Transcript
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all right we are back with the Financial
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Freedom series my name is Andrew bean
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and I'm here with top mortgage broker
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and financial expert Victor lus from
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Lagos Financial how are you mate I'm
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good Andrew how are you mate I'm
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fantastic buddy how's everything going
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in the world of
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Finance I must say it's definitely been
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much better since we haven't had rate
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Rises the last few months oh man it was
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it was tough trying to keep on top of
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all those change of rates and policies
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and lenders and H but now people I mean
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it's also spring so people are out there
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buying property people want to get
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property and it's just a matter of you
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know can they borrow the money so at the
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moment they can so yeah that's it I
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don't think we're uh you know out of the
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woods yet with uh interest rate Rises or
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you know even interest rate drops but um
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yeah definitely more listings now it's
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spring so it's really good to see
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definitely and I'm just even for for
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commercial property I'm finding people
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that I was talking to months ago are
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actually finding the properties the
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right prices so got a lot in the go at
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the moment it's good yeah well that's
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right I mean like the interest rates
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where they are now like a six six and a
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half even like a 7% interest rate on a
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commercial property is actually on
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average like where interest rate should
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be over like the the the you know a
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really long period of time that's the
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like average around where it should be
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and it's a good place for commercial
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property B because you get good um like
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really good uh negotiation tactics with
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the the agent and you can also work it
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around like find a different interest
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rate later down the line like just
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because you have a higher interest rate
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right now doesn't mean that's the
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interest rate you have to have for the
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whole life of that um property you know
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you can refinance you can do lots of
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things yeah yeah definitely and you're
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looking at cash flow from today but yeah
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like you said it's not going to be that
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forever so when rates drop cash flow
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will improve when rents go up cash flow
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will improve so if the numbers work
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today then hopefully they'll actually
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get stronger over time yeah that's right
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and I think people are baselining like
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interest rates today on where they went
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so like how low they went cuz that was
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like a record low that was very unusual
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it you know we may never get back there
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you know in our careers so like that was
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actually the unusual part how low
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interest rates went and this is actually
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more of a normal Market where you know
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you can get good deals you can you know
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a 6% return U or interest on uh property
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is actually like not bad like you
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shouldn't be afraid of it right
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now yeah no agreed more we get used to
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it you know people will adapt to this
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time yeah moving forward all right man
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so today I wanted to have a chat about
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getting Finance approved and where it
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can all go wrong in the process
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so in terms of like the most common
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reasons loan applications get rejected
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um how and how like applicants can
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mitigate these risks of like why
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applicants get
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rejected yeah look it depends I guess on
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the broker and their experience with how
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many deals or how many applications have
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actually they've worked on over their
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career and how much due diligence they
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put to their own assessments before they
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apply on behalf of the customer so a lot
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of the time if the data is all correct
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so meaning you know all your address
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history is correct your employment
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history uh your expenses are you know
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close to what the banks expect them to
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be you supply all the documents that
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they ask for then really it shouldn't
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get the client it's just a matter of um
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going to the right lender for your
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situation
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but what I've seen probably from my own
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experience where things don't go the way
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I plan it's due to the complexity of the
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way they do their tax returns and that's
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if someone's self-employed because an
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accountant will write off as much as
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they can and they will you know
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obviously show a certain amount of
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income and over the last few years there
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has been you know government um
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subsidies and grants and things like
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that to help people and what I found
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from my own experience is that some
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banks will deduct those
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oneoff incomes right and revenues and
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deduct that from the net profit so it's
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not a matter of getting declined but
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more just not getting approved for the
