1222 00:51:01,799 --> 00:51:03,839 that this is probably the biggest risk1223 00:51:03,839 --> 00:51:07,079 is the misuse of the funds if you are1224 00:51:07,079 --> 00:51:09,680 refinancing taking out a line of credit1225 00:51:09,680 --> 00:51:12,640 and it's the misuse of those funds for1226 00:51:12,640 --> 00:51:14,520 things that aren't actually building1227 00:51:14,520 --> 00:51:17,200 your wealth like buying more real estate1228 00:51:17,200 --> 00:51:20,160 um and if you use that um those funds1229 00:51:20,160 --> 00:51:23,000 for like you know just to spend on you1230 00:51:23,000 --> 00:51:24,880 know things like that are material1231 00:51:24,880 --> 00:51:27,280 possessions that are just liabilities1232 00:51:27,280 --> 00:51:29,000 they don't actually you know help your1233 00:51:29,000 --> 00:51:31,720 life and you can't resell them and you1234 00:51:31,720 --> 00:51:33,760 just end up frittering all of that money1235 00:51:33,760 --> 00:51:36,119 away um that you've drawn out as a line1236 00:51:36,119 --> 00:51:37,400 of credit and now you've just got a1237 00:51:37,400 --> 00:51:40,559 bigger loan um that you're paying down1238 00:51:40,559 --> 00:51:42,160 without any you know nothing nothing to1239 00:51:42,160 --> 00:51:45,200 show for it I reckon the misuse of funds1240 00:51:45,200 --> 00:51:47,359 um would be a massive thing because not1241 00:51:47,359 --> 00:51:50,440 everyone um is uh you know uh really1242 00:51:50,440 --> 00:51:53,240 really highly financially educated um on1243 00:51:53,240 --> 00:51:54,960 the types of assets they could be using1244 00:51:54,960 --> 00:51:57,240 so they could be using it for for shares1245 00:51:57,240 --> 00:51:59,359 and things like that and you know shares1246 00:51:59,359 --> 00:52:02,440 can go to zero um unfortunately so it's1247 00:52:02,440 --> 00:52:05,400 a bit more of a a risky game um that1248 00:52:05,400 --> 00:52:07,079 you're playing so I think misuse of1249 00:52:07,079 --> 00:52:08,359 funds would be one of the ones that I1250 00:52:08,359 --> 00:52:10,240 would think1251 00:52:10,240 --> 00:52:15,000 of yeah yeah I agree with that I think1252 00:52:15,000 --> 00:52:16,799 you know the types of clients that I1253 00:52:16,799 --> 00:52:19,480 talk to are typically a bit more um1254 00:52:19,480 --> 00:52:22,400 Savvy and they're a bit more educated1255 00:52:22,400 --> 00:52:25,559 before they take on that risk um but1256 00:52:25,559 --> 00:52:29,119 also I have to filter that too right cuz1257 00:52:29,119 --> 00:52:30,640 I have the right to say no I don't want1258 00:52:30,640 --> 00:52:32,839 to work with certain people too right1259 00:52:32,839 --> 00:52:36,040 and if I get the feel that they're not1260 00:52:36,040 --> 00:52:39,359 you know the right type of customer to1261 00:52:39,359 --> 00:52:41,520 to access hundreds of thousands of1262 00:52:41,520 --> 00:52:43,920 dollars of cash well then I won't1263 00:52:43,920 --> 00:52:47,359 support that application so it's like I1264 00:52:47,359 --> 00:52:51,640 have to then decide as well um so but1265 00:52:51,640 --> 00:52:53,960 typically you know if someone does want1266 00:52:53,960 --> 00:52:56,520 to access a lot of equity and they've1267 00:52:56,520 --> 00:52:59,280 got a lot of personal debt well I would1268 00:52:59,280 --> 00:53:01,280 say it makes sense to consolidate that1269 00:53:01,280 --> 00:53:04,520 first so consolidation doesn't give them1270 00:53:04,520 --> 00:53:07,319 access to the cash so what I mean by1271 00:53:07,319 --> 00:53:09,200 that is if they're going to pay off a1272 00:53:09,200 --> 00:53:13,680 $50,000 car loan um or credit cards well1273 00:53:13,680 --> 00:53:16,400 the bank will want to control that so1274 00:53:16,400 --> 00:53:18,160 then they'll release the money and1275 00:53:18,160 --> 00:53:20,520 actually pay out those debts1276 00:53:20,520 --> 00:53:23,200 directly and if they don't and they do1277 00:53:23,200 --> 00:53:25,400 give them access that's when I asked the1278 00:53:25,400 --> 00:53:27,040 client to make sure they send me a1279 00:53:27,040 --> 00:53:29,520 letter to confirm it's been paid in1280 00:53:29,520 --> 00:53:31,960 full because that's part of my due1281 00:53:31,960 --> 00:53:33,280 diligence to make sure that they're1282 00:53:33,280 --> 00:53:35,440 going to be in a better position and1283 00:53:35,440 --> 00:53:37,040 then whatever's left then they can1284 00:53:37,040 --> 00:53:39,280 invest it but if they've just freed up a1285 00:53:39,280 --> 00:53:41,640 whole bunch of cash flow by clearing all1286 00:53:41,640 --> 00:53:44,040 these personal debts and loans and stuff1287 00:53:44,040 --> 00:53:45,319 well they're in a better position1288 00:53:45,319 --> 00:53:47,520 because they outgoings have reduced1289 00:53:47,520 --> 00:53:49,079 right so now they actually can think1290 00:53:49,079 --> 00:53:50,480 clearer and actually make some more1291 00:53:50,480 --> 00:53:52,440 investment decisions because they're not1292 00:53:52,440 --> 00:53:55,160 constantly you know maxed out and PID1293 00:53:55,160 --> 00:53:57,280 paying you know all their disposable1294 00:53:57,280 --> 00:54:00,319 income to paying off personal debt High1295 00:54:00,319 --> 00:54:05,280 rates so yeah that comes into effect as1296 00:54:05,280 --> 00:54:09,119 well and how do you see like um you know1297 00:54:09,119 --> 00:54:11,119 refinancing property changing in the1298 00:54:11,119 --> 00:54:13,240 future are there any like emerging1299 00:54:13,240 --> 00:54:16,799 Technologies or Trends or like AI that1300 00:54:16,799 --> 00:54:19,680 um you know banks are using now to to1301 00:54:19,680 --> 00:54:21,599 submit these applications to review1302 00:54:21,599 --> 00:54:23,760 these applications is there anything1303 00:54:23,760 --> 00:54:25,400 like futuristic coming through through1304 00:54:25,400 --> 00:54:26,760 the the woodwork that we're going to1305 00:54:26,760 --> 00:54:28,280 it's going to change the landscape of1306 00:54:28,280 --> 00:54:32,319 how we refinance property in1307 00:54:32,359 --> 00:54:35,720 future yeah it's um it's an interesting1308 00:54:35,720 --> 00:54:37,400 time we're in at the moment right we've1309 00:54:37,400 --> 00:54:40,480 got a lot of emerging1310 00:54:40,480 --> 00:54:44,200 technology um you know we've got AI1311 00:54:44,200 --> 00:54:47,079 that's coming up we've got um open1312 00:54:47,079 --> 00:54:49,440 Banking and open banking I think will1313 00:54:49,440 --> 00:54:51,599 probably be the thing that's uh when it1314 00:54:51,599 --> 00:54:53,960 starts to work well it will make it1315 00:54:53,960 --> 00:54:57,680 easier and faster for for for um clients1316 00:54:57,680 --> 00:55:00,559 to refinance because it just means that1317 00:55:00,559 --> 00:55:03,480 the transparency of their transactions1318 00:55:03,480 --> 00:55:06,160 and their repayment history will be you1319 00:55:06,160 --> 00:55:08,640 know they just electronically consent1320 00:55:08,640 --> 00:55:10,200 and they don't have to log into net1321 00:55:10,200 --> 00:55:13,040 banking download statements try to get1322 00:55:13,040 --> 00:55:15,400 the exact dates transaction histories1323 00:55:15,400 --> 00:55:16,960 and send that and get the bank to1324 00:55:16,960 --> 00:55:19,559 manually check everything it's the you1325 00:55:19,559 --> 00:55:22,839 know when that is integrated well with1326 00:55:22,839 --> 00:55:27,079 um with the credit bureaus so Equifax1327 00:55:27,079 --> 00:55:30,960 and um what happens is they can see1328 00:55:30,960 --> 00:55:33,720 automatically that you've been on time1329 00:55:33,720 --> 00:55:37,000 for the last 12 months or low or more so1330 00:55:37,000 --> 00:55:39,520 then they'll happily just pay that bank1331 00:55:39,520 --> 00:55:41,359 out and if they've got your open banking1332 00:55:41,359 --> 00:55:43,400 consent well they can see the bsbn1333 00:55:43,400 --> 00:55:46,400 account number and they can just pay it1334 00:55:46,400 --> 00:55:49,319 directly and there's already electronic1335 00:55:49,319 --> 00:55:52,160 title systems not in all states but the1336 00:55:52,160 --> 00:55:56,000 majority of all states called pexa P XA1337 00:55:56,000 --> 00:55:57,520 and this is where you don't have a1338 00:55:57,520 --> 00:55:59,720 physical title of your of title deed1339 00:55:59,720 --> 00:56:01,960 anymore it's just an electronic transfer1340 00:56:01,960 --> 00:56:04,319 