1 00:00:05,839 --> 00:00:09,000 this is the Financial Freedom series 2 00:00:09,000 --> 00:00:12,000 designed to show you how to cash flow 3 00:00:12,000 --> 00:00:16,020 your way to Financial Freedom brought to 4 00:00:16,020 --> 00:00:19,560 you by Lagos Financial the road to 5 00:00:19,560 --> 00:00:23,840 Financial Freedom starts today 6 00:00:24,660 --> 00:00:27,240 welcome to the Financial Freedom series 7 00:00:27,240 --> 00:00:30,359 my name is Andrew bean and I'm here with 8 00:00:30,359 --> 00:00:33,480 top mortgage broker and financial expert 9 00:00:33,480 --> 00:00:36,059 Victor Lagos from Lagos Financial how 10 00:00:36,059 --> 00:00:37,920 are you mate 11 00:00:37,920 --> 00:00:39,840 good Andrew mate how are you I'm 12 00:00:39,840 --> 00:00:42,360 fantastic buddy we have an absolute 13 00:00:42,360 --> 00:00:45,180 Ripper of a show today really excited 14 00:00:45,180 --> 00:00:48,000 about this one are you as pumped as me 15 00:00:48,000 --> 00:00:51,379 yeah this one's a tough one 16 00:00:51,379 --> 00:00:53,700 Victor was just telling me before that 17 00:00:53,700 --> 00:00:56,100 I've got a few tough questions for him 18 00:00:56,100 --> 00:00:58,199 so I'm putting him on the pump today to 19 00:00:58,199 --> 00:01:00,660 uh basically give the listener and 20 00:01:00,660 --> 00:01:02,940 everyone else the the tools to be able 21 00:01:02,940 --> 00:01:05,640 to crack the lending code and that's the 22 00:01:05,640 --> 00:01:08,820 real theme of this particular podcast is 23 00:01:08,820 --> 00:01:12,000 how can we uh actually do what we need 24 00:01:12,000 --> 00:01:14,520 to do to give the banks or give 25 00:01:14,520 --> 00:01:16,979 ourselves a more borrowing capacity so 26 00:01:16,979 --> 00:01:19,320 Victor's going to explain to us exactly 27 00:01:19,320 --> 00:01:22,439 how the banks evaluate us as the 28 00:01:22,439 --> 00:01:24,900 borrower and then give us a few tips and 29 00:01:24,900 --> 00:01:28,380 tricks on how to actually make that a 30 00:01:28,380 --> 00:01:30,420 larger sum because at the end of the day 31 00:01:30,420 --> 00:01:32,759 you know property is just a game of 32 00:01:32,759 --> 00:01:34,740 Finance with a few pieces of real estate 33 00:01:34,740 --> 00:01:37,259 you know thrown in there so if you can 34 00:01:37,259 --> 00:01:39,780 get more money more access to Capital 35 00:01:39,780 --> 00:01:43,040 um happy days keep on going 36 00:01:43,040 --> 00:01:45,900 yeah yeah exactly I think today uh 37 00:01:45,900 --> 00:01:47,880 you're really gonna be getting all the 38 00:01:47,880 --> 00:01:49,799 secrets out of me all the stuff that I 39 00:01:49,799 --> 00:01:51,659 share with my clients uh 40 00:01:51,659 --> 00:01:54,360 if you're listening yeah take some notes 41 00:01:54,360 --> 00:01:57,299 awesome mate so this is a really really 42 00:01:57,299 --> 00:02:00,180 big subject so can you just give us a 43 00:02:00,180 --> 00:02:03,240 quick overview of how the banks actually 44 00:02:03,240 --> 00:02:05,700 like make their assessment on borrowing 45 00:02:05,700 --> 00:02:07,860 capacity per applicant 46 00:02:07,860 --> 00:02:09,000 right 47 00:02:09,000 --> 00:02:12,300 yeah so I mean very simply put they're 48 00:02:12,300 --> 00:02:15,239 just trying to work out that once you uh 49 00:02:15,239 --> 00:02:17,760 cancel all of your expenses so your 50 00:02:17,760 --> 00:02:19,739 living costs as well as all of your 51 00:02:19,739 --> 00:02:20,940 debts 52 00:02:20,940 --> 00:02:24,060 is there money left over to service your 53 00:02:24,060 --> 00:02:26,760 your new loan and is there a surplus 54 00:02:26,760 --> 00:02:29,520 after that so that's overarching what 55 00:02:29,520 --> 00:02:31,140 they're trying to work it out but then 56 00:02:31,140 --> 00:02:34,200 the numbers in which they calculate that 57 00:02:34,200 --> 00:02:36,180 differ they don't look at what the 58 00:02:36,180 --> 00:02:38,940 actual cost is they use buffers and 59 00:02:38,940 --> 00:02:40,920 stress tests and we'll get into a little 60 00:02:40,920 --> 00:02:42,480 bit more of the details on that as you 61 00:02:42,480 --> 00:02:45,120 ask the questions yeah awesome so I mean 62 00:02:45,120 --> 00:02:47,519 when I'm assessing a property 63 00:02:47,519 --> 00:02:49,560 um I have a metric that I put in 64 00:02:49,560 --> 00:02:52,440 um for the debt coverage ratio because I 65 00:02:52,440 --> 00:02:55,019 believe that a bank or Banks like to see 66 00:02:55,019 --> 00:02:56,879 like a good one and a half two percent 67 00:02:56,879 --> 00:02:59,640 of a debt coverage ratio from the 68 00:02:59,640 --> 00:03:01,920 positively geared property do they have 69 00:03:01,920 --> 00:03:04,319 their own like debt coverage ratio per 70 00:03:04,319 --> 00:03:07,920 applicant that they they use 71 00:03:07,920 --> 00:03:11,340 yeah so so when you're looking at uh 72 00:03:11,340 --> 00:03:15,180 lending serviceability calculators every 73 00:03:15,180 --> 00:03:18,680 bank or lender has got their own uh 74 00:03:18,680 --> 00:03:22,440 methodology in what they account for so 75 00:03:22,440 --> 00:03:24,060 if they're looking at a debt servicing 76 00:03:24,060 --> 00:03:29,940 ratio it's usually between say 1.25 77 00:03:29,940 --> 00:03:32,280 up to two times cover 78 00:03:32,280 --> 00:03:35,700 and this is based on principle and 79 00:03:35,700 --> 00:03:38,340 interest on all of your loans 80 00:03:38,340 --> 00:03:40,140 on a higher interest rate than what 81 00:03:40,140 --> 00:03:42,659 you're actually paying so say that rate 82 00:03:42,659 --> 00:03:44,940 is six percent 83 00:03:44,940 --> 00:03:47,239 um and the bank has a three percent 84 00:03:47,239 --> 00:03:50,159 buffer on that they'll they'll calculate 85 00:03:50,159 --> 00:03:52,200 it at nine percent and they'll want to 86 00:03:52,200 --> 00:03:54,480 see that you can actually cover that you 87 00:03:54,480 --> 00:03:56,940 know two times cover well not so much 88 00:03:56,940 --> 00:03:58,560 two times that's pretty high but I'd say 89 00:03:58,560 --> 00:04:01,680 you know 1.25 times that can you cover 90 00:04:01,680 --> 00:04:04,140 that with your with your income 91 00:04:04,140 --> 00:04:06,420 so is the spread that the bank always 92 00:04:06,420 --> 00:04:08,760 puts on is is that a specific number or 93 00:04:08,760 --> 00:04:11,040 does that change bank to bank like the 94 00:04:11,040 --> 00:04:12,599 spread of the interest rate that they 95 00:04:12,599 --> 00:04:14,939 can actually give you to the the stress 96 00:04:14,939 --> 00:04:19,199 test that they you know put on you 97 00:04:19,199 --> 00:04:21,180 so if you're a 98 00:04:21,180 --> 00:04:23,280 a bank and you're a deposit taking 99 00:04:23,280 --> 00:04:25,919 institution you're regulated by apra 100 00:04:25,919 --> 00:04:28,380 yeah and apra says you have to put three 101 00:04:28,380 --> 00:04:31,440 percent above the actual interest rate 102 00:04:31,440 --> 00:04:33,780 so today's rates 103 00:04:33,780 --> 00:04:36,300 are around six percent so they're 104 00:04:36,300 --> 00:04:38,940 calculating at nine percent but if 105 00:04:38,940 --> 00:04:42,180 you're a non-bank then you don't report 106 00:04:42,180 --> 00:04:45,780 directly to apra you report to Asic and 107 00:04:45,780 --> 00:04:48,600 the stress test rates can vary they can 108 00:04:48,600 --> 00:04:50,400 be sometimes 109 00:04:50,400 --> 00:04:53,400 um one time one percent above that or 110 00:04:53,400 --> 00:04:55,199 two percent above that so there's a bit 111 00:04:55,199 --> 00:04:59,100 more breathing room and also the way 112 00:04:59,100 --> 00:05:00,540 they treat principle and interest 113 00:05:00,540 --> 00:05:03,960 repayments versus interest only is 114 00:05:03,960 --> 00:05:06,479 different as well so a bank 115 00:05:06,479 --> 00:05:09,600 a bank will always look at the principal 116 00:05:09,600 --> 00:05:11,699 and interest payment for the remaining p 117 00:05:11,699 --> 00:05:14,220 and I term so say you've got a 30-year 118 00:05:14,220 --> 00:05:16,080 loan and you've got a five-year interest 119 00:05:16,080 --> 00:05:18,120 only A bank's going to say all right 120 00:05:18,120 --> 00:05:20,759 well there's 25 years remaining so we 121 00:05:20,759 --> 00:05:23,820 need to calculate p i or principal and 122 00:05:23,820 --> 00:05:26,520 interest on 25 years and we're going to 123 00:05:26,520 --> 00:05:28,259 stress test that 124 00:05:28,259 --> 00:05:31,259 up say nine percent so that's obviously 125 00:05:31,259 --> 00:05:33,479 a difficult fee because now you're 126 00:05:33,479 --> 00:05:35,940 you've got a shorter loan term and the 127 00:05:35,940 --> 00:05:37,620 repayments are higher 128 00:05:37,620 --> 00:05:40,620 whereas a non-bank can potentially look 129 00:05:40,620 --> 00:05:43,139 at the interest-only repayment and just 130 00:05:43,139 --> 00:05:45,120 say put two percent above that 131 00:05:45,120 --> 00:05:47,460 that's a significant difference they're 132 00:05:47,460 --> 00:05:49,080 not looking at the current principle and 133 00:05:49,080 --> 00:05:50,400 interest repayment they're not looking 134 00:05:50,400 --> 00:05:52,740 at 25 years remaining they're saying 135 00:05:52,740 --> 00:05:55,320 what's the actual repayment today and if 136 00:05:55,320 --> 00:05:57,240 it is interest only then let's just 137 00:05:57,240 --> 00:05:58,860 stress test that and see that you can 138 00:05:58,860 --> 00:06:00,780 afford that and if you've got a few 139 00:06:00,780 --> 00:06:02,340 properties and they're all interest only 140 00:06:02,340 --> 00:06:04,800 that could work in your favor for a 141 00:06:04,800 --> 00:06:07,440 non-bank to borrow more but if you're 142 00:06:07,440 --> 00:06:10,139 going to a bigger bank for you know 143 00:06:10,139 --> 00:06:11,160 overall you're going to get a better 144 00:06:11,160 --> 00:06:13,620 interest rate lower fees then it can 145 00:06:13,620 --> 00:06:15,300 hinder you by having a longer 146 00:06:15,300 --> 00:06:17,340 interest-only terms 147 00:06:17,340 --> 00:06:20,160 so can you just um basically explain to 148 00:06:20,160 --> 00:06:22,500 us like like what a non-bank is like 149 00:06:22,500 --> 00:06:24,240 maybe just name couple of the businesses 150 00:06:24,240 --> 00:06:25,740 that are a non-bank because I mean I 151 00:06:25,740 --> 00:06:27,539 guess if a lot of people just think if 152 00:06:27,539 --> 00:06:28,440 they're lending me money they're 153 00:06:28,440 --> 00:06:30,180 obviously a bank but that doesn't seem 154 00:06:30,180 --> 00:06:32,160 to be the case 155 00:06:32,160 --> 00:06:34,740 yeah they're just called non-banks or or 156 00:06:34,740 --> 00:06:38,160 non-adis non-deposit taking institutions 157 00:06:38,160 --> 00:06:40,979 so some of the more known lenders out 158 00:06:40,979 --> 00:06:43,940 there uh Liberty Financial paper money 159 00:06:43,940 --> 00:06:47,520 uh resymac first Mac 160 00:06:47,520 --> 00:06:49,199 these are the ones that a lot of people 161 00:06:49,199 --> 00:06:50,699 know of especially if you're a property 162 00:06:50,699 --> 00:06:52,680 investor but then there's other 163 00:06:52,680 --> 00:06:54,960 non-banks or mortgage managers out there 164 00:06:54,960 --> 00:06:57,020 that many people may not have heard of 165 00:06:57,020 --> 00:06:59,880 uh I'm even learning about new ones and 166 00:06:59,880 --> 00:07:01,259 I'm getting accredited with a lot of 167 00:07:01,259 --> 00:07:03,840 them so yeah you know a lot of them 168 00:07:03,840 --> 00:07:06,360 don't have any type of advertising or 169 00:07:06,360 --> 00:07:08,940 direct to Consumer channels so you can 170 00:07:08,940 --> 00:07:10,500 only get to them through the broker 171 00:07:10,500 --> 00:07:11,280 Channel 172 00:07:11,280 --> 00:07:13,020 and that's why sometimes it's really 173 00:07:13,020 --> 00:07:16,259 important to work with a broker that can 174 00:07:16,259 --> 00:07:18,060 actually navigate that and find the 175 00:07:18,060 --> 00:07:20,340 right lender because otherwise customer 176 00:07:20,340 --> 00:07:21,900 doesn't even know they exist they don't 177 00:07:21,900 --> 00:07:23,460 advertise and that might be the right 178 00:07:23,460 --> 00:07:25,740 lender to help you get the next property 179 00:07:25,740 --> 00:07:28,380 yeah right so with the three percent 180 00:07:28,380 --> 00:07:30,840 interest that the bank does put on or 181 00:07:30,840 --> 00:07:34,199 apra has put on for the bank has that 182 00:07:34,199 --> 00:07:36,300 always been three percent and 183 00:07:36,300 --> 00:07:38,340 um has that is that enough for this 184 00:07:38,340 --> 00:07:40,500 particular you know time around where I 185 00:07:40,500 --> 00:07:43,740 think are we on 12 or 13 rate hikes 186 00:07:43,740 --> 00:07:45,720 um you know now is that is three percent 187 00:07:45,720 --> 00:07:47,819 enough back before the interest rates 188 00:07:47,819 --> 00:07:49,020 we've probably already gobbled that up 189 00:07:49,020 --> 00:07:51,060 right now 190 00:07:51,060 --> 00:07:53,280 yeah it's an interesting time that we're 191 00:07:53,280 --> 00:07:55,979 in so when the three percent it used to 192 00:07:55,979 --> 00:07:59,340 be higher I believe it was 3.25 a few 193 00:07:59,340 --> 00:08:01,740 years ago but they they dropped it down 194 00:08:01,740 --> 00:08:05,340 because interest rates were around two 195 00:08:05,340 --> 00:08:07,259 percent at one point or even lower for 196 00:08:07,259 --> 00:08:11,300 fixed and the three percent buffer was 197 00:08:11,300 --> 00:08:14,880 accurate and a lot of loans now cracked 198 00:08:14,880 --> 00:08:17,039 over that so there hasn't really been 199 00:08:17,039 --> 00:08:20,340 much distress even for loans coming off 200 00:08:20,340 --> 00:08:23,160 it's fixed into into variable because 201 00:08:23,160 --> 00:08:26,039 