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amount you apply for which is basically
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like getting declined right so if you're
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buying if you need 600 Grand but the
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bank only approves 400 well what's the
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point of approving 400 because you
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needed 600 for that particular
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transaction right yeah well sense yeah
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it does make sense so like say like
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during Co when um you know businesses
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were getting a bit of help from the
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government and they the revenues were
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down but like and so they weren't able
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to work they weren't able to get like
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the higher revenues that they would
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usually get so the lending is like and
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and then the bank doesn't even like
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capture what they the government was
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giving out to businesses anyway um so
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that yeah that's a bit of a like a it's
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a bit of a slap in the face really cuz
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like will we were operating properly at
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at like 100% capacity we would have
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earned that money anyway and we wouldn't
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be even talking right now but because of
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the
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situation um you know wow it's just
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almost like shading on
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rent yeah yeah and that's that's why you
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need to navigate it properly because
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some banks are actually understanding of
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that so they'll look at say the previous
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year and say okay well that previous
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year when you had no no grants there was
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no pandemic you earned x amount and the
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year after after you obviously weren't
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able to work you know you had to shut
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shop for a period of time so as long as
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it sort of shows that pattern of
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recovery in the most recent Financial
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year then they'll kind of accept it but
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others are like no blanket rule no can't
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look at it it was oneoff it's not going
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to continue and that brings down the
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average so that's that's a challenge
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it's obviously something you have to
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navigate um but also just you know when
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someone's got multiple entities
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sometimes it it can be quite complex to
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track the money to actually and and it's
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easy to sometimes double up because
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money gets paid from one company to
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another to another trust and sometimes
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you think that you know you've got oh
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there 60 Grand here there another 60
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Grand there but really it was the same
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60 Grand right so you have to be
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spending time checking it properly to
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make sure that you know showing more
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income than you actually is um and then
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but in terms of decline so what of from
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I guess maybe more inexperienced um
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Brokers or even inexperienced customers
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that have got uh credit issues so they
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might end up going applying for um a
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payday loan so someone that's going to
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fund give them Capital straight away and
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then they'll pay it back with their next
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paycheck that's that's a red flag so if
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if you've got them on your credit file
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that could be a decline even though that
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would just for a particular window of
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time that you needed it that could be a
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decline so something like that could
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affect you a default that you've had on
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your credit file from a few years ago uh
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that you know that was and also a period
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of time where you weren't able to you
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know make your payments and it's still
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on your file so that could also be a
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decline but again you can find this
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stuff out before you even you know hit
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go and you know cover that off with your
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comments you know get an okay from the
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bank I try to do that they're called um
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you know you get a credit scenario you
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send it to the bank and say look this is
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the situation this is the strength can
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we actually do can you approve it based
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on this situation and then they'll say
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yes subject to full
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assessment and if we have that then we
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should be good to apply for the loan so
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mate how do different types of loans
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such as like personal business or
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mortgages differ with the approval
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process probably more than anything else
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it's the the time frame it takes to get
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approved so the more I guess the larger
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amount you apply for the longer it can
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take because there's more moving Parts
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it's more risk to the
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bank and also there's an a a larger
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asset so if you're purchasing a property
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there's obviously there's going to be a
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mortgage required um there might already
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be a mortgage because somebody owns a
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property so they have to Value the
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property that can take
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time um but if it was a car for example
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you know cars they're quite easy to
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determine if they're real or not you
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just do a ppsr search you know security
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property search to see if it exists the
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VIN search and then the money can really
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you know exchange hands within a couple
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of days but property as well there's