that happens through this system and the1341 00:56:04,319 --> 00:56:06,160 banks share it and the state governments1342 00:56:06,160 --> 00:56:08,480 share it and the Titles office share it1343 00:56:08,480 --> 00:56:09,880 and that's why you have seamless1344 00:56:09,880 --> 00:56:11,760 transactions already happening1345 00:56:11,760 --> 00:56:13,280 electronically uh when you're when1346 00:56:13,280 --> 00:56:14,520 you're refinancing and when you're1347 00:56:14,520 --> 00:56:16,960 purchasing but once you sort of you know1348 00:56:16,960 --> 00:56:19,319 put open Banking and you know integrate1349 00:56:19,319 --> 00:56:23,079 the credit history in there as well um1350 00:56:23,079 --> 00:56:25,640 what what will then inevitably happen1351 00:56:25,640 --> 00:56:27,400 is that they're going to start to review1352 00:56:27,400 --> 00:56:29,880 your affordability through these means1353 00:56:29,880 --> 00:56:32,000 too they haven't done that yet they1354 00:56:32,000 --> 00:56:35,079 still require pay slips and they still1355 00:56:35,079 --> 00:56:37,960 um you know require you to declare your1356 00:56:37,960 --> 00:56:41,079 expenses but at some point or another1357 00:56:41,079 --> 00:56:43,760 they are most likely going to say give1358 00:56:43,760 --> 00:56:46,079 us consent so we can see your your1359 00:56:46,079 --> 00:56:49,480 banking data and your loan history and1360 00:56:49,480 --> 00:56:51,280 then we'll see how much money you really1361 00:56:51,280 --> 00:56:53,119 have left over after you spend all your1362 00:56:53,119 --> 00:56:56,200 money and do you have enough to afford1363 00:56:56,200 --> 00:56:58,359 the loan and if you do we'll lend you1364 00:56:58,359 --> 00:57:01,359 the money if you don't we won't you see1365 00:57:01,359 --> 00:57:02,960 that's where we're probably going to get1366 00:57:02,960 --> 00:57:05,400 to um a lot of fexs are already using1367 00:57:05,400 --> 00:57:08,000 that in the car finance and personal1368 00:57:08,000 --> 00:57:10,680 loan space but in mortgages and1369 00:57:10,680 --> 00:57:14,720 Commercial loans uh bit1370 00:57:14,920 --> 00:57:16,799 slower yeah so I guess there's1371 00:57:16,799 --> 00:57:19,799 absolutely no hiding in future um know1372 00:57:19,799 --> 00:57:21,480 cooking the numbers a little bit just to1373 00:57:21,480 --> 00:57:23,280 get that little bit more Finance over1374 00:57:23,280 --> 00:57:26,839 the line um so so you know what I'm1375 00:57:26,839 --> 00:57:29,119 hearing you say is get as much Finance1376 00:57:29,119 --> 00:57:30,760 as you can right now before those1377 00:57:30,760 --> 00:57:33,359 Technologies come uh you know to1378 00:57:33,359 --> 00:57:37,480 fruition um because when they do um1379 00:57:37,480 --> 00:57:38,880 there's no hiding there you're never1380 00:57:38,880 --> 00:57:40,280 getting away from it you're not going to1381 00:57:40,280 --> 00:57:41,839 be getting approved for anything that1382 00:57:41,839 --> 00:57:43,240 you shouldn't be getting approved for1383 00:57:43,240 --> 00:57:47,440 and um that would be a a horrible thing1384 00:57:47,440 --> 00:57:50,200 well one of our early episodes we talked1385 00:57:50,200 --> 00:57:52,720 about how to prepare before you start1386 00:57:52,720 --> 00:57:55,440 borrowing money right and1387 00:57:55,440 --> 00:57:57,480 I think that's probably more prevalent1388 00:57:57,480 --> 00:58:00,319 now because if you can get on the front1389 00:58:00,319 --> 00:58:02,440 foot and start managing your money so1390 00:58:02,440 --> 00:58:05,200 that you always spend less than you earn1391 00:58:05,200 --> 00:58:08,319 and save the difference then when it1392 00:58:08,319 --> 00:58:11,559 comes time to uh apply for alar with1393 00:58:11,559 --> 00:58:13,880 these Technologies you'll be like here1394 00:58:13,880 --> 00:58:16,599 I'll happily just share it with you see1395 00:58:16,599 --> 00:58:18,240 that I'm good with my money because1396 00:58:18,240 --> 00:58:19,799 remember it can work in your favor1397 00:58:19,799 --> 00:58:22,520 because remember the banks use um what's1398 00:58:22,520 --> 00:58:25,119 called The Hem the household expens1399 00:58:25,119 --> 00:58:28,000 measure so they're guessing how much