people are paying what the banks are 202 00:08:26,039 --> 00:08:28,139 stress tested anyway around that five 203 00:08:28,139 --> 00:08:30,720 percent so now that we're cracking over 204 00:08:30,720 --> 00:08:32,039 to six percent 205 00:08:32,039 --> 00:08:34,200 now it's starting to squeeze the 206 00:08:34,200 --> 00:08:36,059 household much more and on top of that 207 00:08:36,059 --> 00:08:38,099 you've got inflation so the cost of 208 00:08:38,099 --> 00:08:40,620 living is going up as well but because 209 00:08:40,620 --> 00:08:42,899 there was such a short a period of time 210 00:08:42,899 --> 00:08:45,360 where people were able to pay these low 211 00:08:45,360 --> 00:08:47,700 interest rates they were then also able 212 00:08:47,700 --> 00:08:50,399 to build up cash buffers so build up 213 00:08:50,399 --> 00:08:51,899 their offset account their savings 214 00:08:51,899 --> 00:08:55,140 account uh build up the loan redraw so 215 00:08:55,140 --> 00:08:56,580 that's a lot of people living off of 216 00:08:56,580 --> 00:08:58,860 that stuff at the moment just to um hold 217 00:08:58,860 --> 00:09:02,760 on to their property so right now if 218 00:09:02,760 --> 00:09:04,740 you're entering the market and the banks 219 00:09:04,740 --> 00:09:07,200 are assessing it at say nine percent I 220 00:09:07,200 --> 00:09:08,880 don't think nine three percent buffer 221 00:09:08,880 --> 00:09:10,860 makes sense with today's rates because 222 00:09:10,860 --> 00:09:13,320 if interest rates were at nine percent 223 00:09:13,320 --> 00:09:17,220 today uh and where the prices are right 224 00:09:17,220 --> 00:09:19,680 now there'll be very small amount of the 225 00:09:19,680 --> 00:09:22,080 market they'll be able to borrow and own 226 00:09:22,080 --> 00:09:25,740 property anymore so yeah so I think it's 227 00:09:25,740 --> 00:09:29,040 actually going to drop uh you know the 228 00:09:29,040 --> 00:09:31,320 some banks have got special rulings a 229 00:09:31,320 --> 00:09:33,899 lot of them got because of this mortgage 230 00:09:33,899 --> 00:09:35,640 Cliff they're calling it where people 231 00:09:35,640 --> 00:09:37,080 are coming off into these two percent 232 00:09:37,080 --> 00:09:39,720 fixed rates and they're calling it a 233 00:09:39,720 --> 00:09:41,339 mortgage prison because they're stuck 234 00:09:41,339 --> 00:09:44,519 with the same bank that they're with and 235 00:09:44,519 --> 00:09:46,380 they've given them this ruling where 236 00:09:46,380 --> 00:09:47,940 they can instead of assessing three 237 00:09:47,940 --> 00:09:49,560 percent above the actual interest rate 238 00:09:49,560 --> 00:09:51,660 they're assessing at one percent Above 239 00:09:51,660 --> 00:09:53,700 So then as long as you've got clean 240 00:09:53,700 --> 00:09:55,980 credit the loan to value ratio is I 241 00:09:55,980 --> 00:09:58,140 think below 80 242 00:09:58,140 --> 00:10:00,480 um and you put a one percent uh stress 243 00:10:00,480 --> 00:10:02,700 test buffer on top then there's an 244 00:10:02,700 --> 00:10:04,920 option for these people to refinance to 245 00:10:04,920 --> 00:10:06,540 to a lower interest rate potentially 246 00:10:06,540 --> 00:10:09,000 than that same bank is offering 247 00:10:09,000 --> 00:10:11,820 so I guess that means that the banks 248 00:10:11,820 --> 00:10:14,339 aren't assuming or they're they're bet 249 00:10:14,339 --> 00:10:15,480 they're betting that there aren't going 250 00:10:15,480 --> 00:10:17,519 to be too many more interest rate hikes 251 00:10:17,519 --> 00:10:19,080 where they're going to easily take up 252 00:10:19,080 --> 00:10:21,660 that one percent buffer 253 00:10:21,660 --> 00:10:24,600 yeah yeah exactly right they're they're 254 00:10:24,600 --> 00:10:27,720 kind of aware that we're at that higher 255 00:10:27,720 --> 00:10:30,600 range right now and I've noticed as well 256 00:10:30,600 --> 00:10:32,580 that the gap between 257 00:10:32,580 --> 00:10:33,420 um 258 00:10:33,420 --> 00:10:35,519 owner occupied interest rates and 259 00:10:35,519 --> 00:10:37,800 investment rates is closing so it's not 260 00:10:37,800 --> 00:10:40,380 as as large as it used to be so what 261 00:10:40,380 --> 00:10:43,019 that means is that the banks are likely 262 00:10:43,019 --> 00:10:45,240 um eating into their margins their 263 00:10:45,240 --> 00:10:47,040 profit margins just to keep the interest 264 00:10:47,040 --> 00:10:49,920 rates at a somewhat affordable level if 265 00:10:49,920 --> 00:10:51,839 they were really trying to maintain the 266 00:10:51,839 --> 00:10:53,760 same margins that they've had then 267 00:10:53,760 --> 00:10:56,040 customers will be paying probably seven 268 00:10:56,040 --> 00:10:59,100 percent right now so they're and above 269 00:10:59,100 --> 00:11:01,200 so they're sort of keeping it at a 270 00:11:01,200 --> 00:11:03,120 relatively affordable level 271 00:11:03,120 --> 00:11:05,399 so that they can still get business 272 00:11:05,399 --> 00:11:06,779 so if 273 00:11:06,779 --> 00:11:09,120 if the rates were jumping up to eight 274 00:11:09,120 --> 00:11:11,279 percent nine percent and no one could 275 00:11:11,279 --> 00:11:13,680 borrow well that's the entire economy 276 00:11:13,680 --> 00:11:15,779 gone right no one's no one's able to buy 277 00:11:15,779 --> 00:11:18,120 and borrow anymore so and Banks aren't 278 00:11:18,120 --> 00:11:19,620 making profit at all so they're better 279 00:11:19,620 --> 00:11:21,959 off you know having a lower margin but 280 00:11:21,959 --> 00:11:23,579 still getting a lot of customers than 281 00:11:23,579 --> 00:11:26,459 high margins and no customers yeah yeah 282 00:11:26,459 --> 00:11:28,740 definitely so I guess because the banks 283 00:11:28,740 --> 00:11:30,779 have had such a good run or you know the 284 00:11:30,779 --> 00:11:32,880 the interest rate or the cash rate has 285 00:11:32,880 --> 00:11:35,880 been so low for so long they've had such 286 00:11:35,880 --> 00:11:37,740 a good run of making money getting more 287 00:11:37,740 --> 00:11:40,200 loans you know putting out debt 288 00:11:40,200 --> 00:11:41,820 um that they really don't need to be 289 00:11:41,820 --> 00:11:44,279 having that really big spread of the the 290 00:11:44,279 --> 00:11:45,720 best times 291 00:11:45,720 --> 00:11:47,399 um you know profitability they can they 292 00:11:47,399 --> 00:11:49,019 can dial it back because you know 293 00:11:49,019 --> 00:11:50,519 obviously they still want to have loans 294 00:11:50,519 --> 00:11:52,920 coming in business coming in to keep the 295 00:11:52,920 --> 00:11:55,560 um the economy and everything going 296 00:11:55,560 --> 00:11:57,959 exactly right and they've invested a lot 297 00:11:57,959 --> 00:12:01,019 of money into uh lending so they've got 298 00:12:01,019 --> 00:12:02,760 a lot of new bankers and credit 299 00:12:02,760 --> 00:12:05,399 assessors and Technology uh they're 300 00:12:05,399 --> 00:12:07,440 shutting down branches so that more 301 00:12:07,440 --> 00:12:09,240 people are going online to apply for 302 00:12:09,240 --> 00:12:11,700 loans so they need to get a return on 303 00:12:11,700 --> 00:12:13,740 investment on this yeah and they need to 304 00:12:13,740 --> 00:12:15,420 cut you know if they're if they're 305 00:12:15,420 --> 00:12:17,100 increasing rates so high that no one can 306 00:12:17,100 --> 00:12:18,480 borrow well they're going to have to 307 00:12:18,480 --> 00:12:20,940 start getting rid of a lot of jobs and 308 00:12:20,940 --> 00:12:23,519 start downsizing so it's a it's an 309 00:12:23,519 --> 00:12:25,260 interesting time to rent right now yeah 310 00:12:25,260 --> 00:12:28,260 100 so can you explain to me what um 311 00:12:28,260 --> 00:12:30,360 what shading is for the listeners that 312 00:12:30,360 --> 00:12:31,800 don't know what banks do or they don't 313 00:12:31,800 --> 00:12:34,560 know what what shading is 314 00:12:34,560 --> 00:12:37,500 yeah so shading is when 315 00:12:37,500 --> 00:12:41,760 say you're collecting rent of 316 00:12:41,760 --> 00:12:43,680 um a thousand dollars a week 317 00:12:43,680 --> 00:12:47,579 they'll usually shade that by 10 to 20 318 00:12:47,579 --> 00:12:48,600 percent 319 00:12:48,600 --> 00:12:50,940 so instead of using a you know a 320 00:12:50,940 --> 00:12:52,139 thousand dollars a week towards 321 00:12:52,139 --> 00:12:53,399 serviceability 322 00:12:53,399 --> 00:12:56,279 they'll use eight hundred dollars or 323 00:12:56,279 --> 00:12:57,480 nine hundred dollars 324 00:12:57,480 --> 00:12:59,940 and they do this because properties for 325 00:12:59,940 --> 00:13:02,180 example aren't going to be 326 00:13:02,180 --> 00:13:05,459 rented out every you know week of the 327 00:13:05,459 --> 00:13:07,680 year there might be a week or two where 328 00:13:07,680 --> 00:13:11,220 it's vacant or longer depending 329 00:13:11,220 --> 00:13:13,279 um when tenants leave and whatnot 330 00:13:13,279 --> 00:13:15,540 they're also aware that there's going to 331 00:13:15,540 --> 00:13:18,540 be some costs that come up that they 332 00:13:18,540 --> 00:13:20,040 were unaware of so things is going to be 333 00:13:20,040 --> 00:13:22,380 maintenance or repairs and things like 334 00:13:22,380 --> 00:13:26,519 that and so if they accept 100 then 335 00:13:26,519 --> 00:13:28,560 they're putting themselves at risk that 336 00:13:28,560 --> 00:13:30,480 yeah that you can't afford to loan so 337 00:13:30,480 --> 00:13:32,579 they shade it to make sure that they're 338 00:13:32,579 --> 00:13:34,620 they're being more conservative and it's 339 00:13:34,620 --> 00:13:36,420 not just rental income that's one thing 340 00:13:36,420 --> 00:13:38,160 that they showed it's it's also certain 341 00:13:38,160 --> 00:13:39,600 types of income 342 00:13:39,600 --> 00:13:42,540 such as overtime or bonuses or 343 00:13:42,540 --> 00:13:44,839 commissions 344 00:13:44,839 --> 00:13:47,579 right you might get really good bonuses 345 00:13:47,579 --> 00:13:49,980 this year and last year 346 00:13:49,980 --> 00:13:53,160 but the year after it drops so by them 347 00:13:53,160 --> 00:13:55,079 shading it by 20 percent 348 00:13:55,079 --> 00:13:57,540 it gives them comfort knowing that if it 349 00:13:57,540 --> 00:14:00,000 does drop that they were conservative 350 00:14:00,000 --> 00:14:02,279 and obviously the amount that they use 351 00:14:02,279 --> 00:14:04,680 towards uh servicing the debt that they 352 00:14:04,680 --> 00:14:07,680 gave you and is that 20 is that a 353 00:14:07,680 --> 00:14:09,660 standard thing across across all banks 354 00:14:09,660 --> 00:14:11,639 and all non-banks or do they have their 355 00:14:11,639 --> 00:14:14,160 own percentages they use for their own 356 00:14:14,160 --> 00:14:16,740 particular business 357 00:14:16,740 --> 00:14:20,100 no they all have their own so and it all 358 00:14:20,100 --> 00:14:24,180 they call them niches right in in in the 359 00:14:24,180 --> 00:14:26,100 lending World they all have their own 360 00:14:26,100 --> 00:14:28,500 niches and some of them will use a 361 00:14:28,500 --> 00:14:30,720 hundred percent of overtime for certain 362 00:14:30,720 --> 00:14:33,000 industries like essential workers for 363 00:14:33,000 --> 00:14:35,279 example you know if you're if you're a 364 00:14:35,279 --> 00:14:38,579 doctor or or a nurse or ambulance 365 00:14:38,579 --> 00:14:40,260 something like that and you work a lot 366 00:14:40,260 --> 00:14:42,540 of overtime well that can boost up your 367 00:14:42,540 --> 00:14:44,880 income significantly but if you go to 368 00:14:44,880 --> 00:14:47,160 One bank and they shade it by 80 or 20 369 00:14:47,160 --> 00:14:49,560 and only use eighty percent that's 370 00:14:49,560 --> 00:14:51,420 limiting how much you can borrow so 371 00:14:51,420 --> 00:14:53,040 there might be a lender or a bank that 372 00:14:53,040 --> 00:14:55,980 will accept 100 of the overtime because 373 00:14:55,980 --> 00:14:58,320 they're aware that this industry it's 374 00:14:58,320 --> 00:15:00,240 very common to have Avatar 375 00:15:00,240 --> 00:15:02,160 um so they're happily taking on the risk 376 00:15:02,160 --> 00:15:04,139 because they know it's more likely going 377 00:15:04,139 --> 00:15:05,519 to continue that you're going to do 378 00:15:05,519 --> 00:15:07,560 those sort of hours 379 00:15:07,560 --> 00:15:10,500 and um you know when it comes to 380 00:15:10,500 --> 00:15:11,760 property 381 00:15:11,760 --> 00:15:15,600 because we've had a lot of low vacancies 382 00:15:15,600 --> 00:15:18,000 in terms of rent you know as we're aware 383 00:15:18,000 --> 00:15:20,279 the population's growing migration is 384 00:15:20,279 --> 00:15:22,940 increasing there's a lot of people that 385 00:15:22,940 --> 00:15:25,680 uh are in a position where they're 386 00:15:25,680 --> 00:15:27,480 obviously having to pay more rent to 387 00:15:27,480 --> 00:15:29,399 stay where they're at in their current 388 00:15:29,399 --> 00:15:31,320 place and people are paying more and 389 00:15:31,320 --> 00:15:33,660 more rent just to just to get a place to 390 00:15:33,660 --> 00:15:36,660 live right so that's kept vacancy rates 391 00:15:36,660 --> 00:15:40,680 very very low so banks have started um 392 00:15:40,680 --> 00:15:43,079 trying to find more ways to be to get 393 00:15:43,079 --> 00:15:45,300 more borrowing so instead of shading 10 394 00:15:45,300 --> 00:15:46,139 percent 395 00:15:46,139 --> 00:15:48,779 uh sorry 20 now they're only shading uh 396 00:15:48,779 --> 00:15:51,000 10 so they're accepting 90 of the rental 397 00:15:51,000 --> 00:15:53,579 income so yeah it's always an 398 00:15:53,579 --> 00:15:55,920 ever-changing environment there's new 399 00:15:55,920 --> 00:15:57,839 policies coming out all the time and 400 00:15:57,839 --> 00:16:00,360 they always send us Brokers the changes 401 