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contracts and those contracts have
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settlement periods which can take six
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weeks sometimes even longer so but the
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approval itself depending how good you
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are with the data you present to the
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bank you can get approvals in a few days
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with some banks and some lend actually
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can take longer they can take a week or
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two and it all depends on how much
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volume they have what their you know
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their turnaround times are uh to process
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that but yeah it all just comes down to
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I think complexity amount they're
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borrowing the type of asset they're
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buying um and also even the type of
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customer if you're self-employed it's
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going to take a bank longer to come up
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with a credit decision versus someone
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that's
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py yeah it blows my mind that like how
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how easy it is to get car finance like
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obviously like for the bank that's uh an
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asset to them because they're writing a
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loan the loan is an asset to them but to
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the actual borrower the car is a
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liability like unless you're using it to
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make money um through Uber driving or
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like doing deliveries and stuff like
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that for like Amazon like it's a clear
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liability so like if the bank was like
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going to lend money to you in the best
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like in like basically they trying to
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lend to you for the best type of asset
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for your particular finances that would
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it would be flipped around it would be
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like okay let's buy you a house because
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that's going to make you a lot more
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money in future because it's going to
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have time in the market it's going to
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appreciate over time it's going to be a
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real great asset to you obviously like
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00:10:49,399 --> 00:10:52,360
the values are way different but like in
275
00:10:52,360 --> 00:10:53,800
terms of like the other side it's like
276
00:10:53,800 --> 00:10:55,959
let's get you a car let's make sure you
277
00:10:55,959 --> 00:10:57,959
have huge like big repayments for that
278
00:10:57,959 --> 00:10:59,240
car and it's a liability it's a
279
00:10:59,240 --> 00:11:01,320
depreciating asset and it will not grow
280
00:11:01,320 --> 00:11:03,320
your wealth at all like it's just really
281
00:11:03,320 --> 00:11:05,920
funny how like the difference in a
282
00:11:05,920 --> 00:11:08,519
liability to an actual asset which the
283
00:11:08,519 --> 00:11:10,320
banks are actually trying to they're
284
00:11:10,320 --> 00:11:12,279
happy to loan like the loan process
285
00:11:12,279 --> 00:11:16,120
quicker to you yeah yeah I can see why
286
00:11:16,120 --> 00:11:17,920
you can look at it from that angle right
287
00:11:17,920 --> 00:11:19,680
when you Ben like the more you benefit
288
00:11:19,680 --> 00:11:21,480
the longer it can take and the harder it
289
00:11:21,480 --> 00:11:24,760
is right yeah but but for them the
290
00:11:24,760 --> 00:11:27,320
lender they benefit and they'll turn it
291
00:11:27,320 --> 00:11:29,200
over quickly because that just means
292
00:11:29,200 --> 00:11:31,839
income straight to their Bank whatnot
293
00:11:31,839 --> 00:11:34,000
yeah I can see that angle but look I
294
00:11:34,000 --> 00:11:36,079
don't think that's a deliberate thing I
295
00:11:36,079 --> 00:11:38,560
think it's just a matter of um a lot
296
00:11:38,560 --> 00:11:42,120
more moving parts required um for a
297
00:11:42,120 --> 00:11:43,760
property it's more complex there's
298
00:11:43,760 --> 00:11:45,800
mortgages there's other interest on
299
00:11:45,800 --> 00:11:48,120
there there's you
300
00:11:48,120 --> 00:11:51,360
know different banks already have an
301
00:11:51,360 --> 00:11:54,240
existing mortgage on there uh versus you
302
00:11:54,240 --> 00:11:55,839
know a car that's like you know you're
303
00:11:55,839 --> 00:11:57,399
buying from a dealership it's clear
304
00:11:57,399 --> 00:11:59,720
title you just register
305
00:11:59,720 --> 00:12:01,680
you know an interest when you buy it and
306
00:12:01,680 --> 00:12:05,120
it it's nice and quick and also the
307
00:12:05,120 --> 00:12:07,760
availability of capital that's another
308
00:12:07,760 --> 00:12:10,000
thing the reason why car Lo can get
309
00:12:10,000 --> 00:12:12,120
approved so quickly and a lot of the
310
00:12:12,120 --> 00:12:14,079
time it's less
311
00:12:14,079 --> 00:12:16,040
documentation it's because it's we're
312
00:12:16,040 --> 00:12:17,519
not talking about a lot of money here
313
00:12:17,519 --> 00:12:20,199
right 30 40 50 Grand it might be a lot
314
00:12:20,199 --> 00:12:23,120
to a lot of people but to to A lender
315
00:12:23,120 --> 00:12:25,079
it's not right they lend out billions of
316
00:12:25,079 --> 00:12:28,480
dollars um whereas when you're lending
317
00:12:28,480 --> 00:12:31,480
Millions of dollars for for a property
318
00:12:31,480 --> 00:12:33,720
yeah it's a larger sum there's more
319
00:12:33,720 --> 00:12:37,519
rules um around making sure that the
320
00:12:37,519 --> 00:12:39,600
they're going to get their money back
321
00:12:39,600 --> 00:12:40,480
with
322
00:12:40,480 --> 00:12:43,600
interest um because they don't lend out
323
00:12:43,600 --> 00:12:45,720
their own money right they borrow it so
324
00:12:45,720 --> 00:12:49,800
the moment it defaults everybody loses
325
00:12:49,800 --> 00:12:53,480
so yeah of course so we' like car loans
326
00:12:53,480 --> 00:12:56,279
obviously with property there's also a
327
00:12:56,279 --> 00:12:58,399
location aspect as well like some banks
328
00:12:58,399 --> 00:13:01,160
will only loan to certain locations with
329
00:13:01,160 --> 00:13:03,440
a car loan that probably doesn't apply
330
00:13:03,440 --> 00:13:06,040
does it at all because a car
331
00:13:06,040 --> 00:13:09,320
moves it doesn't apply in terms of
332
00:13:09,320 --> 00:13:12,639
location but it does apply in terms of
333
00:13:12,639 --> 00:13:15,279
the asset itself so what I mean by that
334
00:13:15,279 --> 00:13:19,880
is um some most lenders for car finance
335
00:13:19,880 --> 00:13:24,160
will have a age restriction so you can't
336
00:13:24,160 --> 00:13:27,920
go and finance like a 1980s car or a 60s
337
00:13:27,920 --> 00:13:30,279
you know car because it's it's too old
338
00:13:30,279 --> 00:13:33,800
for them the resale is difficult right
339
00:13:33,800 --> 00:13:36,240
um so they might have at the end of the
340
00:13:36,240 --> 00:13:38,880
loan term the car must maximum be 10
341
00:13:38,880 --> 00:13:41,279
years old right uh they don't really
342
00:13:41,279 --> 00:13:43,120
care about kilometers I think that'll be
343
00:13:43,120 --> 00:13:46,440
very hard to to sort of track um but
344
00:13:46,440 --> 00:13:48,720
they do look at if it's private sale if
345
00:13:48,720 --> 00:13:51,880
it's dealership sale how old the car is
346
00:13:51,880 --> 00:13:53,360
and whether the car is going to be for
347
00:13:53,360 --> 00:13:55,480
business use or personal use all of that
348
00:13:55,480 --> 00:13:57,920
will come into into the equation and
349
00:13:57,920 --> 00:13:59,800
some it's just a blank blanket rule if
350
00:13:59,800 --> 00:14:01,519
if the car is too old we won't lend
351
00:14:01,519 --> 00:14:04,440
against it and others will be flexible
352
00:14:04,440 --> 00:14:06,639
um so yeah it's not the same as property
353
00:14:06,639 --> 00:14:08,360
because I I did experience that recently
354
00:14:08,360 --> 00:14:10,399
with a with a client wanting to buy in
355
00:14:10,399 --> 00:14:13,639
in South Australia and it's in a sort of
356
00:14:13,639 --> 00:14:18,720
regional town and lenders consider it a
357
00:14:18,720 --> 00:14:22,079
category 4 location so what that means
358
00:14:22,079 --> 00:14:24,040
is that it's you know it's obviously
359
00:14:24,040 --> 00:14:26,800
it's not Metro if you think cat one
360
00:14:26,800 --> 00:14:29,120
category one Category 2 three so Falls
361
00:14:29,120 --> 00:14:31,800
like you know the bottom of the pile
362
00:14:31,800 --> 00:14:34,120
there's not much uh population at all
363
00:14:34,120 --> 00:14:38,519
there's not much industry there um so re
364
00:14:38,519 --> 00:14:40,199
reselling the property would be
365
00:14:40,199 --> 00:14:42,639
difficult if it defaulted um that's and
366
00:14:42,639 --> 00:14:45,920
if it's reliant on on tenants to pay the
367
00:14:45,920 --> 00:14:47,320
the the rent in order to cover the
368