you1400 00:58:28,000 --> 00:58:30,200 spend based on your household income1401 00:58:30,200 --> 00:58:33,200 based on where you live uh based on how1402 00:58:33,200 --> 00:58:35,240 many people are in the household1403 00:58:35,240 --> 00:58:38,000 including kids and even if you spend1404 00:58:38,000 --> 00:58:39,799 less than that they're still using the1405 00:58:39,799 --> 00:58:43,119 higher of the two but in the future if1406 00:58:43,119 --> 00:58:44,760 you can show them you're spending less1407 00:58:44,760 --> 00:58:47,559 than that cons consistently they'll have1408 00:58:47,559 --> 00:58:50,160 no reason to use the higher they'll have1409 00:58:50,160 --> 00:58:51,680 they they'll say well the data tells me1410 00:58:51,680 --> 00:58:53,640 you're spending three grand even though1411 00:58:53,640 --> 00:58:56,000 my estimates are four and a half so that1412 00:58:56,000 --> 00:58:57,839 can work in your favor but if you are1413 00:58:57,839 --> 00:59:00,559 spending four and a half or five grand1414 00:59:00,559 --> 00:59:01,960 well forget about it's worked against1415 00:59:01,960 --> 00:59:05,799 you so that's why get ahead no that's a1416 00:59:05,799 --> 00:59:07,520 good point get your get your ducks in1417 00:59:07,520 --> 00:59:09,960 order right now um for when this scary1418 00:59:09,960 --> 00:59:12,680 technology does uh come online because1419 00:59:12,680 --> 00:59:15,240 there's no hiding um big brother will1420 00:59:15,240 --> 00:59:17,559 get you all right mate well this has1421 00:59:17,559 --> 00:59:20,920 been a fantastic series um really really1422 00:59:20,920 --> 00:59:23,960 happy we got this um got this done um1423 00:59:23,960 --> 00:59:25,920 you know it's been there've been like1424 00:59:25,920 --> 00:59:28,039 few and far between um there's only been1425 00:59:28,039 --> 00:59:30,000 six episodes but it's been very very fun1426 00:59:30,000 --> 00:59:33,280 so I uh I thanks for uh uh joining me um1427 00:59:33,280 --> 00:59:35,839 and doing these series mate um anything1428 00:59:35,839 --> 00:59:38,440 any final1429 00:59:39,000 --> 00:59:41,799 words no it's been great um I've had1430 00:59:41,799 --> 00:59:43,839 some really positive feedback from the1431 00:59:43,839 --> 00:59:45,920 listeners um you know people have1432 00:59:45,920 --> 00:59:48,240 connected with yourself and me and we've1433 00:59:48,240 --> 00:59:49,960 been able to help more and more clients1434 00:59:49,960 --> 00:59:52,720 get onto the uh commercial property lad1435 00:59:52,720 --> 00:59:56,119 and um yeah I think you know keep keep1436 00:59:56,119 --> 00:59:58,119 at it I think at some point I'm going to1437 00:59:58,119 --> 01:00:00,079 have you on my interview on my podcast1438 01:00:00,079 --> 01:00:01,359 as well because I really want you to1439 01:00:01,359 --> 01:00:03,359 share more of your story about self1440 01:00:03,359 --> 01:00:05,599 storage uh and how we can help more1441 01:00:05,599 --> 01:00:08,280 people tap into that because it is uh1442 01:00:08,280 --> 01:00:10,000 yeah there a lot a lot of moving Parts1443 01:00:10,000 --> 01:00:11,680 it's not as simple as a a regular1444 01:00:11,680 --> 01:00:13,880 property so I think if we can find a way1445 01:00:13,880 --> 01:00:16,160 to help more people uh that's what it's1446 01:00:16,160 --> 01:00:17,359 all1447 01:00:17,359 --> 01:00:20,079 about nice see man and we we will have1448 01:00:20,079 --> 01:00:22,920 Victor on back again um I'd imagine um1449 01:00:22,920 --> 01:00:24,799 you know so don't feel like he's going1450 01:00:24,799 --> 01:00:26,520 anywhere but just for this particular1451 01:00:26,520 --> 01:00:29,240 series um we're we're going to close it1452 01:00:29,240 --> 01:00:30,760 up but uh you know there could be a1453 01:00:30,760 --> 01:00:34,559 reboot who knows who knows so this has1454 01:00:34,559 --> 01:00:37,599 been Financial1455 01:00:37,839 --> 01:00:40,359 expert well this has been Financial1456 01:00:40,359 --> 01:00:42,599 expert vixel Lagos and Andrew Bean on1457 01:00:42,599 --> 01:00:46,079 the Financial Freedom series thanks1458 01:00:46,079 --> 01:00:50,039 guys thanks guys1459 01:00:53,520 --> 01:00:56,520 cheers1460 01:01:09,440 --> 01:01:12,440 go