00:16:00,360 --> 00:16:02,279 and sometimes it's hard to stay on top 402 00:16:02,279 --> 00:16:04,740 of but that's what I have to do for a 403 00:16:04,740 --> 00:16:06,420 living and I do that uh to help my 404 00:16:06,420 --> 00:16:07,560 customers 405 00:16:07,560 --> 00:16:09,300 yeah that's really interesting how like 406 00:16:09,300 --> 00:16:12,600 the the changing of the assessment can 407 00:16:12,600 --> 00:16:15,540 change on you know at any time and I 408 00:16:15,540 --> 00:16:17,040 guess that's why you know you have your 409 00:16:17,040 --> 00:16:19,740 finger on the pulse and it makes sense 410 00:16:19,740 --> 00:16:21,899 um to use someone like you who is always 411 00:16:21,899 --> 00:16:24,420 like getting updates like how do you 412 00:16:24,420 --> 00:16:26,880 know when a bank has changed their 413 00:16:26,880 --> 00:16:29,779 shading policy like how do you know 414 00:16:29,779 --> 00:16:32,519 usually they send an email out with 415 00:16:32,519 --> 00:16:34,079 policy changes 416 00:16:34,079 --> 00:16:37,259 um but emails can get missed uh you know 417 00:16:37,259 --> 00:16:39,300 you can imagine how many lenders and 418 00:16:39,300 --> 00:16:41,519 banks are out there and how many policy 419 00:16:41,519 --> 00:16:43,440 changes especially with RBA hikes and 420 00:16:43,440 --> 00:16:46,560 whatnot so sometimes they get missed so 421 00:16:46,560 --> 00:16:49,620 every bank or lender has got a 422 00:16:49,620 --> 00:16:51,720 relationship management team or a 423 00:16:51,720 --> 00:16:53,699 business development manager and it's 424 00:16:53,699 --> 00:16:56,699 their job to explain these changes to 425 00:16:56,699 --> 00:16:58,740 Brokers so they all get a portfolio of 426 00:16:58,740 --> 00:17:01,740 Brokers and they contact contact us and 427 00:17:01,740 --> 00:17:04,319 they tell us about the changes and they 428 00:17:04,319 --> 00:17:07,020 tell us you know their new dishes or you 429 00:17:07,020 --> 00:17:09,240 know special offers that they have you 430 00:17:09,240 --> 00:17:10,799 know sometimes if they call them like 431 00:17:10,799 --> 00:17:12,780 under the table offers as well so 432 00:17:12,780 --> 00:17:14,880 they're not advertised because lenders 433 00:17:14,880 --> 00:17:17,520 are aware that 434 00:17:17,520 --> 00:17:19,980 um the competition is fierce so if they 435 00:17:19,980 --> 00:17:22,020 advertise certain things and other 436 00:17:22,020 --> 00:17:24,000 lenders become aware of it 437 00:17:24,000 --> 00:17:27,480 customers can you know leverage that and 438 00:17:27,480 --> 00:17:30,720 um you know go back to the other banking 439 00:17:30,720 --> 00:17:32,580 now for the same same product or the 440 00:17:32,580 --> 00:17:34,620 same interest rate or the same Niche so 441 00:17:34,620 --> 00:17:36,240 a lot of it is under the table so they 442 00:17:36,240 --> 00:17:38,220 tell us that this is something we can do 443 00:17:38,220 --> 00:17:40,620 and then we then have to communicate 444 00:17:40,620 --> 00:17:43,220 that to the right customers yeah right 445 00:17:43,220 --> 00:17:46,260 very very interesting it's just um yeah 446 00:17:46,260 --> 00:17:47,880 it's an ever-changing comment I guess it 447 00:17:47,880 --> 00:17:49,559 just does really you need someone with a 448 00:17:49,559 --> 00:17:52,260 finger on the pulse because like if say 449 00:17:52,260 --> 00:17:53,760 there's a bank and they have a shading 450 00:17:53,760 --> 00:17:56,460 of like 20 and they're also um you know 451 00:17:56,460 --> 00:17:59,280 giving me a a three three percent buffer 452 00:17:59,280 --> 00:18:01,500 or if it's a two percent buffer it 453 00:18:01,500 --> 00:18:03,240 really does change the amount of 454 00:18:03,240 --> 00:18:04,860 borrowings that I could potentially get 455 00:18:04,860 --> 00:18:07,380 like it can be drastic have has there 456 00:18:07,380 --> 00:18:09,720 been any like like ridiculous amounts of 457 00:18:09,720 --> 00:18:11,640 money where you've taken it to One bank 458 00:18:11,640 --> 00:18:13,260 and they've given you X and then you're 459 00:18:13,260 --> 00:18:14,340 taking it to the other bank and it's 460 00:18:14,340 --> 00:18:16,260 been like like 10 times more have you 461 00:18:16,260 --> 00:18:18,179 had that with your clients yet 462 00:18:18,179 --> 00:18:21,539 uh I wouldn't say 10 times more but you 463 00:18:21,539 --> 00:18:23,580 know you know you're talking a few 464 00:18:23,580 --> 00:18:25,200 hundred thousand right that's still a 465 00:18:25,200 --> 00:18:29,039 lot easier oh yeah oh definitely it's a 466 00:18:29,039 --> 00:18:31,740 big difference and a lot of um 467 00:18:31,740 --> 00:18:33,900 a lot of customers are unaware of this 468 00:18:33,900 --> 00:18:36,480 so they go directly to the bank and that 469 00:18:36,480 --> 00:18:38,280 bank doesn't know other bank's policies 470 00:18:38,280 --> 00:18:40,200 so they can't even tell you what another 471 00:18:40,200 --> 00:18:42,480 lender will offer because they don't 472 00:18:42,480 --> 00:18:44,460 have access to it plus it's for them 473 00:18:44,460 --> 00:18:45,720 they're kind of you know selling 474 00:18:45,720 --> 00:18:48,900 themselves short yeah 475 00:18:48,900 --> 00:18:50,400 yeah they don't want you going to the 476 00:18:50,400 --> 00:18:52,440 other bank 477 00:18:52,440 --> 00:18:53,640 and a lot of times I don't want you 478 00:18:53,640 --> 00:18:55,200 going to the broker because they get an 479 00:18:55,200 --> 00:18:57,120 incentive you know bonuses and whatnot 480 00:18:57,120 --> 00:19:00,179 so if you work with a broker even then 481 00:19:00,179 --> 00:19:02,400 that broker might not be aware of all 482 00:19:02,400 --> 00:19:04,200 the different policies because you know 483 00:19:04,200 --> 00:19:06,179 we're creatures of comfort human beings 484 00:19:06,179 --> 00:19:08,520 right we try to we try to stick to what 485 00:19:08,520 --> 00:19:11,400 we know and unless you're constantly 486 00:19:11,400 --> 00:19:13,620 getting out of your comfort zone and 487 00:19:13,620 --> 00:19:16,440 sort of questioning things you end up 488 00:19:16,440 --> 00:19:19,200 sticking with one or two Banks right and 489 00:19:19,200 --> 00:19:21,120 most Brokers do the same thing they 490 00:19:21,120 --> 00:19:23,820 stick to one or two and they they become 491 00:19:23,820 --> 00:19:25,679 really really proficient 492 00:19:25,679 --> 00:19:27,960 um at offering those products they 493 00:19:27,960 --> 00:19:30,179 become very familiar with it so it's 494 00:19:30,179 --> 00:19:32,220 very easy for a customer to say oh this 495 00:19:32,220 --> 00:19:33,419 broker knows what he's talking about 496 00:19:33,419 --> 00:19:34,980 this must be the best bang for me 497 00:19:34,980 --> 00:19:36,720 because they know it like the back of 498 00:19:36,720 --> 00:19:38,820 their hand but that bank may not be 499 00:19:38,820 --> 00:19:39,900 giving them the highest borrowing 500 00:19:39,900 --> 00:19:41,520 capacity so if you invest in your 501 00:19:41,520 --> 00:19:43,740 growing your portfolio you need to be 502 00:19:43,740 --> 00:19:46,559 looking outside of the the norm and and 503 00:19:46,559 --> 00:19:49,320 exploring that and that's what I do I 504 00:19:49,320 --> 00:19:51,419 try to find different solutions it's 505 00:19:51,419 --> 00:19:53,400 it's a game Finance like you said 506 00:19:53,400 --> 00:19:55,440 property's a game of finance and we're 507 00:19:55,440 --> 00:19:57,360 looking for Solutions first you know 508 00:19:57,360 --> 00:20:00,120 interest rates and fees are important 509 00:20:00,120 --> 00:20:02,280 but if you're going to pay a higher 510 00:20:02,280 --> 00:20:03,600 interest rate 511 00:20:03,600 --> 00:20:05,340 but you can borrow an extra three four 512 00:20:05,340 --> 00:20:06,480 hundred grand 513 00:20:06,480 --> 00:20:07,919 and it's going to get you a better 514 00:20:07,919 --> 00:20:09,600 property well 515 00:20:09,600 --> 00:20:11,880 what you know what's the cost versus the 516 00:20:11,880 --> 00:20:14,520 gain right well yeah so you know that's 517 00:20:14,520 --> 00:20:15,419 the things you're going to consider 518 00:20:15,419 --> 00:20:17,580 obviously if you're just a typical 519 00:20:17,580 --> 00:20:19,500 person just wanting to buy your first 520 00:20:19,500 --> 00:20:21,419 time or just refinancing for a better 521 00:20:21,419 --> 00:20:23,100 interest rate it's all about costs right 522 00:20:23,100 --> 00:20:25,020 it's not really about different type of 523 00:20:25,020 --> 00:20:27,059 but your listeners our listeners are 524 00:20:27,059 --> 00:20:28,799 investors so they're looking for 525 00:20:28,799 --> 00:20:30,059 Solutions 526 00:20:30,059 --> 00:20:33,240 100 so we've already kind of touched on 527 00:20:33,240 --> 00:20:35,520 it on the opening remarks but can you 528 00:20:35,520 --> 00:20:37,559 basically just explain to me in in as 529 00:20:37,559 --> 00:20:39,660 much detail or as little detail as you 530 00:20:39,660 --> 00:20:41,039 want to 531 00:20:41,039 --> 00:20:43,200 um the main thing the bank wants to see 532 00:20:43,200 --> 00:20:44,940 if there's one thing the bank wants to 533 00:20:44,940 --> 00:20:49,820 see what is it for borrowing capacity 534 00:20:49,880 --> 00:20:51,840 honestly they just want to see that 535 00:20:51,840 --> 00:20:55,080 there's a surplus like they they use 536 00:20:55,080 --> 00:20:57,299 this their calculators and they're 537 00:20:57,299 --> 00:20:58,620 working out 538 00:20:58,620 --> 00:21:01,500 is there a debt servicing ratio is it is 539 00:21:01,500 --> 00:21:05,580 it meeting that so ultimately if we can 540 00:21:05,580 --> 00:21:08,700 show a pass like a green tick versus a 541 00:21:08,700 --> 00:21:11,700 red that's what they want to see they 542 00:21:11,700 --> 00:21:13,980 they usually will work with with us 543 00:21:13,980 --> 00:21:17,580 broker to find a solution it's very rare 544 00:21:17,580 --> 00:21:18,900 that they're going to look at it and say 545 00:21:18,900 --> 00:21:21,780 sorry they can't afford it we're just 546 00:21:21,780 --> 00:21:23,700 going to decline it they're actually 547 00:21:23,700 --> 00:21:25,380 going to look and say okay what can we 548 00:21:25,380 --> 00:21:27,840 do to get the income up 549 00:21:27,840 --> 00:21:30,780 an example was you know yesterday I was 550 00:21:30,780 --> 00:21:32,640 talking to a credit assessor from one of 551 00:21:32,640 --> 00:21:36,000 the big Banks and a customer was 552 00:21:36,000 --> 00:21:37,559 um you know getting a note they have a 553 00:21:37,559 --> 00:21:40,860 novated list so this is if you have a 554 00:21:40,860 --> 00:21:43,559 car loan and the employer pays for some 555 00:21:43,559 --> 00:21:44,460 of that 556 00:21:44,460 --> 00:21:45,720 um pre-tax 557 00:21:45,720 --> 00:21:48,419 it's known as a fringe benefit 558 00:21:48,419 --> 00:21:51,179 um the way a bank treats that even that 559 00:21:51,179 --> 00:21:53,580 is different so this particular Bank I'm 560 00:21:53,580 --> 00:21:55,919 not going to say which bank it is 561 00:21:55,919 --> 00:21:59,580 um but this Bank wanted to include all 562 00:21:59,580 --> 00:22:02,039 of the pre-tax deductions as a 563 00:22:02,039 --> 00:22:03,840 commitment so that means they're going 564 00:22:03,840 --> 00:22:06,360 to deduct it from their income 565 00:22:06,360 --> 00:22:09,419 even though some of that income 566 00:22:09,419 --> 00:22:11,940 that deductions were going to to the 567 00:22:11,940 --> 00:22:14,820 customer to let them spend on the 568 00:22:14,820 --> 00:22:16,919 mortgage so as essentially tax-free 569 00:22:16,919 --> 00:22:19,320 income but that's the bank's policy I 570 00:22:19,320 --> 00:22:21,059 said we have to deduct that include that 571 00:22:21,059 --> 00:22:23,580 as the financial commitment but the car 572 00:22:23,580 --> 00:22:25,440 loan was really the only financial 573 00:22:25,440 --> 00:22:28,460 equipment and that was only 574 00:22:28,460 --> 00:22:33,120 600 no 770 a month that's the car loan 575 00:22:33,120 --> 00:22:34,980 portion the finance lease 576 00:22:34,980 --> 00:22:37,200 all the rest of it was maintenance right 577 00:22:37,200 --> 00:22:39,360 they call it a fully maintained novated 578 00:22:39,360 --> 00:22:40,320 lease 579 00:22:40,320 --> 00:22:42,720 so they were essentially doubling up 580 00:22:42,720 --> 00:22:44,400 because they're accounting for the 581 00:22:44,400 --> 00:22:46,740 expenses for the car in their monthly 582 00:22:46,740 --> 00:22:48,840 living expenses which falls under the 583 00:22:48,840 --> 00:22:51,260 Hem and we'll talk about the Hem shortly 584 00:22:51,260 --> 00:22:54,299 and then they're wanting to double up by 585 00:22:54,299 --> 00:22:55,500 deducting 586 00:22:55,500 --> 00:22:57,360 um you know I think it was about 587 00:22:57,360 --> 00:22:59,280 eight hundred dollars a fortnight in 588 00:22:59,280 --> 00:23:01,140 total so that meant the deal doesn't 589 00:23:01,140 --> 00:23:02,640 service anymore 590 00:23:02,640 --> 00:23:04,080 but he didn't say sorry it doesn't 591 00:23:04,080 --> 00:23:06,960 service the deal's decline he said to me 592 00:23:06,960 --> 00:23:08,940 I noticed that under the mail applicant 593 00:23:08,940 --> 00:23:11,400 he's getting some allowances which we 594 00:23:11,400 --> 00:23:13,799 can use for serviceability can you get 595 00:23:13,799 --> 00:23:15,720 me the next payslip the consecutive 596 00:23:15,720 --> 00:23:18,299 payslip so he's now looking for a 597 00:23:18,299 --> 00:23:21,600 solution with me to get more income to 598 00:23:21,600 --> 00:23:24,240 show that it actually services so that's 599 00:23:24,240 --> 00:23:26,280 the overarching thing that A bank's 600 00:23:26,280 --> 00:23:28,860 always going to look if if it takes of 601 00:23:28,860 --> 