00:14:47,320 --> 00:14:50,120
mortgage then retting it would be
369
00:14:50,120 --> 00:14:53,120
difficult as well so that's why um they
370
00:14:53,120 --> 00:14:56,560
they look at location yeah of course so
371
00:14:56,560 --> 00:14:58,360
mate how long does it usually take like
372
00:14:58,360 --> 00:15:01,360
typic typically from loan approval to
373
00:15:01,360 --> 00:15:05,399
actually seeing the funds in your bank
374
00:15:07,519 --> 00:15:09,800
account honestly it's can be a very
375
00:15:09,800 --> 00:15:12,519
quick process so the main thing you have
376
00:15:12,519 --> 00:15:16,160
to do is sign loan documents once it's
377
00:15:16,160 --> 00:15:19,600
approved if it's a property you know and
378
00:15:19,600 --> 00:15:22,040
you and you would have seen this um some
379
00:15:22,040 --> 00:15:23,600
of the listeners if you've if you've
380
00:15:23,600 --> 00:15:26,279
bought in a company or a trust there's a
381
00:15:26,279 --> 00:15:28,040
lot more documents required you have to
382
00:15:28,040 --> 00:15:29,680
get legal advice you have to get
383
00:15:29,680 --> 00:15:31,560
financial advice there's guarantor
384
00:15:31,560 --> 00:15:33,720
documents there's witnessing documents
385
00:15:33,720 --> 00:15:36,000
they need Wet signatures you know you
386
00:15:36,000 --> 00:15:38,480
need to post a back needs to be checked
387
00:15:38,480 --> 00:15:40,519
all that process can take a little while
388
00:15:40,519 --> 00:15:42,120
but if you're good at paperwork you can
389
00:15:42,120 --> 00:15:44,040
do it in a day send it back by Express
390
00:15:44,040 --> 00:15:46,560
post it can be checked and then good to
391
00:15:46,560 --> 00:15:48,759
go then it just comes down to aligning
392
00:15:48,759 --> 00:15:51,639
the date with the seller the seller is
393
00:15:51,639 --> 00:15:55,319
ready to receive the funds um and
394
00:15:55,319 --> 00:15:56,519
obviously they've probably got a
395
00:15:56,519 --> 00:15:58,399
mortgage as well they need to pay out so
396
00:15:58,399 --> 00:16:00,199
that their lender needs to be ready to
397
00:16:00,199 --> 00:16:02,959
receive the funds yeah that can take you
398
00:16:02,959 --> 00:16:05,079
know the whole thing can from from
399
00:16:05,079 --> 00:16:06,959
approval to settlement can be days and
400
00:16:06,959 --> 00:16:08,560
it can also be weeks depending on when
401
00:16:08,560 --> 00:16:11,880
everyone else is ready um with a car or
402
00:16:11,880 --> 00:16:13,839
a personal loan you know it could be
403
00:16:13,839 --> 00:16:16,279
same day uh it's all electronic now a
404
00:16:16,279 --> 00:16:18,600
lot of the time you sign documents if
405
00:16:18,600 --> 00:16:21,880
it's um you know docy sign and they
406
00:16:21,880 --> 00:16:23,920
transfer the money you experienced that
407
00:16:23,920 --> 00:16:26,160
with your car right like the money was
408
00:16:26,160 --> 00:16:27,720
paid the same day it was approved pretty
409
00:16:27,720 --> 00:16:29,839
much couple days
410
00:16:29,839 --> 00:16:32,399
after yeah I wish um like property
411
00:16:32,399 --> 00:16:34,199
Finance was as quick as Car Finance cuz
412
00:16:34,199 --> 00:16:37,160
I was shocked how how quick and easy car
413
00:16:37,160 --> 00:16:39,480
finance was I mean look it's no wonder
414
00:16:39,480 --> 00:16:42,120
that um you know there's a cost of
415
00:16:42,120 --> 00:16:45,160
living crisis um everyone's driving a
416
00:16:45,160 --> 00:16:48,120
brand like beautiful new car like i' I
417
00:16:48,120 --> 00:16:50,440
have never really had a really nice car
418
00:16:50,440 --> 00:16:52,880
and I still have a you know just a
419
00:16:52,880 --> 00:16:55,560
average you know Hy Santa Fe it's like a
420
00:16:55,560 --> 00:16:58,600
2017 model there's nothing full flashy
421
00:16:58,600 --> 00:17:00,639
it's just uh gets the job done it's just
422
00:17:00,639 --> 00:17:03,319
nice and you know has a bit more room um
423
00:17:03,319 --> 00:17:04,799
but previously we were driving like
424
00:17:04,799 --> 00:17:08,880
older cars um But like everyone now has
425
00:17:08,880 --> 00:17:11,919
a really nice new car so like it's like
426
00:17:11,919 --> 00:17:15,039
a good I'd say about A5 to $600 payment
427
00:17:15,039 --> 00:17:17,760
per month like just on their car loan
428
00:17:17,760 --> 00:17:19,720
you know so it's no wonder that like
429
00:17:19,720 --> 00:17:22,439
people have so much debt now um and and
430
00:17:22,439 --> 00:17:24,599
extra like cash they need every single
431
00:17:24,599 --> 00:17:26,959
month let alone to be able to buy a
432
00:17:26,959 --> 00:17:29,240
property and put a mortgage on it
433
00:17:29,240 --> 00:17:32,280
um you know it's just
434
00:17:32,280 --> 00:17:36,600
crazy yeah I um I'm working on one at
435
00:17:36,600 --> 00:17:39,640
the moment where these clients came to
436
00:17:39,640 --> 00:17:41,400
me and they want to buy another
437
00:17:41,400 --> 00:17:43,919
investment property they've got four at
438
00:17:43,919 --> 00:17:45,400
the moment and they're looking at buying
439
00:17:45,400 --> 00:17:48,600
the fifth and they're pretty squeezed
440
00:17:48,600 --> 00:17:50,640
for borrowing capacity but I noticed
441
00:17:50,640 --> 00:17:52,799
that they've got two car loans under
442
00:17:52,799 --> 00:17:56,200
their names yeah um totaling about 40
443
00:17:56,200 --> 00:17:58,679
Grand approximately maybe a bit more and
444
00:17:58,679 --> 00:18:00,080
the repayments are like that exactly
445
00:18:00,080 --> 00:18:02,000
what you said $600 or whatever it is per
446
00:18:02,000 --> 00:18:06,039
month but because we got equity on their
447
00:18:06,039 --> 00:18:08,679
properties we can consolidate them so
448
00:18:08,679 --> 00:18:09,919
that's what we're doing we're actually
449
00:18:09,919 --> 00:18:12,360
just paying out the car loans with 40
450
00:18:12,360 --> 00:18:14,200
Grand of equity and then we're using the
451
00:18:14,200 --> 00:18:16,280
rest of the equity to to come up with a
452
00:18:16,280 --> 00:18:18,400
deposit to buy another
453
00:18:18,400 --> 00:18:20,600
property so it's
454
00:18:20,600 --> 00:18:23,320
like you know people don't realize how
455
00:18:23,320 --> 00:18:25,320
much of an impact it has on them at the
456
00:18:25,320 --> 00:18:27,960
time right they want they want the car
457
00:18:27,960 --> 00:18:28,960
they want the
458
00:18:28,960 --> 00:18:31,600
convenience um they want you know to
459
00:18:31,600 --> 00:18:33,480
look good when they're driving on the
460
00:18:33,480 --> 00:18:36,000
road um but then when they want to grow
461
00:18:36,000 --> 00:18:38,960
their portfolio or set themselves up for
462
00:18:38,960 --> 00:18:42,039
the future it's it can be hindering them
463
00:18:42,039 --> 00:18:44,679
so hopefully they got enough equity in
464
00:18:44,679 --> 00:18:46,720
one of their properties that they can
465
00:18:46,720 --> 00:18:49,200
consolidate at some point uh otherwise
466
00:18:49,200 --> 00:18:50,720
you're stuck with the car loan for you
467
00:18:50,720 --> 00:18:54,000
know five to seven years but if you if
468
00:18:54,000 --> 00:18:55,640
your repayments are low and you're not
469
00:18:55,640 --> 00:18:56,960
borrowing that much or you come up with
470
00:18:56,960 --> 00:18:58,919
a big deposit you know
471
00:18:58,919 --> 00:19:01,200
couple hundred bucks a month whatever it
472
00:19:01,200 --> 00:19:03,799
is 300 400 it's it's not going to have a
473
00:19:03,799 --> 00:19:06,799
massive impact on your borrow yeah cuz
474
00:19:06,799 --> 00:19:08,919
the the reason they would do that and I
475
00:19:08,919 --> 00:19:11,039
I I can basically break it break it down
476
00:19:11,039 --> 00:19:13,480
is because the the equity that they've
477
00:19:13,480 --> 00:19:16,760
drawn out is at like a a 6% interest
478
00:19:16,760 --> 00:19:18,360
rate let's say that's probably what it
479
00:19:18,360 --> 00:19:20,559
is around that Victor and then the car
480
00:19:20,559 --> 00:19:24,640
loan is at like 10 or 15% interest so it
481
00:19:24,640 --> 00:19:28,360
makes sense to use the cheaper money to
482
00:19:28,360 --> 00:19:30,640
pay that car loan down so you're paying
483
00:19:30,640 --> 00:19:33,080
less interest even though you're still
484
00:19:33,080 --> 00:19:35,400
like borrowing money to pay the car down
485
00:19:35,400 --> 00:19:38,000
but it's like half of the interest so
486
00:19:38,000 --> 00:19:41,280
obviously um that would be
487
00:19:41,280 --> 00:19:44,480
better yeah also the the term that you
488
00:19:44,480 --> 00:19:47,039
have to repay it so like when you take a
489
00:19:47,039 --> 00:19:49,000
car loan out as I said earlier the
490
00:19:49,000 --> 00:19:51,039
maximum you can get is say five to seven
491
00:19:51,039 --> 00:19:53,840
years and that's because the asset is
492
00:19:53,840 --> 00:19:55,799
depreciating it's not going to be worth
493
00:19:55,799 --> 00:19:58,520
much so so lenders don't want to hold
494
00:19:58,520 --> 00:20:00,600
the debt for too long because it's just
495
00:20:00,600 --> 00:20:02,400
not going to be have much of a resale
496
00:20:02,400 --> 00:20:05,440
value um whereas property it's going to
497
00:20:05,440 --> 00:20:07,120
probably go up in value so that's why
498
00:20:07,120 --> 00:20:09,039
they'll give you 30 years because their
499
00:20:09,039 --> 00:20:11,240
risk is actually reducing right from the
500
00:20:11,240 --> 00:20:13,520
bank's perspective the debts coming down
501
00:20:13,520 --> 00:20:15,760
the value is going up so for them the
502
00:20:15,760 --> 00:20:17,520
risk is less and less and you've got a
503
00:20:17,520 --> 00:20:19,120
repayment history so that's why they'll
504
00:20:19,120 --> 00:20:21,720
stretch you out for 30 years no problem
505
00:20:21,720 --> 00:20:24,480
um so when you take out uh you know
506
00:20:24,480 --> 00:20:26,320
equity and you consolidate your car
507
00:20:26,320 --> 00:20:28,640
finance you can stretch it out over 30
508
00:20:28,640 --> 00:20:31,240
years now um which brings down your
509
00:20:31,240 --> 00:20:33,200
minimum repayment you can still pay it
510
00:20:33,200 --> 00:20:35,720
off in 5 to seven years right you have
511
00:20:35,720 --> 00:20:37,520
the freedom to do that on a variable
512
00:20:37,520 --> 00:20:42,039
loan but the bank's minimum is over 30
513
00:20:42,039 --> 00:20:44,640
so therefore your service ability is and
514