00:23:30,659 course you know your credit history has 602 00:23:30,659 --> 00:23:32,880 got to be clean you know your employment 603 00:23:32,880 --> 00:23:35,400 has got to be pretty consistent and all 604 00:23:35,400 --> 00:23:37,559 of that but overarching it needs to 605 00:23:37,559 --> 00:23:40,080 service and if it shows a past and we 606 00:23:40,080 --> 00:23:41,640 can find a way for it to pass 607 00:23:41,640 --> 00:23:43,980 that deal is going to get approved yeah 608 00:23:43,980 --> 00:23:45,840 right that's really interesting so what 609 00:23:45,840 --> 00:23:48,600 about security like say I have like you 610 00:23:48,600 --> 00:23:49,919 know 10 properties that are all 611 00:23:49,919 --> 00:23:52,140 unencumbered and I'll get you to explain 612 00:23:52,140 --> 00:23:54,120 what unencumbered means for you know the 613 00:23:54,120 --> 00:23:56,460 people who are new to investing but say 614 00:23:56,460 --> 00:23:59,220 I have um 10 unencumbered properties and 615 00:23:59,220 --> 00:24:01,559 my servicing is a bit iffy it's like you 616 00:24:01,559 --> 00:24:04,140 know I'm basically on a line because I 617 00:24:04,140 --> 00:24:06,299 can securitize and give them security 618 00:24:06,299 --> 00:24:08,640 over those assets does that make any 619 00:24:08,640 --> 00:24:11,760 difference in my in my application 620 00:24:11,760 --> 00:24:13,620 yeah I'm glad you asked that question 621 00:24:13,620 --> 00:24:15,659 because there's a misconception out 622 00:24:15,659 --> 00:24:18,299 there that people think that by having 623 00:24:18,299 --> 00:24:21,539 more assets that they can borrow more 624 00:24:21,539 --> 00:24:23,280 so there's two things that bank's going 625 00:24:23,280 --> 00:24:25,919 to look for when calculating your your 626 00:24:25,919 --> 00:24:28,320 your ability to borrow one is the 627 00:24:28,320 --> 00:24:30,120 security which is what we talked about 628 00:24:30,120 --> 00:24:32,580 how much of your asset so they can use 629 00:24:32,580 --> 00:24:34,580 as collateral or security they can 630 00:24:34,580 --> 00:24:37,380 basically means they can sell off and 631 00:24:37,380 --> 00:24:39,600 gives them Comfort to lend you more 632 00:24:39,600 --> 00:24:40,320 money 633 00:24:40,320 --> 00:24:42,780 but that is not based on how much you 634 00:24:42,780 --> 00:24:43,860 can borrow that's your borrowing 635 00:24:43,860 --> 00:24:46,200 capacity your borrowing capacity will 636 00:24:46,200 --> 00:24:49,260 only come out from income higher income 637 00:24:49,260 --> 00:24:51,419 less expenses that's what's going to 638 00:24:51,419 --> 00:24:53,220 increase your borrowing capacity so you 639 00:24:53,220 --> 00:24:55,200 can literally be asset rich 640 00:24:55,200 --> 00:24:57,539 be full of properties all unencumbered 641 00:24:57,539 --> 00:24:59,039 and unencumber just means that there's 642 00:24:59,039 --> 00:25:02,940 no mortgage there's no encumbrances or 643 00:25:02,940 --> 00:25:05,520 interests on the property so it's you 644 00:25:05,520 --> 00:25:08,580 know debt free essentially you can be 645 00:25:08,580 --> 00:25:10,080 sitting on millions of dollars of of 646 00:25:10,080 --> 00:25:12,120 assets if you've got no one living in 647 00:25:12,120 --> 00:25:15,120 them no rental income right so you just 648 00:25:15,120 --> 00:25:16,740 said you can be sitting on cash right 649 00:25:16,740 --> 00:25:19,140 million dollars in Cash A bank's not 650 00:25:19,140 --> 00:25:21,539 going to give you a loan for 30 years 651 00:25:21,539 --> 00:25:24,059 which is a normal loan term because 652 00:25:24,059 --> 00:25:26,640 you've got no income to service it you 653 00:25:26,640 --> 00:25:27,840 could say hey I've got a million dollars 654 00:25:27,840 --> 00:25:29,760 in cash that million dollars is going to 655 00:25:29,760 --> 00:25:31,440 service my debt but that's not how they 656 00:25:31,440 --> 00:25:33,059 look at it because they've got no 657 00:25:33,059 --> 00:25:34,620 control over that it's not recurring 658 00:25:34,620 --> 00:25:36,900 income every time you withdraw the 659 00:25:36,900 --> 00:25:39,179 balance goes down you can decide in a 660 00:25:39,179 --> 00:25:40,500 moment I want to go gamble I'm gonna go 661 00:25:40,500 --> 00:25:42,779 buy a yacht or whatever and it's not 662 00:25:42,779 --> 00:25:44,640 income generating so now all of a sudden 663 00:25:44,640 --> 00:25:46,799 you've got no income to service the loan 664 00:25:46,799 --> 00:25:48,779 that you're applying for so they will 665 00:25:48,779 --> 00:25:52,380 always look for recurring income and my 666 00:25:52,380 --> 00:25:54,240 suggestion in that scenario would be 667 00:25:54,240 --> 00:25:57,059 rental income you know how do you 668 00:25:57,059 --> 00:25:58,799 increase the rental income across your 669 00:25:58,799 --> 00:26:00,960 portfolios to boost your borrowing 670 00:26:00,960 --> 00:26:02,279 capacity 671 00:26:02,279 --> 00:26:03,480 um that's going to help you borrowable 672 00:26:03,480 --> 00:26:05,760 not the actual value of the assets 673 00:26:05,760 --> 00:26:07,260 itself 674 00:26:07,260 --> 00:26:09,000 yeah that's super interesting because 675 00:26:09,000 --> 00:26:11,220 like you obviously hear all the time you 676 00:26:11,220 --> 00:26:13,919 know people are asset rich and and cash 677 00:26:13,919 --> 00:26:18,360 poor income yeah income poor so like if 678 00:26:18,360 --> 00:26:19,860 I if you have a million dollars in the 679 00:26:19,860 --> 00:26:21,059 bank 680 00:26:21,059 --> 00:26:23,940 um it to the to the actual bank it that 681 00:26:23,940 --> 00:26:25,620 doesn't mean anything for you know your 682 00:26:25,620 --> 00:26:27,539 actual serviceability because it's not 683 00:26:27,539 --> 00:26:30,299 it's not recurring income so are you 684 00:26:30,299 --> 00:26:32,880 like better off putting in this in like 685 00:26:32,880 --> 00:26:34,980 um some client kind of fully Frank 686 00:26:34,980 --> 00:26:36,539 shares where you know you're going to be 687 00:26:36,539 --> 00:26:38,460 getting some dividend back from this 688 00:26:38,460 --> 00:26:39,419 share 689 00:26:39,419 --> 00:26:41,520 um every single you know month or or 690 00:26:41,520 --> 00:26:42,720 quarter 691 00:26:42,720 --> 00:26:44,039 um and then that could be your income 692 00:26:44,039 --> 00:26:45,720 for servicing even though it's the same 693 00:26:45,720 --> 00:26:48,059 million bucks which that that's way more 694 00:26:48,059 --> 00:26:50,100 risky doing it that way just to show 695 00:26:50,100 --> 00:26:53,179 reoccurring income 696 00:26:53,220 --> 00:26:55,980 well if you're putting it in some sort 697 00:26:55,980 --> 00:26:58,620 of sort of managed fund or or a share 698 00:26:58,620 --> 00:27:00,960 portfolio where you receive dividends 699 00:27:00,960 --> 00:27:03,539 and that's recurring income well then 700 00:27:03,539 --> 00:27:06,840 it's actually less risky because 701 00:27:06,840 --> 00:27:09,059 it's it the value shouldn't be going 702 00:27:09,059 --> 00:27:12,020 downwards right 703 00:27:12,620 --> 00:27:15,659 now then yes it is riskier because then 704 00:27:15,659 --> 00:27:18,419 the income drops but the fact that it's 705 00:27:18,419 --> 00:27:20,460 paying that it means it's a it's a 706 00:27:20,460 --> 00:27:22,799 pretty strong uh you know share 707 00:27:22,799 --> 00:27:25,740 portfolio I don't know if it's ASX you 708 00:27:25,740 --> 00:27:27,960 know top 10 or something like that 709 00:27:27,960 --> 00:27:30,120 because typically you know companies 710 00:27:30,120 --> 00:27:32,159 don't pay you dividends uh small 711 00:27:32,159 --> 00:27:34,980 accounts smaller businesses so and 712 00:27:34,980 --> 00:27:36,299 you're right that is something that 713 00:27:36,299 --> 00:27:38,159 Banks look at they will actually look at 714 00:27:38,159 --> 00:27:40,020 dividends that you receive on your on 715 00:27:40,020 --> 00:27:41,400 your share portfolio and they will use 716 00:27:41,400 --> 00:27:43,860 that income for servicing 717 00:27:43,860 --> 00:27:46,260 but if it's all in cash and you're 718 00:27:46,260 --> 00:27:48,659 getting you know money from the bank in 719 00:27:48,659 --> 00:27:49,919 interest 720 00:27:49,919 --> 00:27:51,539 they can even use that by the way but 721 00:27:51,539 --> 00:27:54,000 let's face it it's not much yeah charge 722 00:27:54,000 --> 00:27:55,200 you a lot but they don't give you much 723 00:27:55,200 --> 00:27:57,380 expense 724 00:27:57,380 --> 00:28:00,059 so in that in that instance because this 725 00:28:00,059 --> 00:28:01,260 is actually really interesting because I 726 00:28:01,260 --> 00:28:02,400 never really 727 00:28:02,400 --> 00:28:04,320 um really thought about that in my mind 728 00:28:04,320 --> 00:28:06,240 where if I just had the money 729 00:28:06,240 --> 00:28:07,799 um you know I had money for the 730 00:28:07,799 --> 00:28:09,779 servicing like a buffer 731 00:28:09,779 --> 00:28:11,100 um that that wouldn't be taking into 732 00:28:11,100 --> 00:28:13,140 account because I guess you know you and 733 00:28:13,140 --> 00:28:14,880 I are both young we've always had 734 00:28:14,880 --> 00:28:16,679 reoccurring income 735 00:28:16,679 --> 00:28:18,240 um you know through work so it's never 736 00:28:18,240 --> 00:28:19,679 been uh something that I would really 737 00:28:19,679 --> 00:28:21,900 think about so in that instance where 738 00:28:21,900 --> 00:28:23,580 someone's potentially a little bit older 739 00:28:23,580 --> 00:28:25,620 they've done really well but they don't 740 00:28:25,620 --> 00:28:27,539 have any reoccurring income and they've 741 00:28:27,539 --> 00:28:28,919 just got cash in the bank because people 742 00:28:28,919 --> 00:28:30,840 just do like to have cash in the bank 743 00:28:30,840 --> 00:28:33,360 like they'll you know have all of their 744 00:28:33,360 --> 00:28:35,279 all of their wealth in a bank account 745 00:28:35,279 --> 00:28:36,720 for the rest of their life especially 746 00:28:36,720 --> 00:28:39,419 they've just retired or just on on the 747 00:28:39,419 --> 00:28:41,760 verge of retirement what's a good 748 00:28:41,760 --> 00:28:44,700 strategy to be able to show the bank 749 00:28:44,700 --> 00:28:47,460 that I've got this asset of money 750 00:28:47,460 --> 00:28:49,740 um and it could be paid to me like do 751 00:28:49,740 --> 00:28:52,320 they just go hey hey um you know hey 752 00:28:52,320 --> 00:28:54,299 Victor I'll give you this million bucks 753 00:28:54,299 --> 00:28:56,580 you just pay me every month to make they 754 00:28:56,580 --> 00:28:58,679 look like I've got really sharing income 755 00:28:58,679 --> 00:29:00,000 um you know and then that'll be good for 756 00:29:00,000 --> 00:29:01,799 serviceability like that's almost sounds 757 00:29:01,799 --> 00:29:04,500 like that's what they want to see 758 00:29:04,500 --> 00:29:06,720 they do want to see it but they want to 759 00:29:06,720 --> 00:29:09,120 see it where there's a demonstration of 760 00:29:09,120 --> 00:29:11,580 some sort of History yeah it's not just 761 00:29:11,580 --> 00:29:13,200 bank accounts and oh look at these 762 00:29:13,200 --> 00:29:14,700 deposits they're going to say well where 763 00:29:14,700 --> 00:29:16,200 are these deposits coming from and if 764 00:29:16,200 --> 00:29:19,220 it's your mate door yes 765 00:29:19,940 --> 00:29:22,559 you know if it's a genuine investment 766 00:29:22,559 --> 00:29:24,299 that's paying you yeah a return they're 767 00:29:24,299 --> 00:29:25,260 going to want to see the investment 768 00:29:25,260 --> 00:29:26,600 summary it's not just your bank account 769 00:29:26,600 --> 00:29:29,100 so you know they are wanting to see 770 00:29:29,100 --> 00:29:31,140 income and the the question you're 771 00:29:31,140 --> 00:29:33,299 talking about if someone at that age of 772 00:29:33,299 --> 00:29:36,179 retired well should they be borrowing 773 00:29:36,179 --> 00:29:38,760 money then right that's the question if 774 00:29:38,760 --> 00:29:40,919 they're at retirement the bank's going 775 00:29:40,919 --> 00:29:42,600 to say why am I lending the money if 776 00:29:42,600 --> 00:29:43,799 they're no longer working you're no 777 00:29:43,799 --> 00:29:45,179 longer making any income doesn't make 778 00:29:45,179 --> 00:29:46,980 any sense but they want to be trying to 779 00:29:46,980 --> 00:29:49,260 and interest they could be trying to 780 00:29:49,260 --> 00:29:52,080 invest to get the income for to you know 781 00:29:52,080 --> 00:29:54,240 to give themselves more opportunity 782 00:29:54,240 --> 00:29:55,860 later on in life and have the income 783 00:29:55,860 --> 00:29:58,020 paying for themselves like I'm always 784 00:29:58,020 --> 00:30:00,000 talking about you know I'm talking about 785 00:30:00,000 --> 00:30:01,500 investing in commercial property and 786 00:30:01,500 --> 00:30:03,659 having positive income coming in it's 787 00:30:03,659 --> 00:30:05,399 not this is not a negative um you know 788 00:30:05,399 --> 00:30:07,200 negative play 789 00:30:07,200 --> 00:30:08,520 um yeah you know that's just really 790 00:30:08,520 --> 00:30:10,799 interesting I just um it's just a good 791 00:30:10,799 --> 00:30:12,720 example yeah well you just said 792 00:30:12,720 --> 00:30:14,460 commercial property if you're saying a 793 00:30:14,460 --> 00:30:15,720 million dollars buy a commercial 794 00:30:15,720 --> 00:30:17,220 property you know there's no Financial 795 00:30:17,220 --> 00:30:19,559 advice here but that would generate the 796 00:30:19,559 --> 00:30:23,059 income yeah 65 yeah 797 00:30:23,059 --> 00:30:25,799 right yeah and now all of a sudden 798 00:30:25,799 --> 00:30:27,840 you've got income that you can use to 799 00:30:27,840 --> 00:30:30,240 help the leverage and and borrow money 800 00:30:30,240 --> 00:30:31,860 of course if that million was everything 801 00:30:31,860 --> 00:30:34,740 now you've got no security yeah um and 802 00:30:34,740 --> 00:30:36,600 that property has already been oh then 803 00:30:36,600 --> 00:30:37,919 again you could use that property of 804 00:30:37,919 --> 00:30:39,480 security as well yeah keep that in mind 805 00:30:39,480 --> 00:30:41,460 right yeah you have an unencumbered 806 00:30:41,460 --> 00:30:43,080 property earning you the income now you 807 00:30:43,080 --> 00:30:44,880 can put that property as security and 808 00:30:44,880 --> 00:30:46,980 use that to borrow more money to buy 809 00:30:46,980 --> 00:30:49,260 something else so that's that's how you 810 00:30:49,260 --> 00:30:51,779 do I like it so you can recycle you buy 811 00:30:51,779 --> 00:30:53,940 that property with cash then you recycle 812 00:30:53,940 --> 00:30:55,500 the debt out of that to buy more 813 00:30:55,500 --> 00:30:57,000 property and you can use the income from 814 00:30:57,000 --> 00:30:59,520 that property to service the debt on 815 00:30:59,520 --> 00:31:01,380 Future Property yeah that's how it's 816 00:31:01,380 --> 00:31:02,880 that's definitely how it should be done 817 00:31:02,880 --> 00:31:05,039 yeah that's good I like that I was 818 00:31:05,039 --> 00:31:06,539 literally having a conversation with 819 00:31:06,539 --> 00:31:09,000 with someone yesterday about this who's 820 00:31:09,000 --> 00:31:10,440 got the cash 821 00:31:10,440 --> 00:31:12,840 um sitting in the account and they they 822 00:31:12,840 --> 00:31:17,360 want to buy uh a ppor at home right 823 00:31:17,360 --> 00:31:21,299 non-deductible debt right uh it's not 824 00:31:21,299 --> 00:31:23,880 income generating but he wants to buy it 825 00:31:23,880 --> 00:31:25,020 for their family 826 00:31:25,020 --> 00:31:27,899 but he's got seven hundred thousand 827 00:31:27,899 --> 00:31:30,360 dollars you know him and his and his 828 00:31:30,360 --> 00:31:31,919 wife and they're going to use that as a 829 00:31:31,919 --> 00:31:34,500 deposit and the lvr on the property 830 00:31:34,500 --> 00:31:37,080 they're buying is going to be about 831 00:31:37,080 --> 00:31:39,840 60 thereabouts 832 00:31:39,840 --> 00:31:42,360 so he could technically they could buy 833 00:31:42,360 --> 00:31:43,500 this home 834 00:31:43,500 --> 00:31:48,179 borrow a 60 contribute 40 and then 835 00:31:48,179 --> 00:31:50,940 go to the bank in the future 836 00:31:50,940 --> 00:31:53,279 pretty soon if they want and re-borrow 837 00:31:53,279 --> 00:31:55,860 the equity that they've just chipped in 838 00:31:55,860 --> 00:31:57,120 with their cash 839 00:31:57,120 --> 00:32:00,840 add the deposit and use that to buy an 840 00:32:00,840 --> 00:32:02,340 investment property now the interest 841 00:32:02,340 --> 00:32:04,020 that they're going to pay on that is tax 842 00:32:04,020 --> 00:32:06,659 deductible so if they had done it the 843 00:32:06,659 --> 00:32:07,620 other way 844 00:32:07,620 --> 00:32:09,899 and just put the cash straight as a 845 00:32:09,899 --> 00:32:12,840 deposit on an investment property yes 846 00:32:12,840 --> 00:32:15,600 they would have stronger cash flow 847 00:32:15,600 --> 00:32:17,700 but they wouldn't be able to claim any 848 00:32:17,700 --> 00:32:19,200 interest because there's no interest to 849 00:32:19,200 --> 00:32:20,940 claim and they wouldn't have a home 850 00:32:20,940 --> 00:32:24,120 either so so this is a strategy because 851 00:32:24,120 --> 00:32:25,500 if you think about if you trace the 852 00:32:25,500 --> 00:32:27,360 money all they're using is their own 853 00:32:27,360 --> 00:32:28,919 money right they're just putting it into 854 00:32:28,919 --> 00:32:30,840 a property first and then they're 855 00:32:30,840 --> 00:32:33,600 Recycling and taking it back out for an 856 00:32:33,600 --> 00:32:36,539 investment purpose 857 00:32:36,539 --> 00:32:39,419 so you know that that happens every day 858 00:32:39,419 --> 00:32:42,419 of the week just knowing timing and you 859 00:32:42,419 --> 00:32:43,440 know you've got to know your personal 860 00:32:43,440 --> 00:32:46,500 objectives and you'll be 100 yeah that's 861 00:32:46,500 --> 00:32:49,500 really interesting so with the bank 862 00:32:49,500 --> 00:32:50,940 um this is an actual interest one I know 863 00:32:50,940 --> 00:32:52,380 you and I have had a few 864 00:32:52,380 --> 00:32:54,000 um you know offline conversations about 865 00:32:54,000 --> 00:32:55,679 this because Victor's doing uh some 866 00:32:55,679 --> 00:32:57,659 range refinancing for me 867 00:32:57,659 --> 00:33:00,539 um in my own personal finances so I 868 00:33:00,539 --> 00:33:01,620 wanted to 869 00:33:01,620 --> 00:33:02,880 um talk about this because this is 870 00:33:02,880 --> 00:33:04,200 really interesting I don't think that 871 00:33:04,200 --> 00:33:04,919 people 872 00:33:04,919 --> 00:33:06,840 um really understand or know about this 873 00:33:06,840 --> 00:33:09,720 it's about um if uh you can demonstrate 874 00:33:09,720 --> 00:33:11,399 a business plan 875 00:33:11,399 --> 00:33:13,679 um and you can forecast the the cash 876 00:33:13,679 --> 00:33:16,799 flow from that business will the bank 877 00:33:16,799 --> 00:33:20,899 lend on that particular forecast 878 00:33:21,539 --> 00:33:23,700 so 879 00:33:23,700 --> 00:33:25,799 this is a yeah it's a good question 880 00:33:25,799 --> 00:33:30,659 because it it's only it's very specific 881 00:33:30,659 --> 00:33:33,299 when you're talking about an investor it 882 00:33:33,299 --> 00:33:35,760 doesn't work an investor 883 00:33:35,760 --> 00:33:38,100 will get rental income 884 00:33:38,100 --> 00:33:41,279 but if you're an owner occupier 885 00:33:41,279 --> 00:33:43,140 so it means you're going to operate a 886 00:33:43,140 --> 00:33:45,720 business out of that property 887 00:33:45,720 --> 00:33:49,760 then yes you could potentially use 888 00:33:49,760 --> 00:33:52,260 forecasted or projected income along 889 00:33:52,260 --> 00:33:54,899 with a business plan so it's definitely 890 00:33:54,899 --> 00:33:56,640 considered commercial lending not 891 00:33:56,640 --> 00:33:59,700 residential it falls outside of the 892 00:33:59,700 --> 00:34:02,159 consumer credit protection and apra 893 00:34:02,159 --> 00:34:03,480 regulations 894 00:34:03,480 --> 00:34:06,019 because they'll only look at historical 895 00:34:06,019 --> 00:34:09,119 income and net profit but if you're 896 00:34:09,119 --> 00:34:11,099 looking at commercial lending in your 897 00:34:11,099 --> 00:34:12,418 your business 898 00:34:12,418 --> 00:34:15,418 then yeah definitely a bank can look at 899 00:34:15,418 --> 00:34:18,719 forecasted revenue and income and profit 900 00:34:18,719 --> 00:34:21,780 to help you borrow to even acquire a 901 00:34:21,780 --> 00:34:24,119 business in the first place but you 902 00:34:24,119 --> 00:34:25,619 still need security that's something you 903 00:34:25,619 --> 00:34:26,760 got to keep in mind because a lot of 904 00:34:26,760 --> 00:34:28,619 people have that idea and they're like I 905 00:34:28,619 --> 00:34:31,560 want to buy an established business and 906 00:34:31,560 --> 00:34:34,080 um you know improve it and earn more 907 00:34:34,080 --> 00:34:36,480 money from it and then borrow money to 908 00:34:36,480 --> 00:34:37,800 buy their business from that future 909 00:34:37,800 --> 00:34:39,659 income I'm going to create 910 00:34:39,659 --> 00:34:42,300 but if you don't have a property 911 00:34:42,300 --> 00:34:44,879 there's no skin in the game so it's very 912 00:34:44,879 --> 00:34:46,320 risky for the bank it's considered 913 00:34:46,320 --> 00:34:47,760 unsecured Lending 914 00:34:47,760 --> 00:34:51,418 and you know I have done one before but 915 00:34:51,418 --> 00:34:55,020 it was it was very Niche and it was the 916 00:34:55,020 --> 00:34:58,320 bank required at least a 50 deposit so 917 00:34:58,320 --> 00:35:00,599 they were willing to fund the other half 918 00:35:00,599 --> 00:35:04,140 so it was a 600 Grand purchase price of 919 00:35:04,140 --> 00:35:05,160 a business 920 00:35:05,160 --> 00:35:08,520 uh they looked at the at the income and 921 00:35:08,520 --> 00:35:10,500 then they also looked at the forecasted 922 00:35:10,500 --> 00:35:11,839 income 923 00:35:11,839 --> 00:35:15,660 uh you know profit and a business plan 924 00:35:15,660 --> 00:35:18,839 that this new buyer was going to or new 925 00:35:18,839 --> 00:35:21,359 owner was going to turn it into but then 926 00:35:21,359 --> 00:35:22,980 because they didn't have any property to 927 00:35:22,980 --> 00:35:24,359 put a security 928 00:35:24,359 --> 00:35:28,920 they uh they wanted at least 50 down so 929 00:35:28,920 --> 00:35:30,960 that's six hundred thousand they 930 00:35:30,960 --> 00:35:34,560 borrowed 300 and they contributed 300. 931 00:35:34,560 --> 00:35:36,780 so you can't do them that way but if 932 00:35:36,780 --> 00:35:38,760 you've got property that's got a lot of 933 00:35:38,760 --> 00:35:40,079 equity 934 00:35:40,079 --> 00:35:42,180 that's really a good opportunity for you 935 00:35:42,180 --> 00:35:43,560 to do something like 936 00:35:43,560 --> 00:35:45,599 yeah you can use that property as the 937 00:35:45,599 --> 00:35:49,320 security and and use the future income 938 00:35:49,320 --> 00:35:53,339 and and to start business basically yeah 939 00:35:53,339 --> 00:35:56,160 so yeah well with a with a startup so 940 00:35:56,160 --> 00:35:58,920 say I have a business venture or I have 941 00:35:58,920 --> 00:36:01,560 a business idea and you know obviously I 942 00:36:01,560 --> 00:36:03,540 can demonstrate that you know either I 943 00:36:03,540 --> 00:36:05,640 have knowledge in that industry or you 944 00:36:05,640 --> 00:36:07,079 know I have some experience in the 945 00:36:07,079 --> 00:36:08,280 industry 946 00:36:08,280 --> 00:36:11,640 um is it is it usual or like a common 947 00:36:11,640 --> 00:36:14,760 practice for a bank certain Banks to 948 00:36:14,760 --> 00:36:17,700 lend on that forecasted business plan 949 00:36:17,700 --> 00:36:19,380 for you and maybe they can you don't 950 00:36:19,380 --> 00:36:21,180 have any property maybe they can 951 00:36:21,180 --> 00:36:22,380 securitize 952 00:36:22,380 --> 00:36:23,940 um you know the lease like if you have a 953 00:36:23,940 --> 00:36:25,200 10-year lease or something on it like 954 00:36:25,200 --> 00:36:26,040 that 955 00:36:26,040 --> 00:36:29,820 um is that common practice to happen 956 00:36:29,820 --> 00:36:33,660 no they're gonna they're gonna want to 957 00:36:33,660 --> 00:36:34,560 um 958 00:36:34,560 --> 00:36:35,820 they're going to want to take some 959 00:36:35,820 --> 00:36:39,000 security over it so it depends on the 960 00:36:39,000 --> 00:36:41,880 amount you're after as well so banks are 961 00:36:41,880 --> 00:36:43,800 willing to do some unsecured lending 962 00:36:43,800 --> 00:36:46,079 there's no no problem with that they're 963 00:36:46,079 --> 00:36:48,240 willing to but if you need if you're 964 00:36:48,240 --> 00:36:51,000 buying a business or you need to borrow 965 00:36:51,000 --> 00:36:54,780 enough to cover all the costs to set 966 00:36:54,780 --> 00:36:56,880 that business up and you've got no 967 00:36:56,880 --> 00:37:00,119 property just the forecast and alone in 968 00:37:00,119 --> 00:37:01,380 a business plan is not going to get you 969 00:37:01,380 --> 00:37:03,060 the whole amount there's not enough in 970 00:37:03,060 --> 00:37:04,680 that there's not there's still too much 971 00:37:04,680 --> 00:37:07,700 risk you know experience in Industry 972 00:37:07,700 --> 00:37:10,380 definitely adds to that 973 00:37:10,380 --> 00:37:12,780 but they want they want some collection 974 00:37:12,780 --> 00:37:15,300 and if you're 975 00:37:15,300 --> 00:37:17,400 um you know if you've got 976 00:37:17,400 --> 00:37:20,940 chattels or some sort of assets like 977 00:37:20,940 --> 00:37:23,040 um vehicles or Machinery something like 978 00:37:23,040 --> 00:37:25,020 that they'll look at that as security 979 00:37:25,020 --> 00:37:26,940 that helps them too even though it's not 980 00:37:26,940 --> 00:37:28,980 it's a depreciate depreciated asset that 981 00:37:28,980 --> 00:37:31,260 helps them but if it's if it's literally 982 00:37:31,260 --> 00:37:34,079 nothing else digital assets there's no 983 00:37:34,079 --> 00:37:37,680 the only security they get is a is um a 984 00:37:37,680 --> 00:37:39,720 security a GSA 985 00:37:39,720 --> 00:37:41,520 um which is a general security agreement 986 00:37:41,520 --> 00:37:43,440 over the actual trading business itself 987 00:37:43,440 --> 00:37:45,780 for future income that it can generate 988 00:37:45,780 --> 00:37:47,520 but that that doesn't really mean 989 00:37:47,520 --> 00:37:48,599 anything because if it doesn't make any 990 00:37:48,599 --> 00:37:49,859 money they get nothing 991 00:37:49,859 --> 00:37:51,300 so there's nothing that they can 992 00:37:51,300 --> 00:37:53,520 immediately sell no stock there's 993 00:37:53,520 --> 00:37:55,260 nothing they have control over to sell 994 00:37:55,260 --> 00:37:57,540 to pay back the bad debt if you don't 995 00:37:57,540 --> 00:37:59,339 make your repayments that's what they 996 00:37:59,339 --> 00:38:01,980 look for so you know good example was 997 00:38:01,980 --> 00:38:03,900 myself a few years ago I set up a 998 00:38:03,900 --> 00:38:06,420 business a mortgage broker business it 999 00:38:06,420 --> 00:38:08,400 didn't go well failed actually the first 1000 00:38:08,400 --> 00:38:10,320 one my first attempt but I had a 1001 00:38:10,320 --> 00:38:13,260 property and one of the banks was able 1002 00:38:13,260 --> 00:38:16,380 to refinance my existing residential low 1003 00:38:16,380 --> 00:38:19,500 and work off forecasted income 1004 00:38:19,500 --> 00:38:22,140 