00:20:44,640 --> 00:20:46,120
what you can do is you take out the
515
00:20:46,120 --> 00:20:49,880
equity you pay down the car loans and
516
00:20:49,880 --> 00:20:51,520
then with the rest of equity the big
517
00:20:51,520 --> 00:20:53,679
chunk of equity then you buy a cash
518
00:20:53,679 --> 00:20:55,520
flowing piece of real estate then the
519
00:20:55,520 --> 00:20:57,559
cash flow from that real estate pays the
520
00:20:57,559 --> 00:21:01,120
cars off for you that's how you do
521
00:21:01,120 --> 00:21:03,480
it so you get the best of both worlds
522
00:21:03,480 --> 00:21:06,799
that's the way to exactly yeah that's
523
00:21:06,799 --> 00:21:09,720
right awesome so can you explain some of
524
00:21:09,720 --> 00:21:11,760
the common terms and stuff that you hear
525
00:21:11,760 --> 00:21:14,480
thrown around by Banks uh and mortgage
526
00:21:14,480 --> 00:21:17,159
brokers um and let us know like if
527
00:21:17,159 --> 00:21:19,480
there's any difference so is a a
528
00:21:19,480 --> 00:21:21,960
pre-qualified there's pre-approval and
529
00:21:21,960 --> 00:21:24,120
there's approval in principle are they
530
00:21:24,120 --> 00:21:26,320
all the same thing or do they mean
531
00:21:26,320 --> 00:21:30,039
something completely different
532
00:21:32,200 --> 00:21:34,320
yeah terminology yeah look it's funny to
533
00:21:34,320 --> 00:21:37,880
say that because I you know this I used
534
00:21:37,880 --> 00:21:39,559
to work for a bank and they had their
535
00:21:39,559 --> 00:21:42,520
own acronyms what things mean and and
536
00:21:42,520 --> 00:21:44,720
then became a broker and then of course
537
00:21:44,720 --> 00:21:46,919
some of those are still carry right and
538
00:21:46,919 --> 00:21:49,120
Brokers use some too and because we
539
00:21:49,120 --> 00:21:50,880
communicate with banks we we try to you
540
00:21:50,880 --> 00:21:53,919
know use some of them example is AIP
541
00:21:53,919 --> 00:21:55,840
right so AIP stands for approval in
542
00:21:55,840 --> 00:21:58,880
principle right um and then it also
543
00:21:58,880 --> 00:22:02,159
means pre-approval same thing synonymous
544
00:22:02,159 --> 00:22:04,600
um the the the two words mean the same
545
00:22:04,600 --> 00:22:07,520
thing but I try when I when I call my
546
00:22:07,520 --> 00:22:09,360
application when I title them when the
547
00:22:09,360 --> 00:22:11,080
customer sees the name of it I call it
548
00:22:11,080 --> 00:22:13,000
pre-approval and once they don't see it
549
00:22:13,000 --> 00:22:15,080
anymore I call it AIP because I don't
550
00:22:15,080 --> 00:22:16,279
want them to be like what the hell does
551
00:22:16,279 --> 00:22:19,200
this mean and come to me what's a I'm
552
00:22:19,200 --> 00:22:22,520
GNA explain it right so um but yeah
553
00:22:22,520 --> 00:22:24,240
essentially it means the same thing it's
554
00:22:24,240 --> 00:22:27,200
it's approved in principle because it's
555
00:22:27,200 --> 00:22:30,440
not full approved or that's another one
556
00:22:30,440 --> 00:22:32,360
unconditionally approved versus formally
557
00:22:32,360 --> 00:22:34,760
approved those also mean the same thing
558
00:22:34,760 --> 00:22:38,159
right um and it's fun it's funny because
559
00:22:38,159 --> 00:22:40,279
you can have an unconditional contract
560
00:22:40,279 --> 00:22:44,720
of sale on a on a purchase and an
561
00:22:44,720 --> 00:22:47,240
unconditional um loan approval but then
562
00:22:47,240 --> 00:22:49,919
you can have settlement conditions so so
563
00:22:49,919 --> 00:22:51,640
technically it's not unconditional right
564
00:22:51,640 --> 00:22:55,279
there's still settling condition um and
565
00:22:55,279 --> 00:22:57,080
so the difference is when it's a
566
00:22:57,080 --> 00:22:59,960
pre-approval there's no property right
567
00:22:59,960 --> 00:23:02,000
AIP approval in principle there's no
568
00:23:02,000 --> 00:23:03,919
property so they've they've approved
569
00:23:03,919 --> 00:23:06,360
your your credit history they've
570
00:23:06,360 --> 00:23:08,520
approved your um
571
00:23:08,520 --> 00:23:10,799
serviceability uh they've approved a
572
00:23:10,799 --> 00:23:13,799
certain loan amount based on your
573
00:23:13,799 --> 00:23:16,799
circumstances subject to a property or
574
00:23:16,799 --> 00:23:18,919
in in a car in you know if you apply for
575
00:23:18,919 --> 00:23:20,360
pre-approve for a car subject to a
576
00:23:20,360 --> 00:23:22,440
particular car so then you need to get
577
00:23:22,440 --> 00:23:24,520
the asset and say Here's the actual
578
00:23:24,520 --> 00:23:26,279
asset that I'm buying can you now give
579
00:23:26,279 --> 00:23:28,440
me an unconditional approval or a for
580
00:23:28,440 --> 00:23:31,000
approval and then assuming that Stacks
581
00:23:31,000 --> 00:23:32,960
up then they'll give you the lot final
582
00:23:32,960 --> 00:23:35,159
approval or the formal final
583
00:23:35,159 --> 00:23:37,919
unconditional um and what was the other
584
00:23:37,919 --> 00:23:41,440
one you said pre-qualify so pre-qualify
585
00:23:41,440 --> 00:23:43,679
uh look I honestly that doesn't really
586
00:23:43,679 --> 00:23:47,200
get used that much in in mortgages
587
00:23:47,200 --> 00:23:48,679
definitely gets used a lot in the
588
00:23:48,679 --> 00:23:52,440
personal loan space and car car finance
589
00:23:52,440 --> 00:23:55,799
get pre-qualified and those are like
590
00:23:55,799 --> 00:23:58,159
before a pre-approval so before you even
591
00:23:58,159 --> 00:24:01,200
apply for the loan you can pre-qualify
592
00:24:01,200 --> 00:24:03,799
and that's by doing like a credit check
593
00:24:03,799 --> 00:24:05,880
or a soft credit check so they basically
594
00:24:05,880 --> 00:24:09,240
look at what your credit score is um
595
00:24:09,240 --> 00:24:10,520
sometimes they'll also do a bank
596
00:24:10,520 --> 00:24:13,360
statements integration so a lot of these
597
00:24:13,360 --> 00:24:16,880
finex and smaller lenders they'll
598
00:24:16,880 --> 00:24:20,679
they'll actually have H an algorithm a
599
00:24:20,679 --> 00:24:23,240
program that will actually scan your
600
00:24:23,240 --> 00:24:26,120
bank statements and automatically
601
00:24:26,120 --> 00:24:28,559
categorize them and it will flag
602
00:24:28,559 --> 00:24:30,600
anything that's negative like late
603
00:24:30,600 --> 00:24:33,520
payments you know um overdrawn fees
604
00:24:33,520 --> 00:24:36,880
overdrawn account um you know payday
605
00:24:36,880 --> 00:24:39,799
lenders um whatever it is the things
606
00:24:39,799 --> 00:24:41,600
that can be negative and I also check
607
00:24:41,600 --> 00:24:42,799
the salary is
608
00:24:42,799 --> 00:24:45,200
consistent um so it's not dropping and
609
00:24:45,200 --> 00:24:47,279
whatnot so that's where you can kind of
610
00:24:47,279 --> 00:24:50,279
get a pre-qualified loan because it will
611
00:24:50,279 --> 00:24:53,640
check that based on computer algorithm
612
00:24:53,640 --> 00:24:55,480
there's no human checking it there no
613
00:24:55,480 --> 00:24:57,080
person checking it and then once you're
614
00:24:57,080 --> 00:24:59,520
ready to actually apply usually it's
615
00:24:59,520 --> 00:25:00,720
easier if you've already been
616
00:25:00,720 --> 00:25:03,360
pre-qualified because then it's just
617
00:25:03,360 --> 00:25:06,480
verifying okay the bank semons was a
618
00:25:06,480 --> 00:25:08,960
program telling me yes okay it matches
619
00:25:08,960 --> 00:25:10,640
the same it looks good tick tick tick
620
00:25:10,640 --> 00:25:13,640
move on approved so it makes it easier
621
00:25:13,640 --> 00:25:14,960
but if there's
622
00:25:14,960 --> 00:25:17,520
no algorithm checking all that stuff
623
00:25:17,520 --> 00:25:19,520
pre-qualifying then you literally need a
624
00:25:19,520 --> 00:25:21,760
human to check it to go through the
625
00:25:21,760 --> 00:25:23,600
statements line by line to check the pay
626
00:25:23,600 --> 00:25:27,520
slips um so T takes more time and you
627
00:25:27,520 --> 00:25:30,200
know obviously error Big Data if you're
628
00:25:30,200 --> 00:25:31,440
looking at 12 months worth of bank
629
00:25:31,440 --> 00:25:33,399
statements person checking it could be
630
00:25:33,399 --> 00:25:36,320
tired right they might miss something um
631
00:25:36,320 --> 00:25:38,520
they might be in a bad mood whatever
632
00:25:38,520 --> 00:25:40,480
from the previous one so they might have
633
00:25:40,480 --> 00:25:42,520
some some some bias and like I don't
634
00:25:42,520 --> 00:25:44,000
like this so I'm going to decline it
635
00:25:44,000 --> 00:25:45,480
right so they're not looking at
636
00:25:45,480 --> 00:25:47,760
objectively so it's a fine balance for a
637
00:25:47,760 --> 00:25:49,600
lender because they want to lend money
638
00:25:49,600 --> 00:25:51,320
to make money but they don't want to
639
00:25:51,320 --> 00:25:52,960
take on too much risk to lend money to
640
00:25:52,960 --> 00:25:56,159
everyone so it's like they're saying yes
641
00:25:56,159 --> 00:25:58,279
whilst trying not to to say yes to
642
00:25:58,279 --> 00:26:00,679
everyone they're saying no while not
643
00:26:00,679 --> 00:26:03,279
trying to say no to everyone yeah it's I
644
00:26:03,279 --> 00:26:06,559
guess there can be that with humans like
645
00:26:06,559 --> 00:26:09,960
we do have unconscious bias as well like
646
00:26:09,960 --> 00:26:12,159
if you've like had a bad you're in a bad
647
00:26:12,159 --> 00:26:14,480
mood or you know things do happen during
648
00:26:14,480 --> 00:26:16,919
your day and you see someone's like he's
649
00:26:16,919 --> 00:26:18,159
always going to m [ __ ] McDonald's
650
00:26:18,159 --> 00:26:19,600
what's he going to McDonald's again for
651
00:26:19,600 --> 00:26:21,799
like he's like three times that
652
00:26:21,799 --> 00:26:26,600
day stff he's declined you know so
653
00:26:26,600 --> 00:26:29,159
yeah so when we're on I just we're on
654
00:26:29,159 --> 00:26:32,279
topic of like pre-approvals can you just
655
00:26:32,279 --> 00:26:34,240
explain like in residential property why
656
00:26:34,240 --> 00:26:36,360
you can get a pre-approval but with
657
00:26:36,360 --> 00:26:37,960
commercial property it's not really the
658
00:26:37,960 --> 00:26:39,720
same thing you don't get a pre-approval
659
00:26:39,720 --> 00:26:41,960
for a commercial
660
00:26:41,960 --> 00:26:46,039
property yeah okay so the main reason
661
00:26:46,039 --> 00:26:48,559
for residential uh that you can get a
662
00:26:48,559 --> 00:26:52,399
pre-approval is because there's certain
663
00:26:52,399 --> 00:26:55,159
simple rules that they can put in place
664
00:26:55,159 --> 00:26:58,520
to accept a property of security um it's
665
00:26:58,520 --> 00:27:01,799
not too complicated it's uh either an
666
00:27:01,799 --> 00:27:05,480
owner occupier or an investment it's
667
00:27:05,480 --> 00:27:09,480
either in a a desired location or it's
668
00:27:09,480 --> 00:27:12,600
not um of course if it doesn't fit the
669
00:27:12,600 --> 00:27:14,640
mold and it's different type whether
670
00:27:14,640 --> 00:27:18,520
it's you know um uh you know primary
671
00:27:18,520 --> 00:27:21,799
production you know rural um you know
672
00:27:21,799 --> 00:27:23,559
it's got an element of commercial into
673
00:27:23,559 --> 00:27:26,320
it then it's usually a blanket rule
674
00:27:26,320 --> 00:27:28,320
decline doesn't don't accept it it's not
675
00:27:28,320 --> 00:27:30,000
our type of security or it's too large
676
00:27:30,000 --> 00:27:33,760
whatever so a lot of it comes down to
677
00:27:33,760 --> 00:27:35,960
the actual individuals borrowing the
678
00:27:35,960 --> 00:27:40,200
money so because houses if they
679
00:27:40,200 --> 00:27:43,039
properties houses units whatever as long
680
00:27:43,039 --> 00:27:45,880
as they fit those particular parameters
681
00:27:45,880 --> 00:27:49,039
then it's going to be approved on the
682
00:27:49,039 --> 00:27:51,240
property they don't need to kind of dig
683
00:27:51,240 --> 00:27:53,440
too deep per property to figure out
684
00:27:53,440 --> 00:27:55,960
whether they'll lend the money the the
685
00:27:55,960 --> 00:27:58,080
the bigger credit decision comes down to
686
00:27:58,080 --> 00:27:59,919
the individuals applying to the loan or
687
00:27:59,919 --> 00:28:02,720
the guarantors um so their credit
688
00:28:02,720 --> 00:28:04,360
history like we talk about employment
689
00:28:04,360 --> 00:28:07,240
history um um the consistency of their
690
00:28:07,240 --> 00:28:10,279
income um all that sort of stuff that's
691
00:28:10,279 --> 00:28:11,919
that's how they decide so that's why
692
00:28:11,919 --> 00:28:13,320
they can give a pre-approval because the
693
00:28:13,320 --> 00:28:15,640
majority of the decision lies there but
694
00:28:15,640 --> 00:28:17,159
when you're buying
695
00:28:17,159 --> 00:28:19,440
commercial it's less reliant on the
696
00:28:19,440 --> 00:28:21,480
individuals that's why people set up
697
00:28:21,480 --> 00:28:23,960
spvs or special purpose Vehicles they
698
00:28:23,960 --> 00:28:26,279
set up trusts companies to own the
699
00:28:26,279 --> 00:28:29,240
assets you know it's and then that
700
00:28:29,240 --> 00:28:34,000
usually they um you know usually it's
701
00:28:34,000 --> 00:28:37,279
it's an investment but they're not
702
00:28:37,279 --> 00:28:38,919
needing to put so much of their own
703
00:28:38,919 --> 00:28:41,000
money to maintain the loan repayments
704
00:28:41,000 --> 00:28:42,360
right they're collecting rent from
705
00:28:42,360 --> 00:28:45,159
another tenant to cover that um unless
706
00:28:45,159 --> 00:28:47,159
it's an owner occupier right if you're
707
00:28:47,159 --> 00:28:48,559
if you're a business and you're trading
708
00:28:48,559 --> 00:28:50,720
from that from that um particular
709
00:28:50,720 --> 00:28:53,919
premise then yeah look the pre-approval
710
00:28:53,919 --> 00:28:56,320
would be probably in your favor because
711
00:28:56,320 --> 00:28:59,279
a lot of the decision is going to be on
712
00:28:59,279 --> 00:29:02,440
your ability to pay the loan but for an
713
00:29:02,440 --> 00:29:04,240
investment it's going to come down to
714
00:29:04,240 --> 00:29:08,039
the actual the asset so is it a riskier
715
00:29:08,039 --> 00:29:11,679
asset you know um is it a specialized
716
00:29:11,679 --> 00:29:14,640
asset or is it just a regular commercial
717
00:29:14,640 --> 00:29:17,240
property is it a you know office um is
718
00:29:17,240 --> 00:29:21,519
it is it industrial and or retail and
719
00:29:21,519 --> 00:29:24,640
then more importantly what are the lease
720
00:29:24,640 --> 00:29:26,799
terms who's the tenant that's actually
721
00:29:26,799 --> 00:29:28,960
renting this property and what's their
722
00:29:28,960 --> 00:29:33,200
history of paying their rent on time and
723
00:29:33,200 --> 00:29:36,279
their history in business so so like
724
00:29:36,279 --> 00:29:37,480
you're not going to know that if you
725
00:29:37,480 --> 00:29:38,840
apply for a pre-approval you don't know
726
00:29:38,840 --> 00:29:41,120
any of that stuff so in a way there's a
727
00:29:41,120 --> 00:29:43,120
term that it's not worth the paper it's
728
00:29:43,120 --> 00:29:45,240
written on have you heard that
729
00:29:45,240 --> 00:29:48,000
before well that's that's essentially
730
00:29:48,000 --> 00:29:50,200
what that is if you apply for pre prepro
731
00:29:50,200 --> 00:29:51,480
for commercial proper it's not worth the
732
00:29:51,480 --> 00:29:53,120
paper is written on doesn't mean
733
00:29:53,120 --> 00:29:54,799
anything because the moment you give
734
00:29:54,799 --> 00:29:56,760
them a property they'll like no doesn't
735
00:29:56,760 --> 00:29:59,440
so but I'm pre-approved so
736
00:29:59,440 --> 00:30:03,440
what right so um and especially if
737
00:30:03,440 --> 00:30:05,480
you're doing a Le stock loan right um
738
00:30:05,480 --> 00:30:07,640
these stock loans don't require anything
739
00:30:07,640 --> 00:30:10,240
to do with the individuals um they just
740
00:30:10,240 --> 00:30:12,200
they're there they prove their
741
00:30:12,200 --> 00:30:14,919
identity um but the approval is based on
742
00:30:14,919 --> 00:30:17,720
the on the lease right so that property
743
00:30:17,720 --> 00:30:19,440
is what's going to determine if it's
744
00:30:19,440 --> 00:30:21,720
going to be approved or not and the
745
00:30:21,720 --> 00:30:24,559
valuation as well that's another thing
746
00:30:24,559 --> 00:30:27,799
so residential lending they they can
747
00:30:27,799 --> 00:30:31,279
rely on avm's automatic valuation model
748
00:30:31,279 --> 00:30:32,360
desktop
749
00:30:32,360 --> 00:30:34,600
valuations so it's literally someone on
750
00:30:34,600 --> 00:30:36,080
the computer doing a quick search
751
00:30:36,080 --> 00:30:40,840
checking recent sales and uh curbside so
752
00:30:40,840 --> 00:30:42,320
someone goes out takes a photo from the
753
00:30:42,320 --> 00:30:43,840
outside makees sure the house actually
754
00:30:43,840 --> 00:30:46,440
exists it's not knocked down or whatever
755
00:30:46,440 --> 00:30:48,679
um and then they do a bit of data search
756
00:30:48,679 --> 00:30:51,039
so they don't even those are less costly
757
00:30:51,039 --> 00:30:52,960
they they're much faster to determine
758
00:30:52,960 --> 00:30:54,760
some of them aren't even like there's no
759
00:30:54,760 --> 00:30:58,039
human involved at all like the AVM
760
00:30:58,039 --> 00:31:00,240
um and then there's a long form
761
00:31:00,240 --> 00:31:02,159
valuation so non-bank lenders will want
762
00:31:02,159 --> 00:31:04,880
an actual long long form sorry short
763
00:31:04,880 --> 00:31:07,360
form valuation so it's like four pages
764
00:31:07,360 --> 00:31:09,480
whatever but it still requires a full
765
00:31:09,480 --> 00:31:11,159
inspection and that can cost a few
766
00:31:11,159 --> 00:31:13,200
hundred bucks but for commercial
767
00:31:13,200 --> 00:31:15,279
property it's always a long form which
768
00:31:15,279 --> 00:31:18,080
means it's like 18 20 Pages there's a
769
00:31:18,080 --> 00:31:19,720
lot more research and data that goes
770
00:31:19,720 --> 00:31:21,840
into it to determine certain things and
771
00:31:21,840 --> 00:31:23,799
it's not just comparable sayings right
772
00:31:23,799 --> 00:31:26,039
it's cap rates it's cost per square
773
00:31:26,039 --> 00:31:28,720
meter um and sometimes just getting the
774
00:31:28,720 --> 00:31:30,960
comparibles is really difficult because
775
00:31:30,960 --> 00:31:32,840
um there haven't been recent sales of
776
00:31:32,840 --> 00:31:36,120
that type of property um the net leible
777
00:31:36,120 --> 00:31:38,200
area they check so there's quite more
778
00:31:38,200 --> 00:31:40,200
it's quite a lot more information that
779
00:31:40,200 --> 00:31:43,639
goes into that and the banks rely on
780
00:31:43,639 --> 00:31:45,639
this the lenders rely on this in order
781
00:31:45,639 --> 00:31:47,679
to make their their decision to lend on
782
00:31:47,679 --> 00:31:50,039
on it so that's why people typically
783
00:31:50,039 --> 00:31:52,200
won't apply for a pre we run the numbers
784
00:31:52,200 --> 00:31:55,320
we make sure that that hypothetical rent
785
00:31:55,320 --> 00:31:57,799
will allow serviceability
786
00:31:57,799 --> 00:31:59,320
and then if that ticks and we know that
787
00:31:59,320 --> 00:32:01,600
the credit history is good then there's
788
00:32:01,600 --> 00:32:03,320
no point in applying for pre-approval
789
00:32:03,320 --> 00:32:04,480
and that's why you always have to have a
790
00:32:04,480 --> 00:32:06,240
finance Clause right so if you buy
791
00:32:06,240 --> 00:32:07,840
commercial property it's not like
792
00:32:07,840 --> 00:32:09,799
residential where you can go in you know
793
00:32:09,799 --> 00:32:12,080
wave your cooling off no Finance it's
794
00:32:12,080 --> 00:32:14,120
very risky if you do that because
795
00:32:14,120 --> 00:32:15,399
there's not many lenders that will do
796
00:32:15,399 --> 00:32:16,639
the finance for you and the ones that
797
00:32:16,639 --> 00:32:18,360
will may not give you the most favorable
798
00:32:18,360 --> 00:32:21,399
terms and so having a finance Clause
799
00:32:21,399 --> 00:32:22,440
will allow you to get out of the
800
00:32:22,440 --> 00:32:24,200
contract in in the event that you don't
801
00:32:24,200 --> 00:32:25,919
get the financed uh terms that you're
802
00:32:25,919 --> 00:32:28,720
after loan amount interest rate um
803
00:32:28,720 --> 00:32:31,480
whatever it is fees or get declined
804
00:32:31,480 --> 00:32:32,799
right so you can still get out and get
805
00:32:32,799 --> 00:32:35,159
your deposit back whereas residential
806
00:32:35,159 --> 00:32:37,360
many people commit because they know
807
00:32:37,360 --> 00:32:39,000