to serviced alone and they gave me a 1005 00:38:22,140 --> 00:38:25,619 startup overdraft of like 60 Grand and a 1006 00:38:25,619 --> 00:38:27,380 business credit card 1007 00:38:27,380 --> 00:38:31,140 well I had industry experience but I 1008 00:38:31,140 --> 00:38:33,180 didn't have business experience so I 1009 00:38:33,180 --> 00:38:36,660 made some mistakes and I ended up using 1010 00:38:36,660 --> 00:38:38,040 all that money and not getting a return 1011 00:38:38,040 --> 00:38:40,920 on it uh immediately so I ended up 1012 00:38:40,920 --> 00:38:42,960 making my own decision to sell that 1013 00:38:42,960 --> 00:38:44,820 property to clear the debt they didn't 1014 00:38:44,820 --> 00:38:47,880 enforce that but they could have if I 1015 00:38:47,880 --> 00:38:49,020 let the loan 1016 00:38:49,020 --> 00:38:52,079 you know go into arrears and get you 1017 00:38:52,079 --> 00:38:53,880 know into bad debt they could have sold 1018 00:38:53,880 --> 00:38:55,740 my property and cleared it and then I 1019 00:38:55,740 --> 00:38:57,180 would have got whatever was left after 1020 00:38:57,180 --> 00:38:59,339 legal legal cost and I would have had 1021 00:38:59,339 --> 00:39:00,540 bad credit 1022 00:39:00,540 --> 00:39:04,020 so you know it can be a risky game that 1023 00:39:04,020 --> 00:39:06,300 was a perfect example they took their 1024 00:39:06,300 --> 00:39:07,740 risk but they had the property so 1025 00:39:07,740 --> 00:39:09,420 they'll happily give me the money 1026 00:39:09,420 --> 00:39:11,099 I took the risk didn't have the 1027 00:39:11,099 --> 00:39:13,260 experience but I made that decision and 1028 00:39:13,260 --> 00:39:15,180 it's time to get out and clear the debt 1029 00:39:15,180 --> 00:39:17,760 so you know people out there they want 1030 00:39:17,760 --> 00:39:21,060 to do some risky stuff too but 1031 00:39:21,060 --> 00:39:23,220 if they've got no property or no big 1032 00:39:23,220 --> 00:39:25,320 cash to chip in don't expect that A 1033 00:39:25,320 --> 00:39:26,460 bank's going to lend you all the money 1034 00:39:26,460 --> 00:39:28,200 it just doesn't happen this day yeah 1035 00:39:28,200 --> 00:39:31,020 yeah that's right now I bet um just from 1036 00:39:31,020 --> 00:39:33,240 that that failed Adventure or that first 1037 00:39:33,240 --> 00:39:34,320 try 1038 00:39:34,320 --> 00:39:36,660 um You probably learned so many lessons 1039 00:39:36,660 --> 00:39:39,000 so you basically paid for you know your 1040 00:39:39,000 --> 00:39:41,400 education into how to how things are run 1041 00:39:41,400 --> 00:39:44,280 and how you know things should and the 1042 00:39:44,280 --> 00:39:46,020 processes and things like that and 1043 00:39:46,020 --> 00:39:47,700 that's why you've got a flourishing you 1044 00:39:47,700 --> 00:39:49,980 know mortgage broking business now from 1045 00:39:49,980 --> 00:39:51,420 that first mistake because you learn so 1046 00:39:51,420 --> 00:39:53,520 much from your mistakes like if you 1047 00:39:53,520 --> 00:39:55,740 hadn't had success straight away 1048 00:39:55,740 --> 00:39:58,560 um success isn't a great teacher failure 1049 00:39:58,560 --> 00:40:01,619 is the true like the great teacher 1050 00:40:01,619 --> 00:40:04,079 yeah yeah and and you know the word 1051 00:40:04,079 --> 00:40:07,020 failure you know the truth is you don't 1052 00:40:07,020 --> 00:40:10,500 really truly fail unless you give up 1053 00:40:10,500 --> 00:40:13,079 unless you quit yeah yeah unless you 1054 00:40:13,079 --> 00:40:14,700 quit unless you're fully out of the game 1055 00:40:14,700 --> 00:40:17,099 but if you're around in the lesson I 1056 00:40:17,099 --> 00:40:18,839 give you you know if you're going 1057 00:40:18,839 --> 00:40:20,940 through the experience and you learn 1058 00:40:20,940 --> 00:40:23,099 through those experiences you keep going 1059 00:40:23,099 --> 00:40:25,020 and that's what happened with me so 1060 00:40:25,020 --> 00:40:26,579 you're right I'm in a much different 1061 00:40:26,579 --> 00:40:28,560 position now and and there's just an 1062 00:40:28,560 --> 00:40:31,079 expensive lesson yeah yeah that's it I 1063 00:40:31,079 --> 00:40:34,020 had a few expensive lessons myself 1064 00:40:34,020 --> 00:40:34,880 foreign 1065 00:40:34,880 --> 00:40:37,260 another one I wanted to actually talk 1066 00:40:37,260 --> 00:40:39,000 about which is something that you and I 1067 00:40:39,000 --> 00:40:41,880 have also spoken about is how you have 1068 00:40:41,880 --> 00:40:44,700 to have your accountant on board with 1069 00:40:44,700 --> 00:40:46,859 your property plan and this has bit me 1070 00:40:46,859 --> 00:40:49,800 in the ass just recently and I wanted to 1071 00:40:49,800 --> 00:40:52,980 basically let you talk about how the 1072 00:40:52,980 --> 00:40:54,900 accountant really needs to be working 1073 00:40:54,900 --> 00:40:57,119 with you on your team and potentially 1074 00:40:57,119 --> 00:40:58,920 even be connected you know with the 1075 00:40:58,920 --> 00:41:00,839 mortgage broker you know on your team to 1076 00:41:00,839 --> 00:41:05,060 make sure the goals are aligned 1077 00:41:05,099 --> 00:41:07,859 yeah it's super important because an 1078 00:41:07,859 --> 00:41:10,320 accountant you know they some of them 1079 00:41:10,320 --> 00:41:12,180 are not really 1080 00:41:12,180 --> 00:41:13,740 um 1081 00:41:13,740 --> 00:41:16,619 properly focused some of them don't own 1082 00:41:16,619 --> 00:41:18,359 property they don't understand property 1083 00:41:18,359 --> 00:41:19,920 and they don't try to help customers 1084 00:41:19,920 --> 00:41:22,140 build the property portfolio some of 1085 00:41:22,140 --> 00:41:24,359 them do some of them understand the 1086 00:41:24,359 --> 00:41:26,280 limitations of borrowing capacity they 1087 00:41:26,280 --> 00:41:27,540 understand that you're going to need to 1088 00:41:27,540 --> 00:41:31,680 be sometimes creative uh to you know 1089 00:41:31,680 --> 00:41:34,560 have a balance of tax reduction as well 1090 00:41:34,560 --> 00:41:37,500 as you know borrowing capacity you know 1091 00:41:37,500 --> 00:41:39,720 Improvement so working with the right 1092 00:41:39,720 --> 00:41:42,420 encounter who gets that is going to help 1093 00:41:42,420 --> 00:41:44,579 you along the way along the journey and 1094 00:41:44,579 --> 00:41:45,839 it's going to be times where you need 1095 00:41:45,839 --> 00:41:47,460 them to write up letters and 1096 00:41:47,460 --> 00:41:50,040 declarations for you when you hit your 1097 00:41:50,040 --> 00:41:51,660 ceilings of borrowing capacity and then 1098 00:41:51,660 --> 00:41:54,240 you end up going to a non-bank do like 1099 00:41:54,240 --> 00:41:56,339 an ALT doc or a low document so having 1100 00:41:56,339 --> 00:41:58,380 the right account is super important to 1101 00:41:58,380 --> 00:42:00,660 have an attempt and you know sometimes 1102 00:42:00,660 --> 00:42:01,920 you have to let go of the old account 1103 00:42:01,920 --> 00:42:04,859 the whole family account all the old h r 1104 00:42:04,859 --> 00:42:07,260 block around the corner to uh to upgrade 1105 00:42:07,260 --> 00:42:09,000 the team 1106 00:42:09,000 --> 00:42:12,359 so just explain to me how an accountant 1107 00:42:12,359 --> 00:42:16,760 can screw up your borrowing capacity 1108 00:42:18,119 --> 00:42:19,920 um well I guess they can 1109 00:42:19,920 --> 00:42:23,040 you know bring down your taxable income 1110 00:42:23,040 --> 00:42:25,680 so low that there's nothing left to help 1111 00:42:25,680 --> 00:42:27,359 you borrow so in their in their mind 1112 00:42:27,359 --> 00:42:29,280 they're like I want to get you to pay 1113 00:42:29,280 --> 00:42:31,859 less tax that's great but then when you 1114 00:42:31,859 --> 00:42:33,180 want to go borrowed to buy a property 1115 00:42:33,180 --> 00:42:34,980 there's no income left to borrow so 1116 00:42:34,980 --> 00:42:37,020 that's how they can screw you they think 1117 00:42:37,020 --> 00:42:38,820 they're helping you but they're actually 1118 00:42:38,820 --> 00:42:42,359 hindering your your financial Journey 1119 00:42:42,359 --> 00:42:45,000 yeah 100 and I've actually seen this a 1120 00:42:45,000 --> 00:42:46,740 couple of times with um profit and 1121 00:42:46,740 --> 00:42:49,500 losses on self-story facilities where 1122 00:42:49,500 --> 00:42:52,260 the the operator obviously the Canton is 1123 00:42:52,260 --> 00:42:54,480 working to minimize their tax like it's 1124 00:42:54,480 --> 00:42:56,040 it's clearly obvious because you can see 1125 00:42:56,040 --> 00:42:58,500 that the facility itself 1126 00:42:58,500 --> 00:43:00,900 um has definitely a higher you know 1127 00:43:00,900 --> 00:43:02,940 income but there are all like all these 1128 00:43:02,940 --> 00:43:05,040 you know crazy things that he's been in 1129 00:43:05,040 --> 00:43:07,020 charge he's taxing and deducting and 1130 00:43:07,020 --> 00:43:08,640 things like that so it makes it look 1131 00:43:08,640 --> 00:43:10,680 like at the end of the day he's earning 1132 00:43:10,680 --> 00:43:13,560 such a small amount that you know it 1133 00:43:13,560 --> 00:43:15,000 doesn't stack up when you're trying to 1134 00:43:15,000 --> 00:43:17,040 to sell this property so like if you're 1135 00:43:17,040 --> 00:43:19,140 owning a property or an asset like a 1136 00:43:19,140 --> 00:43:21,000 self-story facility that you want to 1137 00:43:21,000 --> 00:43:23,160 sell you have to prepare that like a 1138 00:43:23,160 --> 00:43:24,780 year before 1139 00:43:24,780 --> 00:43:26,099 um you know before you want to sell it 1140 00:43:26,099 --> 00:43:27,420 because you've got profit and losses 1141 00:43:27,420 --> 00:43:28,619 that are getting generated by your 1142 00:43:28,619 --> 00:43:30,480 accountant it's a different Focus 1143 00:43:30,480 --> 00:43:33,300 between them you know trying to save you 1144 00:43:33,300 --> 00:43:37,140 money in in taxes to showing like 1145 00:43:37,140 --> 00:43:38,760 um income from that property to get you 1146 00:43:38,760 --> 00:43:41,280 the highest price for you know that sale 1147 00:43:41,280 --> 00:43:43,020 so it's really important important to 1148 00:43:43,020 --> 00:43:44,339 talk to these accountants and make sure 1149 00:43:44,339 --> 00:43:46,079 they're doing that the objectives are 1150 00:43:46,079 --> 00:43:47,760 the same or they're in line with your 1151 00:43:47,760 --> 00:43:49,440 goals 1152 00:43:49,440 --> 00:43:52,020 yeah exactly right and everyone knows 1153 00:43:52,020 --> 00:43:54,180 someone in business it's always good to 1154 00:43:54,180 --> 00:43:56,880 ask them who they use and why they work 1155 00:43:56,880 --> 00:43:58,020 with their accountant that's how you 1156 00:43:58,020 --> 00:44:00,180 just get the introduction and upgrade 1157 00:44:00,180 --> 00:44:02,339 have the right conversations because 1158 00:44:02,339 --> 00:44:04,020 that's what's going to help you get to 1159 00:44:04,020 --> 00:44:05,819 the next stage whether it is for 1160 00:44:05,819 --> 00:44:07,380 business or whether it's for property 1161 00:44:07,380 --> 00:44:10,680 yeah 100 so mate can you just share a 1162 00:44:10,680 --> 00:44:12,359 few actionable tips that maybe the 1163 00:44:12,359 --> 00:44:15,119 listeners can can take away and you know 1164 00:44:15,119 --> 00:44:17,819 use to potentially like increase their 1165 00:44:17,819 --> 00:44:21,680 borrowing capacity somewhat quickly 1166 00:44:22,020 --> 00:44:24,599 yeah so some of the immediate things 1167 00:44:24,599 --> 00:44:27,060 they can do is actually to reduce their 1168 00:44:27,060 --> 00:44:30,420 personal debts so if they can close 1169 00:44:30,420 --> 00:44:32,280 their credit cards 1170 00:44:32,280 --> 00:44:34,859 um if they can you know consolidate 1171 00:44:34,859 --> 00:44:38,460 loans such as car loans or hex debt 1172 00:44:38,460 --> 00:44:40,200 that's going to actually improve that 1173 00:44:40,200 --> 00:44:43,020 straight away if they own property if 1174 00:44:43,020 --> 00:44:44,880 they can increase the rent if they're 1175 00:44:44,880 --> 00:44:46,380 outside of the lease they can increase 1176 00:44:46,380 --> 00:44:48,660 the rent go ahead and do that it's going 1177 00:44:48,660 --> 00:44:50,760 to improve your income if you've got 1178 00:44:50,760 --> 00:44:53,040 existing loans that have got short terms 1179 00:44:53,040 --> 00:44:55,640 10 years 15 years 20 years 1180 00:44:55,640 --> 00:44:59,460 refinance them and reset the terms to 30 1181 00:44:59,460 --> 00:45:02,520 years having a longer term means yes 1182 00:45:02,520 --> 00:45:03,960 you're going to pay more interest but 1183 00:45:03,960 --> 00:45:05,160 you're increasing your borrowing 1184 00:45:05,160 --> 00:45:07,500 capacity by doing that and then the 1185 00:45:07,500 --> 00:45:08,460 other thing you can do is with your 1186 00:45:08,460 --> 00:45:11,280 expenses is review them and talk to your 1187 00:45:11,280 --> 00:45:13,380 mortgage broker who can tell you what 1188 00:45:13,380 --> 00:45:16,740 the hemis hem for your household and 1189 00:45:16,740 --> 00:45:18,960 bring your expenses in line with him so 1190 00:45:18,960 --> 00:45:20,880 that way you're below that or in line 1191 00:45:20,880 --> 00:45:22,380 with it so that way you're not above it 1192 00:45:22,380 --> 00:45:24,180 that will increase your buying capacity 1193 00:45:24,180 --> 00:45:25,859 and there's other things you can do 1194 00:45:25,859 --> 00:45:29,099 which look I don't suggest to anyone to 1195 00:45:29,099 --> 00:45:31,500 to underinsure yourself it's important 1196 00:45:31,500 --> 00:45:33,839 to have the right insurances but just so 1197 00:45:33,839 --> 00:45:34,980 you're aware 1198 00:45:34,980 --> 00:45:38,160 uh life insurance and health insurance 1199 00:45:38,160 --> 00:45:40,859 income protection all of