they're already pre-approved and then
808
00:32:39,000 --> 00:32:40,760
they can just you know find a good
809
00:32:40,760 --> 00:32:43,159
property that's nothing you know out of
810
00:32:43,159 --> 00:32:45,000
the norm and it'll be
811
00:32:45,000 --> 00:32:47,559
approved that yeah does that all make
812
00:32:47,559 --> 00:32:49,480
sense or yeah definitely makes sense and
813
00:32:49,480 --> 00:32:51,639
and the finance Clause doesn't actually
814
00:32:51,639 --> 00:32:52,960
have to be separate from the due
815
00:32:52,960 --> 00:32:55,200
diligence cause I think we like to
816
00:32:55,200 --> 00:32:57,279
separate it sometimes to make it more
817
00:32:57,279 --> 00:33:01,159
clear for the the opposing party um but
818
00:33:01,159 --> 00:33:04,159
in in essence the due diligence Finance
819
00:33:04,159 --> 00:33:05,480
getting the Finance on the property
820
00:33:05,480 --> 00:33:07,679
should be part of that um but sometimes
821
00:33:07,679 --> 00:33:10,159
we um we have a due diligence clause and
822
00:33:10,159 --> 00:33:13,679
then we also have uh a finance Clause um
823
00:33:13,679 --> 00:33:15,399
as well just to make it a bit more clear
824
00:33:15,399 --> 00:33:17,639
I think maybe for the for the for the
825
00:33:17,639 --> 00:33:19,799
buyer and the seller probably um while
826
00:33:19,799 --> 00:33:22,600
we do that but it's is quite interesting
827
00:33:22,600 --> 00:33:25,480
so mate some of the red flags or common
828
00:33:25,480 --> 00:33:27,960
mistakes individuals make on their
829
00:33:27,960 --> 00:33:30,600
application um that can delay the
830
00:33:30,600 --> 00:33:32,840
approval process what are they and how
831
00:33:32,840 --> 00:33:35,519
can we and how can we avoid
832
00:33:35,519 --> 00:33:39,240
them so probably a lot of it to do with
833
00:33:39,240 --> 00:33:43,399
debts and knowing all of them so people
834
00:33:43,399 --> 00:33:45,399
apply for credit cards they forget you
835
00:33:45,399 --> 00:33:47,159
know they get buy now pay later they
836
00:33:47,159 --> 00:33:50,200
forget they don't consider hex debt an
837
00:33:50,200 --> 00:33:51,720
actual debt so they don't type it in
838
00:33:51,720 --> 00:33:54,720
when they're filling out their fact fine
839
00:33:54,720 --> 00:33:57,519
um this stuff can actually slow down
840
00:33:57,519 --> 00:34:01,080
applications because borrowing capacity
841
00:34:01,080 --> 00:34:04,559
or capacity to repay that's one of the
842
00:34:04,559 --> 00:34:07,360
fundamental things that if not the most
843
00:34:07,360 --> 00:34:09,199
important thing when any lender is
844
00:34:09,199 --> 00:34:11,040
approving a loan do you have the
845
00:34:11,040 --> 00:34:13,679
capacity to repay so any debts that you
846
00:34:13,679 --> 00:34:17,199
have um need to be accounted
847
00:34:17,199 --> 00:34:21,280
for and a lot of the time it's hard to
848
00:34:21,280 --> 00:34:24,679
get the information as easy that's
849
00:34:24,679 --> 00:34:26,239
probably one of the one of the more
850
00:34:26,239 --> 00:34:27,520
challenging things if someone's got a
851
00:34:27,520 --> 00:34:28,760
lot of
852
00:34:28,760 --> 00:34:33,040
loans and we need to know what the loan
853
00:34:33,040 --> 00:34:35,760
limit is what the loan balance is what
854
00:34:35,760 --> 00:34:38,760
the interest rate is what the repayments
855
00:34:38,760 --> 00:34:41,480
are how long the loan term is what the
856
00:34:41,480 --> 00:34:45,079
maturity date is um if it's fixed when
857
00:34:45,079 --> 00:34:46,440
it's coming off or fixed if it's
858
00:34:46,440 --> 00:34:47,599
interest only when it's coming off
859
00:34:47,599 --> 00:34:50,159
interest only that information sometimes
860
00:34:50,159 --> 00:34:52,599
is really hard to get for multiple loans
861
00:34:52,599 --> 00:34:54,760
or multiple loan splits so some people
862
00:34:54,760 --> 00:34:56,960
got five loan splits on one loan and and
863
00:34:56,960 --> 00:34:59,400
then they got five loans so that's a lot
864
00:34:59,400 --> 00:35:02,440
of loan splits and and each of them we
865
00:35:02,440 --> 00:35:04,480
need we need that information for all of
866
00:35:04,480 --> 00:35:07,000
them so getting that sometimes is tricky
867
00:35:07,000 --> 00:35:08,200
and if they're with like a smaller
868
00:35:08,200 --> 00:35:10,480
lender uh I experienced this recently
869
00:35:10,480 --> 00:35:11,960
actually with with a client that is with
870
00:35:11,960 --> 00:35:14,720
a lender that's very uncommon they're a
871
00:35:14,720 --> 00:35:17,200
Ukrainian bank and getting that
872
00:35:17,200 --> 00:35:18,920
information was really really tricky so
873
00:35:18,920 --> 00:35:21,800
we went backwards and forwards for like
874
00:35:21,800 --> 00:35:24,640
two weeks trying to get it
875
00:35:24,640 --> 00:35:27,359
and yeah and so if you have that stuff
876
00:35:27,359 --> 00:35:29,560
up front uh and a lot of time you can
877
00:35:29,560 --> 00:35:31,280
get it from net banking like you just go
878
00:35:31,280 --> 00:35:33,160
on to your you know your loan summary
879
00:35:33,160 --> 00:35:35,560
page you can do a screenshot of that on
880
00:35:35,560 --> 00:35:38,520
your phone app or on the computer and
881
00:35:38,520 --> 00:35:39,680
then you provide that along with the
882
00:35:39,680 --> 00:35:41,680
statements getting the transactional
883
00:35:41,680 --> 00:35:43,320
statement history for the most recent
884
00:35:43,320 --> 00:35:46,160
month can be tricky as well and so like
885
00:35:46,160 --> 00:35:47,960
at the moment we're in
886
00:35:47,960 --> 00:35:50,280
October and if someone downloaded the
887
00:35:50,280 --> 00:35:51,760
most recent loan statement it will
888
00:35:51,760 --> 00:35:53,680
probably get them up to the end of June
889
00:35:53,680 --> 00:35:55,800
right um beginning of July but that
890
00:35:55,800 --> 00:35:57,119
doesn't cover it what happens to the
891
00:35:57,119 --> 00:35:59,880
last four months so that so they need to
892
00:35:59,880 --> 00:36:03,480
they need to extract um the transaction
893
00:36:03,480 --> 00:36:05,040
history to show that they rep payments
894
00:36:05,040 --> 00:36:06,800
are up to date to show what the current
895
00:36:06,800 --> 00:36:08,200
balance is and all that other
896
00:36:08,200 --> 00:36:10,599
information I just I mentioned earlier
897
00:36:10,599 --> 00:36:12,760
so then to get that they need to extract
898
00:36:12,760 --> 00:36:16,400
it as a PDF so I always find it funny
899
00:36:16,400 --> 00:36:18,800
when somebody when I ask for these um
900
00:36:18,800 --> 00:36:20,520
dates and somebody sends me a
901
00:36:20,520 --> 00:36:23,359
spreadsheet a CSV I'm like what am I
902
00:36:23,359 --> 00:36:26,560
supposed to do with that like do like do
903
00:36:26,560 --> 00:36:28,359
you really think A banks go to look at a
904
00:36:28,359 --> 00:36:30,200
CSV and say okay that must be the
905
00:36:30,200 --> 00:36:32,400
balance like you can literally go in and
906
00:36:32,400 --> 00:36:36,640
type whatever you want in there like you
907
00:36:36,640 --> 00:36:39,920
know yeah but sometimes when you go into
908
00:36:39,920 --> 00:36:42,400
a net banking and you say extract
909
00:36:42,400 --> 00:36:45,000
there's no option say print the PDF so
910
00:36:45,000 --> 00:36:47,359
that's all you can get so I understand
911
00:36:47,359 --> 00:36:50,119
the you know why people will send that
912
00:36:50,119 --> 00:36:52,079
but logically it just doesn't make sense
913
00:36:52,079 --> 00:36:55,599
doesn't verify anything right um so yeah
914
00:36:55,599 --> 00:36:57,200
that's that's something that you know
915
00:36:57,200 --> 00:37:00,480
can definitely slow down applications
916
00:37:00,480 --> 00:37:02,480
um uh what
917
00:37:02,480 --> 00:37:06,520
else documents yeah look tax returns
918
00:37:06,520 --> 00:37:08,880
definitely that's something um if if
919
00:37:08,880 --> 00:37:11,599
you've got if you've got multiple
920
00:37:11,599 --> 00:37:14,440
entities or even one if you're a company
921
00:37:14,440 --> 00:37:16,040
you know that's you need the last two
922
00:37:16,040 --> 00:37:18,240
years worth and you may not have that at
923
00:37:18,240 --> 00:37:20,520
hand your accountant hasn't so then now
924
00:37:20,520 --> 00:37:21,599
you're waiting for the accountant to
925
00:37:21,599 --> 00:37:24,000
send it um and then the accter might
926
00:37:24,000 --> 00:37:27,599
take a while so um having that in nice
927
00:37:27,599 --> 00:37:29,680
one clean folder ready to go I think
928
00:37:29,680 --> 00:37:31,280
that would be important so that when
929
00:37:31,280 --> 00:37:33,640
you're ready to apply just upload it or
930
00:37:33,640 --> 00:37:36,079
email it or whatever it is and and your
931
00:37:36,079 --> 00:37:38,119
atto notice of assessment they used to
932
00:37:38,119 --> 00:37:40,520
post it in the mail now they just make
933
00:37:40,520 --> 00:37:43,000
it available in my gov so just log in go
934
00:37:43,000 --> 00:37:45,960
to ATO portal and just download it um
935
00:37:45,960 --> 00:37:50,119
yeah having that ready and what else
936
00:37:50,119 --> 00:37:52,000
yeah I think in general just filling out
937
00:37:52,000 --> 00:37:54,839
the fact find so you know every broker's
938
00:37:54,839 --> 00:37:56,400
got a different process on getting a
939
00:37:56,400 --> 00:37:58,720
fact fact find and a fact find is just
940
00:37:58,720 --> 00:38:01,280
what's your you know um address history
941
00:38:01,280 --> 00:38:03,760
employment histories asset liabilities
942
00:38:03,760 --> 00:38:06,319
expenses and um your needs and
943
00:38:06,319 --> 00:38:08,200
objectives like this is a requirement
944
00:38:08,200 --> 00:38:11,520
for every application and how to capture
945
00:38:11,520 --> 00:38:13,680
that it's always a tricky thing for
946
00:38:13,680 --> 00:38:16,160
every every broker every customer um not
947
00:38:16,160 --> 00:38:18,480
many people like to fill out long forms
948
00:38:18,480 --> 00:38:21,040
um I get that but a broker doesn't have
949
00:38:21,040 --> 00:38:22,760
the access to that information you know
950
00:38:22,760 --> 00:38:24,280
unless you want them to sit on the phone
951
00:38:24,280 --> 00:38:26,119
with you for an hour or half an hour
952
00:38:26,119 --> 00:38:28,920
asking question by question it's I think
953
00:38:28,920 --> 00:38:30,520
that's counterproductive I think you're
954