that falls 1200 00:45:40,859 --> 00:45:43,740 outside of him so if you're paying for 1201 00:45:43,740 --> 00:45:45,540 all these insurances it's actually 1202 00:45:45,540 --> 00:45:49,880 impacting your buying capacity and also 1203 00:45:49,880 --> 00:45:52,980 private school fees so if you're paying 1204 00:45:52,980 --> 00:45:54,660 for private school well I don't want to 1205 00:45:54,660 --> 00:45:56,220 tell you what to do take your kids out 1206 00:45:56,220 --> 00:45:58,380 of private put them into public but that 1207 00:45:58,380 --> 00:46:00,420 can actually impact your buying quite a 1208 00:46:00,420 --> 00:46:01,920 bit so those are things that you can do 1209 00:46:01,920 --> 00:46:03,359 immediately that will that will boost 1210 00:46:03,359 --> 00:46:05,579 your buying capacity and then obviously 1211 00:46:05,579 --> 00:46:07,680 the most important one is you know get a 1212 00:46:07,680 --> 00:46:10,200 payer answer so you can either ask your 1213 00:46:10,200 --> 00:46:12,480 boss for a pay increase or a bonus 1214 00:46:12,480 --> 00:46:14,220 that's going to help you and then if 1215 00:46:14,220 --> 00:46:15,839 you're self-employed work with your 1216 00:46:15,839 --> 00:46:18,000 accountant that can that can actually uh 1217 00:46:18,000 --> 00:46:19,920 help you to you know show a bit more 1218 00:46:19,920 --> 00:46:21,240 profit 1219 00:46:21,240 --> 00:46:22,680 um you know that you can use for help 1220 00:46:22,680 --> 00:46:25,319 you helping you borrow more yeah yeah 1221 00:46:25,319 --> 00:46:28,500 that's interesting because on the um uh 1222 00:46:28,500 --> 00:46:31,079 the term sheets or the um you know the 1223 00:46:31,079 --> 00:46:33,599 in your portal that I filled out and you 1224 00:46:33,599 --> 00:46:36,359 gave me the the output back and I'm 1225 00:46:36,359 --> 00:46:38,040 doing some borrowing obviously with my 1226 00:46:38,040 --> 00:46:40,619 fiance's involved as well and um she's 1227 00:46:40,619 --> 00:46:43,500 got a 25 000 hex debt and like hex dad 1228 00:46:43,500 --> 00:46:46,700 what the hell is this this isn't mine 1229 00:46:46,700 --> 00:46:49,800 now I've got a 25 000 hex debt that's 1230 00:46:49,800 --> 00:46:52,619 apparently like lumped with my you know 1231 00:46:52,619 --> 00:46:54,420 my borrowing so I've got it we've got to 1232 00:46:54,420 --> 00:46:55,740 take care of that 1233 00:46:55,740 --> 00:46:57,599 um to get together in the same household 1234 00:46:57,599 --> 00:47:00,000 right yeah this is um I didn't sign up 1235 00:47:00,000 --> 00:47:03,020 for that you know 1236 00:47:08,000 --> 00:47:11,280 yeah so when you're finding a partner 1237 00:47:11,280 --> 00:47:12,839 make sure you've got to ask them about 1238 00:47:12,839 --> 00:47:15,000 their hex debt what what hex debt do 1239 00:47:15,000 --> 00:47:16,680 they have you know is it uh you know 1240 00:47:16,680 --> 00:47:19,800 good or bad or ugly so um 1241 00:47:19,800 --> 00:47:23,760 mate when what about like mistakes I 1242 00:47:23,760 --> 00:47:25,319 want to know I'm sure you see a lot of 1243 00:47:25,319 --> 00:47:27,540 mistakes that people make with you know 1244 00:47:27,540 --> 00:47:30,060 putting in their their um applications 1245 00:47:30,060 --> 00:47:32,940 or like mistakes with their Finance what 1246 00:47:32,940 --> 00:47:34,920 are the really big you know ones that 1247 00:47:34,920 --> 00:47:37,140 you've seen that maybe the listeners can 1248 00:47:37,140 --> 00:47:39,180 avoid to help them you know not make 1249 00:47:39,180 --> 00:47:40,319 that mistake and increase their 1250 00:47:40,319 --> 00:47:42,839 borrowing capacity 1251 00:47:42,839 --> 00:47:46,020 yeah it's um there's definitely a lot of 1252 00:47:46,020 --> 00:47:48,060 mistakes that people can make I think 1253 00:47:48,060 --> 00:47:50,579 talking to a broker is the number one 1254 00:47:50,579 --> 00:47:52,319 thing that you can do rather than going 1255 00:47:52,319 --> 00:47:54,599 to the bank and I think that's a mistake 1256 00:47:54,599 --> 00:47:57,000 going to the bank well it's a mistake to 1257 00:47:57,000 --> 00:47:59,160 go to the bank directly 1258 00:47:59,160 --> 00:48:01,619 at times because 1259 00:48:01,619 --> 00:48:05,060 what you say can't be unset right 1260 00:48:05,060 --> 00:48:07,680 whereas talking to a broker will 1261 00:48:07,680 --> 00:48:09,960 understand your situation and help you 1262 00:48:09,960 --> 00:48:12,119 navigate it in a way that's going to 1263 00:48:12,119 --> 00:48:13,980 allow you to achieve you achieve your 1264 00:48:13,980 --> 00:48:17,160 objectives so it's typically somewhat 1265 00:48:17,160 --> 00:48:19,319 confidential what you talk about 1266 00:48:19,319 --> 00:48:20,760 um because at the end of the day you're 1267 00:48:20,760 --> 00:48:22,560 trying to figure out a solution for each 1268 00:48:22,560 --> 00:48:24,720 other so that would be I think a common 1269 00:48:24,720 --> 00:48:27,480 mistake is you know providing way too 1270 00:48:27,480 --> 00:48:29,640 much information up front directly to 1271 00:48:29,640 --> 00:48:32,160 the bank yeah uh talk to your broker 1272 00:48:32,160 --> 00:48:35,460 first to get a you know a more broader 1273 00:48:35,460 --> 00:48:37,079 picture as to what's possible for your 1274 00:48:37,079 --> 00:48:39,660 circumstances 1275 00:48:39,660 --> 00:48:43,560 um another mistake would be uh debts so 1276 00:48:43,560 --> 00:48:46,319 a lot of people don't talk about the 1277 00:48:46,319 --> 00:48:47,579 fact that they had you know you talk 1278 00:48:47,579 --> 00:48:49,859 about hex but you might have had some 1279 00:48:49,859 --> 00:48:51,960 missed payments in the past or old 1280 00:48:51,960 --> 00:48:53,460 default that you had on your credit file 1281 00:48:53,460 --> 00:48:55,200 and you and you you know in the back of 1282 00:48:55,200 --> 00:48:57,240 your mind it could still be there but 1283 00:48:57,240 --> 00:49:01,020 you try to hide it or ignore it thinking 1284 00:49:01,020 --> 00:49:02,579 that no one's going to find out about it 1285 00:49:02,579 --> 00:49:05,099 and then you apply for the loan and you 1286 00:49:05,099 --> 00:49:06,839 know everyone spends time getting it all 1287 00:49:06,839 --> 00:49:09,060 together and then you find out later 1288 00:49:09,060 --> 00:49:11,160 the bank finds out because they do their 1289 00:49:11,160 --> 00:49:13,200 checks the the mortgage broker finds out 1290 00:49:13,200 --> 00:49:14,700 but you knew deep down so that's a 1291 00:49:14,700 --> 00:49:16,220 mistake I think you need to be 1292 00:49:16,220 --> 00:49:19,560 transparent with your credit history uh 1293 00:49:19,560 --> 00:49:21,359 and look for remedies around there are 1294 00:49:21,359 --> 00:49:23,160 ways to to clear everyone makes mistakes 1295 00:49:23,160 --> 00:49:25,500 like no one's got perfect squeaky clean 1296 00:49:25,500 --> 00:49:27,480 credit history well some people do but 1297 00:49:27,480 --> 00:49:29,460 you know for the most part there's 1298 00:49:29,460 --> 00:49:30,599 people out there that have made some 1299 00:49:30,599 --> 00:49:32,400 mistakes and there's there's ways to 1300 00:49:32,400 --> 00:49:34,200 remedy it to still help you borrow 1301 00:49:34,200 --> 00:49:36,060 I'd say those are probably the biggest 1302 00:49:36,060 --> 00:49:37,079 ones 1303 00:49:37,079 --> 00:49:40,200 um borrowing capacity wise look at the 1304 00:49:40,200 --> 00:49:41,819 end of the day what you oh actually no 1305 00:49:41,819 --> 00:49:43,800 there is another big one that just 1306 00:49:43,800 --> 00:49:44,880 occurred to me 1307 00:49:44,880 --> 00:49:47,220 when you go and start your own business 1308 00:49:47,220 --> 00:49:49,800 or you become a contractor 1309 00:49:49,800 --> 00:49:51,960 a lot of people want to go out and you 1310 00:49:51,960 --> 00:49:52,980 know invoice because they're going to 1311 00:49:52,980 --> 00:49:55,260 get paid more but they go do that and 1312 00:49:55,260 --> 00:49:57,000 then they go apply for a loan they need 1313 00:49:57,000 --> 00:49:58,680 two years of trading history 1314 00:49:58,680 --> 00:50:00,180 so you want to get the loan while you're 1315 00:50:00,180 --> 00:50:03,780 still payg once you've got the loan you 1316 00:50:03,780 --> 00:50:05,160 can make decisions for your life you 1317 00:50:05,160 --> 00:50:07,140 know for your household so that would be 1318 00:50:07,140 --> 00:50:09,839 a common mistake a lot of people do 1319 00:50:09,839 --> 00:50:12,300 so the mistake is quitting your job 1320 00:50:12,300 --> 00:50:14,460 first and go taking you're doing your 1321 00:50:14,460 --> 00:50:17,040 your new Venture and then trying to get 1322 00:50:17,040 --> 00:50:18,900 the loan after you've quit your your 1323 00:50:18,900 --> 00:50:20,839 payg job 1324 00:50:20,839 --> 00:50:24,440 exactly first yeah 1325 00:50:24,920 --> 00:50:27,000 yeah while you've still got the 1326 00:50:27,000 --> 00:50:29,160 recurring income if you plan on setting 1327 00:50:29,160 --> 00:50:32,280 up a starting a business well obviously 1328 00:50:32,280 --> 00:50:34,140 you want to make sure that it's it's the 1329 00:50:34,140 --> 00:50:35,700 right move for you but even if it is 1330 00:50:35,700 --> 00:50:36,839 secure 1331 00:50:36,839 --> 00:50:38,280 well the bank I can lend you money 1332 00:50:38,280 --> 00:50:39,420 unless you've got two years of History 1333 00:50:39,420 --> 00:50:42,000 to prove that so keep that in mind 1334 00:50:42,000 --> 00:50:44,460 before you quit your job yeah if you 1335 00:50:44,460 --> 00:50:46,020 need Finance anytime yeah that's a good 1336 00:50:46,020 --> 00:50:48,119 one yeah because when when we when you 1337 00:50:48,119 --> 00:50:49,440 first started answering that question I 1338 00:50:49,440 --> 00:50:51,839 said what are the mistakes and you said 1339 00:50:51,839 --> 00:50:53,819 um talking to a mortgage broker and I'm 1340 00:50:53,819 --> 00:50:55,020 like I thought you were leading into 1341 00:50:55,020 --> 00:50:56,220 that's a mistake I'm like that's not a 1342 00:50:56,220 --> 00:50:58,579 mistake 1343 00:51:03,800 --> 00:51:08,040 so mate in terms of like trusts 1344 00:51:08,040 --> 00:51:11,040 um I've heard a lot about like how you 1345 00:51:11,040 --> 00:51:14,339 can use trusts and other entities to 1346 00:51:14,339 --> 00:51:16,740 increase your borrowing capacity and I 1347 00:51:16,740 --> 00:51:18,000 think this is a really interesting one 1348 00:51:18,000 --> 00:51:20,339 because if this is actually like 1349 00:51:20,339 --> 00:51:22,559 um really workable 1350 00:51:22,559 --> 00:51:24,599 um it could definitely change the game 1351 00:51:24,599 --> 00:51:26,819 um for a lot of people so how how can 1352 00:51:26,819 --> 00:51:29,819 you use trusts or entities to to 1353 00:51:29,819 --> 00:51:32,220 dramatically change uh your borrowing 1354 00:51:32,220 --> 00:51:34,640 capacity 1355 00:51:35,059 --> 00:51:37,380 yeah a lot of people think that by 1356 00:51:37,380 --> 00:51:39,720 having a trust that you can increase 1357 00:51:39,720 --> 00:51:42,420 your borrowing it's it's not necessary 1358 00:51:42,420 --> 00:51:45,300 that increases it it can help you to not 1359 00:51:45,300 --> 00:51:48,059 limit it limit your borrowing and what I 1360 00:51:48,059 --> 00:51:49,380 mean by that is 1361 00:51:49,380 --> 00:51:51,420 by setting up a new entity you're the 1362 00:51:51,420 --> 00:51:54,480 guarantor so you and your partner for 1363 00:51:54,480 --> 00:51:57,119 example so serviceability is based on 1364 00:51:57,119 --> 00:51:59,880 your income and your expenses and the 1365 00:51:59,880 --> 00:52:02,760 rental income that that entity is that 1366 00:52:02,760 --> 00:52:04,319 property that the entity is buying is 1367 00:52:04,319 --> 00:52:06,900 going to generate but 1368 00:52:06,900 --> 00:52:08,760 it's it's called a special purpose 1369 00:52:08,760 --> 00:52:10,680 vehicle so it's it's not a trading 1370 00:52:10,680 --> 00:52:12,900 business it is set up specifically to 1371 00:52:12,900 --> 00:52:15,300 own the property so the income is still 1372 00:52:15,300 --> 00:52:17,579 going to be based on you guys you as a 1373 00:52:17,579 --> 00:52:20,819 guarantors working uh not hinder you in 1374 00:52:20,819 --> 00:52:22,920 the future is that because it's a 1375 00:52:22,920 --> 00:52:25,200 commercial debt and not residential and 1376 00:52:25,200 --> 00:52:27,300 it's under a commercial entity 1377 00:52:27,300 --> 00:52:29,460 then it can be excluded from your 1378 00:52:29,460 --> 00:52:31,800 personal borrowing capacity as long as 1379 00:52:31,800 --> 00:52:33,599 your accountant is willing to write a 1380 00:52:33,599 --> 00:52:35,640 letter to say that it's profitable and 1381 00:52:35,640 --> 00:52:37,500 able to meet its Financial commitments 1382 00:52:37,500 --> 00:52:39,839 if they write that you know they're not 1383 00:52:39,839 --> 00:52:41,099 going to stress test that commercial 1384 00:52:41,099 --> 00:52:42,960 mortgage so you could have a million 1385 00:52:42,960 --> 00:52:44,160 dollar mortgage and we talked about 1386 00:52:44,160 --> 00:52:45,839 earlier about they're going to stress 1387 00:52:45,839 --> 00:52:47,339 test it at three percent of other 1388 00:52:47,339 --> 00:52:49,920 interest rate right if it's seven 1389 00:52:49,920 --> 00:52:51,900 percent commercial rate and a stress 1390 00:52:51,900 --> 00:52:53,400 test at a 10 percent 1391 00:52:53,400 --> 00:52:56,579 that killed the deal but if the rent is 1392 00:52:56,579 --> 00:52:58,140 covering the mortgage 1393 00:52:58,140 --> 00:52:59,880 and the expenses 1394 00:52:59,880 --> 00:53:01,800 well we can exclude it all together 1395 00:53:01,800 --> 00:53:03,900 within the current letter but if it's 1396 00:53:03,900 --> 00:53:05,700 your name and you're buying it in your 1397 00:53:05,700 --> 00:53:07,200 name you can't get an account letter for 1398 00:53:07,200 --> 00:53:08,819 that it will show up on your credit file 1399 00:53:08,819 --> 00:53:10,740 and you must declare it and we need and 1400 00:53:10,740 --> 00:53:12,960 the bank's going to stress test it for 1401 00:53:12,960 --> 00:53:14,339 what it is 1402 00:53:14,339 --> 00:53:17,760 so that's why having a trust or a 1403 00:53:17,760 --> 00:53:19,920 commercial trust specifically so keep 1404 00:53:19,920 --> 00:53:21,300 that in mind has to be a corporate 1405 00:53:21,300 --> 00:53:23,460 Trustee of the trust not the individual 1406 00:53:23,460 --> 00:53:24,599 trustee 1407 00:53:24,599 --> 00:53:27,059 and then it can be excluded so that's 1408 00:53:27,059 --> 00:53:28,500 that's where it can help you so similar 1409 00:53:28,500 --> 00:53:30,480 to a self-managed super fund 1410 00:53:30,480 --> 00:53:32,339 that doesn't impact your personal wiring 1411 00:53:32,339 --> 00:53:34,260 capacity because it is a separate entity 1412 00:53:34,260 --> 00:53:36,420 outside of your personal 1413 00:53:36,420 --> 00:53:38,220 um and it's excluded when calculating 1414 00:53:38,220 --> 00:53:40,740 borrowing capacity so that that's really 1415 00:53:40,740 --> 00:53:42,839 powerful and then in the future where it 1416 00:53:42,839 --> 00:53:45,240 can help you borrow is when it becomes 1417 00:53:45,240 --> 00:53:47,640 super profitable so say you've got a new 1418 00:53:47,640 --> 00:53:49,440 entity and say two three years later 1419 00:53:49,440 --> 00:53:51,480 it's actually generating you know 50 1420 00:53:51,480 --> 00:53:53,339 Grand profit every year 1421 00:53:53,339 --> 00:53:56,400 well that profit can now then be added 1422 00:53:56,400 --> 00:53:58,079 to your income 1423 00:53:58,079 --> 00:54:01,079 to help you borrow without stress 1424 00:54:01,079 --> 00:54:02,339 testing the mortgage that you got on 1425 00:54:02,339 --> 00:54:05,339 there so it can actually just be added 1426 00:54:05,339 --> 00:54:08,040 to your net profit can be added to your 1427 00:54:08,040 --> 00:54:10,380 to your income and it'll be borrowing so 1428 00:54:10,380 --> 00:54:11,819 yeah it can be a really powerful tool 1429 00:54:11,819 --> 00:54:13,859 you do it properly so that's that's 1430 00:54:13,859 --> 00:54:15,780 that's really cool so you can it's 1431 00:54:15,780 --> 00:54:17,460 basically like you're Sheltering that 1432 00:54:17,460 --> 00:54:20,280 debt so you're basically Sheltering that 1433 00:54:20,280 --> 00:54:22,680 debt from going on to your personal name 1434 00:54:22,680 --> 00:54:24,300 or your personal 1435 00:54:24,300 --> 00:54:26,579 um borrowing capacity because it's its 1436 00:54:26,579 --> 00:54:28,319 own Standalone entity and I guess that 1437 00:54:28,319 --> 00:54:30,540 is essentially why you have a trust or 1438 00:54:30,540 --> 00:54:32,819 UI you have a business account so a 1439 00:54:32,819 --> 00:54:34,680 business entity because you know you 1440 00:54:34,680 --> 00:54:36,119 don't want to be using your personal 1441 00:54:36,119 --> 00:54:38,339 name and your personal like assets it 1442 00:54:38,339 --> 00:54:40,079 won't be liable 1443 00:54:40,079 --> 00:54:42,720 um so you basically can set up trust 1444 00:54:42,720 --> 00:54:45,300 after trust just after trust and shelter 1445 00:54:45,300 --> 00:54:48,480 the debt and then potentially you could 1446 00:54:48,480 --> 00:54:50,880 not when you're assessing 1447 00:54:50,880 --> 00:54:52,859 um you know borrowing or capacity from 1448 00:54:52,859 --> 00:54:54,720 the bank if you're doing that in your 1449 00:54:54,720 --> 00:54:57,420 personal name or a new entity then that 1450 00:54:57,420 --> 00:54:59,819 doesn't take into account those original 1451 00:54:59,819 --> 00:55:02,760 loans is that right 1452 00:55:02,760 --> 00:55:04,619 yeah as long as the accountant allows 1453 00:55:04,619 --> 00:55:06,300 you to exclude it 1454 00:55:06,300 --> 00:55:09,240 um so if if not the bank's going to ask 1455 00:55:09,240 --> 00:55:11,040 for financials and they're gonna they're 1456 00:55:11,040 --> 00:55:12,480 gonna include the debts so if it's 1457 00:55:12,480 --> 00:55:16,859 running at a loss and they see that they 1458 00:55:16,859 --> 00:55:18,660 will put the loss against your name it 1459 00:55:18,660 --> 00:55:21,300 will impact your bar so it you do that's 1460 00:55:21,300 --> 00:55:22,619 why I'm having a good account is super 1461 00:55:22,619 --> 00:55:24,300 important they know that the journey 1462 00:55:24,300 --> 00:55:25,319 that you're on and they're willing to 1463 00:55:25,319 --> 00:55:27,300 write letters for you to help you 1464 00:55:27,300 --> 00:55:29,520 but if you need that income to help you 1465 00:55:29,520 --> 00:55:31,380 with service like if you you say oh I 1466 00:55:31,380 --> 00:55:33,059 get all this commercial rental income I 1467 00:55:33,059 --> 00:55:34,440 want to use that to help me borrow well 1468 00:55:34,440 --> 00:55:35,520 then you're going to have to disclose 1469 00:55:35,520 --> 00:55:36,839 the debt as well 1470 00:55:36,839 --> 00:55:38,940 it's only later when it's showing a 1471 00:55:38,940 --> 00:55:40,920 strong profit if it's a very little 1472 00:55:40,920 --> 00:55:43,079 amount of profit in the beginning you're 1473 00:55:43,079 --> 00:55:44,940 better off excluding it all together 1474 00:55:44,940 --> 00:55:46,859 but if it's running at a significant 1475 00:55:46,859 --> 00:55:49,260 loss well your accountant is most likely 1476 00:55:49,260 --> 00:55:50,579 not going to write a letter for you to 1477 00:55:50,579 --> 00:55:53,760 say it's profitable but say it was and 1478 00:55:53,760 --> 00:55:56,099 and it they can't was able to write that 1479 00:55:56,099 --> 00:55:58,260 it can be excluded and you can keep 1480 00:55:58,260 --> 00:56:00,480 growing your personal uh borrowing and 1481 00:56:00,480 --> 00:56:02,640 buy your your ppor without that 1482 00:56:02,640 --> 00:56:04,079 affecting your borrowing 1483 00:56:04,079 --> 00:56:06,300 yeah wow so is this is it just 1484 00:56:06,300 --> 00:56:08,400 accountant to accountant you ask that 1485 00:56:08,400 --> 00:56:10,380 letter and then they provide it to you 1486 00:56:10,380 --> 00:56:12,480 or like your mortgage broker is that how 1487 00:56:12,480 --> 00:56:13,980 it works yeah 1488 00:56:13,980 --> 00:56:15,839 yeah wow yeah yeah that's right well the 1489 00:56:15,839 --> 00:56:18,480 customer has to ask for it and then the 1490 00:56:18,480 --> 00:56:20,520 accountant will write it and then it's 1491 00:56:20,520 --> 00:56:22,680 sent to the bank the bank will just 1492 00:56:22,680 --> 00:56:24,240 happily exclude because the bank will 1493 00:56:24,240 --> 00:56:25,800 always do a credit check and any 1494 00:56:25,800 --> 00:56:27,720 directorships you have will show up on 1495 00:56:27,720 --> 00:56:29,640 your profile so they're going to want a 1496 00:56:29,640 --> 00:56:31,500 letter for any directorship 1497 00:56:31,500 --> 00:56:33,180 they're not going to do credit checks 1498 00:56:33,180 --> 00:56:34,800 against every single company that you 1499 00:56:34,800 --> 00:56:35,880 have because they don't you're not 1500 00:56:35,880 --> 00:56:37,380 borrowing in that company you're 1501 00:56:37,380 --> 00:56:38,700 applying under your name for this 1502 00:56:38,700 --> 00:56:40,920 particular Loan in the future so they 1503 00:56:40,920 --> 00:56:42,119 don't have the right to just do credit 1504 00:56:42,119 --> 00:56:44,040 checks on all these other companies 1505 00:56:44,040 --> 00:56:45,599 so that's why they need an accountant 1506 00:56:45,599 --> 00:56:48,900 letter or financials tax returns 1507 00:56:48,900 --> 00:56:50,760 one or the other it's a tax return show 1508 00:56:50,760 --> 00:56:51,900 profit you don't need the account to 1509 00:56:51,900 --> 00:56:54,000 write anything but just be mindful that 1510 00:56:54,000 --> 00:56:55,920 they the bank May then stress test the 1511 00:56:55,920 --> 00:56:58,079 mortgages that exist so that might not 1512 00:56:58,079 --> 00:56:59,940 help you so it's better to exclude it 1513 00:56:59,940 --> 00:57:00,839 all together 1514 00:57:00,839 --> 00:57:02,819 yeah cool and I like the fact that you 1515 00:57:02,819 --> 00:57:05,099 can you know exclude it and then later 1516 00:57:05,099 --> 00:57:06,780 on when you want to borrow you can use 1517 00:57:06,780 --> 00:57:09,180 the income as uh you know to help you 1518 00:57:09,180 --> 00:57:10,740 that's cool so like you get the best of 1519 00:57:10,740 --> 00:57:12,359 both worlds there 1520 00:57:12,359 --> 00:57:14,760 exactly yeah just timeline right in the 1521 00:57:14,760 --> 00:57:16,020 beginning excluded when it earns more 1522 00:57:16,020 --> 00:57:18,720 and more then you use it yeah nice all 1523 00:57:18,720 --> 00:57:20,520 right mate last question 1524 00:57:20,520 --> 00:57:24,059 um you have obviously uh a large 1525 00:57:24,059 --> 00:57:25,619 um you know view on all these different 1526 00:57:25,619 --> 00:57:28,500 banks which ones right now particularly 1527 00:57:28,500 --> 00:57:30,720 are you liking that you're able to 1528 00:57:30,720 --> 00:57:32,940 squeeze the most out of the most out of 1529 00:57:32,940 --> 00:57:34,440 like borrowing capacity for People Are 1530 00:57:34,440 --> 00:57:36,240 there specific ones that you you like 1531 00:57:36,240 --> 00:57:38,700 that you favor or have better lending 1532 00:57:38,700 --> 00:57:42,480 terms right now that you you like 1533 00:57:42,480 --> 00:57:44,700 uh actually I touched on it earlier we 1534 00:57:44,700 --> 00:57:46,800 talked about non-banks so the non-banks 1535 00:57:46,800 --> 00:57:49,260 that are kind of more generous with 1536 00:57:49,260 --> 00:57:51,420 their borrowing capacity uh pepper money 1537 00:57:51,420 --> 00:57:54,119 our Liberty Financial our first Mac 1538 00:57:54,119 --> 00:57:56,220 they're kind of the the well-known ones 1539 00:57:56,220 --> 00:57:58,559 but there are a couple of others out 1540 00:57:58,559 --> 00:58:01,079 there that I'm sort of starting to 1541 00:58:01,079 --> 00:58:02,460 connect with and learning more about 1542 00:58:02,460 --> 00:58:04,619 their policies so I'm not going to tell 1543 00:58:04,619 --> 00:58:06,359 you who they are yet just because I 1544 00:58:06,359 --> 00:58:08,880 don't know them well enough so of course 1545 00:58:08,880 --> 00:58:10,859 that's what I'm here to do so if 1546 00:58:10,859 --> 00:58:12,720 customers do want to reach out to me I 1547 00:58:12,720 --> 00:58:14,460 can always um look at their 1548 00:58:14,460 --> 00:58:16,020 circumstances and then connect with 1549 00:58:16,020 --> 00:58:17,940 these new lenders and see if if they're 1550 00:58:17,940 --> 00:58:19,740 willing to help because remember these 1551 00:58:19,740 --> 00:58:20,880 lenders will give you more but they're 1552 00:58:20,880 --> 00:58:22,260 going to charge you more so just be 1553 00:58:22,260 --> 00:58:24,960 prepared for that higher fees and higher 1554 00:58:24,960 --> 00:58:26,400 interest rates but they'll lend you more 1555 00:58:26,400 --> 00:58:28,200 money too yeah but it's all about 1556 00:58:28,200 --> 00:58:29,940 getting the deal done isn't it so if you 1557 00:58:29,940 --> 00:58:31,680 can just get the deal done 1558 00:58:31,680 --> 00:58:32,880 um you know even if you can pay it 1559 00:58:32,880 --> 00:58:34,020 you're paying a little bit higher 1560 00:58:34,020 --> 00:58:35,700 interest rate you know your wealth can 1561 00:58:35,700 --> 00:58:37,980 grow a lot from getting that deal done 1562 00:58:37,980 --> 00:58:40,859 rather than just like you know trying to 1563 00:58:40,859 --> 00:58:42,359 find the best interest rate possible 1564 00:58:42,359 --> 00:58:43,859 because at the end of the day that 1565 00:58:43,859 --> 00:58:45,119 little gap between the interest rate 1566 00:58:45,119 --> 00:58:47,220 doesn't make you make you um you know 1567 00:58:47,220 --> 00:58:49,079 wealthy but buying the property and 1568 00:58:49,079 --> 00:58:51,839 potentially having a cash flow and then 1569 00:58:51,839 --> 00:58:53,579 the Capital Growth of that behind it 1570 00:58:53,579 --> 00:58:56,040 does so definitely um worth worth 1571 00:58:56,040 --> 00:58:57,900 shopping around 1572 00:58:57,900 --> 00:58:59,760 yeah great 1573 00:58:59,760 --> 00:59:02,280 all right well that pretty much wraps up 1574 00:59:02,280 --> 00:59:06,359 uh episode three uh cracking the what is 1575 00:59:06,359 --> 00:59:08,160 it hang on what have I got 1576 00:59:08,160 --> 00:59:10,559 yep all right all right mate that pretty 1577 00:59:10,559 --> 00:59:13,200 much wraps up uh the episode three 1578 00:59:13,200 --> 00:59:16,619 cracking the lending code so where can 1579 00:59:16,619 --> 00:59:18,960 listeners go to find out more about you 1580 00:59:18,960 --> 00:59:21,480 and your services mate 1581 00:59:21,480 --> 00:59:23,940 uh they can find me on my website which 1582 00:59:23,940 --> 00:59:27,299 is lagosfinancial.com uh they can hit 1583 00:59:27,299 --> 00:59:29,579 contact us and they can do an inquiry or 1584 00:59:29,579 --> 00:59:31,619 they can book in a call directly in my 1585 00:59:31,619 --> 00:59:34,079 calendar and we will I'll reach out 1586 00:59:34,079 --> 00:59:36,240 we'll set up a time well that could be 1587 00:59:36,240 --> 00:59:37,619 our time setting up and we'll go through 1588 00:59:37,619 --> 00:59:39,900 circumstances and I'll see what we can 1589 00:59:39,900 --> 00:59:40,619 do 1590 00:59:40,619 --> 00:59:43,799 fantastic mate this has been Financial 1591 00:59:43,799 --> 00:59:46,920 expert Victor Lagos and Andrew Bean on 1592 00:59:46,920 --> 00:59:49,710 the Financial Freedom series thanks guys 1593 00:59:49,710 --> 00:59:56,229 [Applause]