00:38:30,520 --> 00:38:31,880
better off doing it on your own time
955
00:38:31,880 --> 00:38:33,960
when you got some free time H and just
956
00:38:33,960 --> 00:38:35,640
just prepareing yourself mentally not
957
00:38:35,640 --> 00:38:37,640
don't no distractions and just say all
958
00:38:37,640 --> 00:38:38,720
right I'm going to fill this form out
959
00:38:38,720 --> 00:38:41,160
from start to finish upload all the
960
00:38:41,160 --> 00:38:43,520
documents and I'm done you know not
961
00:38:43,520 --> 00:38:45,640
dragging out over a week or a few days
962
00:38:45,640 --> 00:38:46,720
forgetting about it and then
963
00:38:46,720 --> 00:38:49,119
procrastinating it um because that can
964
00:38:49,119 --> 00:38:52,079
also slow things down for everyone um
965
00:38:52,079 --> 00:38:53,839
and then last minute if if it's for a
966
00:38:53,839 --> 00:38:55,440
purchase and you got Finance due and now
967
00:38:55,440 --> 00:38:57,240
everyone's rushing last minute because
968
00:38:57,240 --> 00:39:00,359
they didn't get the information up
969
00:39:01,400 --> 00:39:03,760
front yeah 100% I mean you have a great
970
00:39:03,760 --> 00:39:05,920
online portal um I think when I was
971
00:39:05,920 --> 00:39:07,480
filling out Finance when you doing
972
00:39:07,480 --> 00:39:10,119
refinancing for me I think it took
973
00:39:10,119 --> 00:39:12,119
probably about an hour hour and a half
974
00:39:12,119 --> 00:39:14,079
just to to get scan all the documents
975
00:39:14,079 --> 00:39:16,640
and put everything in there um but after
976
00:39:16,640 --> 00:39:18,400
that there was you know very smooth
977
00:39:18,400 --> 00:39:19,720
process I didn't need to put anything
978
00:39:19,720 --> 00:39:22,280
else in there and and it also probably
979
00:39:22,280 --> 00:39:24,839
slowed it down um because the property
980
00:39:24,839 --> 00:39:26,640
that we were refinancing I owned that
981
00:39:26,640 --> 00:39:29,119
with my my um my fiance as well so we
982
00:39:29,119 --> 00:39:30,760
needed a little bit documentation from
983
00:39:30,760 --> 00:39:33,280
her um that actually brings me to my
984
00:39:33,280 --> 00:39:35,960
next point so when you're co-signing a
985
00:39:35,960 --> 00:39:39,079
loan with someone does that slow things
986
00:39:39,079 --> 00:39:41,280
down how does the bank view co-signing
987
00:39:41,280 --> 00:39:44,200
loans yeah it can slow things down
988
00:39:44,200 --> 00:39:46,160
because you need that fact find
989
00:39:46,160 --> 00:39:48,560
information for for everyone not every
990
00:39:48,560 --> 00:39:51,880
borrower or every guarantor so and if
991
00:39:51,880 --> 00:39:54,079
you don't have that information at hand
992
00:39:54,079 --> 00:39:56,240
so say you're filling out for your wife
993
00:39:56,240 --> 00:39:57,599
and and you don't know when she started
994
00:39:57,599 --> 00:39:59,520
her job you don't know who her boss is
995
00:39:59,520 --> 00:40:01,520
the contact number so you need that
996
00:40:01,520 --> 00:40:03,599
information um so you need to ask her
997
00:40:03,599 --> 00:40:05,240
when you're filling that form out or she
998
00:40:05,240 --> 00:40:07,280
needs to log in separately and fill that
999
00:40:07,280 --> 00:40:09,200
out for herself so now you need to
1000
00:40:09,200 --> 00:40:10,800
navigate that so you're both available
1001
00:40:10,800 --> 00:40:12,880
to come up with those details and then
1002
00:40:12,880 --> 00:40:14,640
when you're estimating your expenses
1003
00:40:14,640 --> 00:40:16,040
usually you have one person in the
1004
00:40:16,040 --> 00:40:17,760
household that knows that and the other
1005
00:40:17,760 --> 00:40:19,400
one's got no idea other one just pays
1006
00:40:19,400 --> 00:40:22,079
and like got no idea what you spend yeah
1007
00:40:22,079 --> 00:40:24,760
so then so then you need to navigate
1008
00:40:24,760 --> 00:40:26,760
that right uh cuz some of the cost you
1009
00:40:26,760 --> 00:40:28,359
can estimate other ones they are what
1010
00:40:28,359 --> 00:40:30,440
they are you know fixed cost bills and
1011
00:40:30,440 --> 00:40:31,640
whatnot you know what they are you just
1012
00:40:31,640 --> 00:40:33,359
have to dig them up if you don't have it
1013
00:40:33,359 --> 00:40:35,720
readily accessible takes your time or
1014
00:40:35,720 --> 00:40:37,400
you need to check with the with the
1015
00:40:37,400 --> 00:40:40,079
other co uh co-borrower that actually
1016
00:40:40,079 --> 00:40:41,640
knows that information or they the ones
1017
00:40:41,640 --> 00:40:42,880
that store all the
1018
00:40:42,880 --> 00:40:46,319
paperwork um and then you know when it
1019
00:40:46,319 --> 00:40:50,359
comes down to iding as well so if you're
1020
00:40:50,359 --> 00:40:52,560
married and they've had a change of name
1021
00:40:52,560 --> 00:40:55,000
you know that can be a I've experienced
1022
00:40:55,000 --> 00:40:58,040
that as a as a delay many times where
1023
00:40:58,040 --> 00:40:59,240
you know they've changed their name but
1024
00:40:59,240 --> 00:41:01,079
they haven't updated their passport and
1025
00:41:01,079 --> 00:41:02,000
because they haven't updated their
1026
00:41:02,000 --> 00:41:03,520
passport the bank's like well what's
1027
00:41:03,520 --> 00:41:05,359
their actual legal name well the legal
1028
00:41:05,359 --> 00:41:07,160
name is is the married name okay well
1029
00:41:07,160 --> 00:41:08,680
where's the evidence and they I say I
1030
00:41:08,680 --> 00:41:10,040
need a marriage certificate and then
1031
00:41:10,040 --> 00:41:11,480
they send me the ceremonial marriage
1032
00:41:11,480 --> 00:41:13,079
certificate which doesn't mean anything
1033
00:41:13,079 --> 00:41:14,880
that's just that's just a celebrate or
1034
00:41:14,880 --> 00:41:16,520
whatever so I need the one that's you
1035
00:41:16,520 --> 00:41:18,440
know transferred over at the department
1036
00:41:18,440 --> 00:41:20,240
of birth and marriages and then
1037
00:41:20,240 --> 00:41:21,319
sometimes they don't have it so then
1038
00:41:21,319 --> 00:41:23,319
they have to go and apply for it get it
1039
00:41:23,319 --> 00:41:26,880
so that's a mission um and you know
1040
00:41:26,880 --> 00:41:28,839
middle names so sometimes people remove
1041
00:41:28,839 --> 00:41:30,119
their middle name from their driver's
1042
00:41:30,119 --> 00:41:31,800
license but it's on the passport or it's
1043
00:41:31,800 --> 00:41:33,480
on the Medicare whatever so now we have
1044
00:41:33,480 --> 00:41:35,880
to find out what that is have their
1045
00:41:35,880 --> 00:41:38,480
birth certificate so it's just got to be
1046
00:41:38,480 --> 00:41:40,319
consistent if your name is the same on
1047
00:41:40,319 --> 00:41:43,400
everything make it nice and easy uh but
1048
00:41:43,400 --> 00:41:46,119
general rule of thumb your legal name
1049
00:41:46,119 --> 00:41:47,960
will be your passport and your birth
1050
00:41:47,960 --> 00:41:49,680
certificate everything else you can
1051
00:41:49,680 --> 00:41:51,720
change you can tell the license I I
1052
00:41:51,720 --> 00:41:53,359
don't want to have this you know make my
1053
00:41:53,359 --> 00:41:55,160
middle name my my first name blah blah
1054
00:41:55,160 --> 00:41:58,359
blah like but and then and then change
1055
00:41:58,359 --> 00:42:00,040
of name is obviously the next thing that
1056
00:42:00,040 --> 00:42:01,680
can can Trump that if you've changed
1057
00:42:01,680 --> 00:42:03,640
your name legally at Depart bth of
1058
00:42:03,640 --> 00:42:06,560
marriages then we just need a copy of
1059
00:42:06,560 --> 00:42:08,240
that um and then we can send it to the
1060
00:42:08,240 --> 00:42:10,680
bank and everyone's
1061
00:42:10,680 --> 00:42:13,480
happy so just to confirm your advice
1062
00:42:13,480 --> 00:42:16,119
your advice was if you want to speed up
1063
00:42:16,119 --> 00:42:19,119
your uh mortgage application don't get
1064
00:42:19,119 --> 00:42:22,040
married and make it a lot faster process
1065
00:42:22,040 --> 00:42:23,599
so you just have one legal name don't
1066
00:42:23,599 --> 00:42:25,920
even have a partner don't even coign so
1067
00:42:25,920 --> 00:42:28,520
don't have a partner don't cosign don't
1068
00:42:28,520 --> 00:42:29,880
get married that was the advice that
1069
00:42:29,880 --> 00:42:31,480
will make it easier to get the loan
1070
00:42:31,480 --> 00:42:34,760
approved just just the m the m thing is
1071
00:42:34,760 --> 00:42:38,880
earn more income like you are two
1072
00:42:39,599 --> 00:42:42,359
people then you can keep borrowing just
1073
00:42:42,359 --> 00:42:45,079
joking yeah yeah just kidding that's
1074
00:42:45,079 --> 00:42:46,920
funny yeah just joke get married if
1075
00:42:46,920 --> 00:42:49,599
you'd like to um yeah yeah and if you
1076
00:42:49,599 --> 00:42:50,520
yeah if you want to change your name
1077
00:42:50,520 --> 00:42:52,040
that's fine just change it everywhere
1078
00:42:52,040 --> 00:42:53,319
and make sure it's all consistent on
1079
00:42:53,319 --> 00:42:56,040
your documents then it'll fly through
1080
00:42:56,040 --> 00:42:57,119
yeah
1081
00:42:57,119 --> 00:42:59,520
yeah so mate can you just give us a like
1082
00:42:59,520 --> 00:43:02,280
a rundown of like how like external
1083
00:43:02,280 --> 00:43:04,839
factors like economic factors like such
1084
00:43:04,839 --> 00:43:08,720
as inflation um economic downturns like
1085
00:43:08,720 --> 00:43:11,520
can really impact the Loan Approval Pro
1086
00:43:11,520 --> 00:43:13,119
process as
1087
00:43:13,119 --> 00:43:18,079
well yeah so I mean everyone who was I
1088
00:43:18,079 --> 00:43:20,440
guess an adult through the global
1089
00:43:20,440 --> 00:43:23,119
financial crisis would know that during
1090
00:43:23,119 --> 00:43:26,800
that period of time you know 2008 till
1091
00:43:26,800 --> 00:43:28,240
maybe
1092
00:43:28,240 --> 00:43:30,640
2012 I'd say for that period of time
1093
00:43:30,640 --> 00:43:33,599
lending was was really difficult the the
1094
00:43:33,599 --> 00:43:36,760
rules around it were were changing
1095
00:43:36,760 --> 00:43:38,319
things were getting more strict
1096
00:43:38,319 --> 00:43:41,920
requirements were higher uh capacity to
1097
00:43:41,920 --> 00:43:45,400
repay requirements were similar to now
1098
00:43:45,400 --> 00:43:49,440
um rates were Rising um so during a
1099
00:43:49,440 --> 00:43:50,720
periods like
1100
00:43:50,720 --> 00:43:53,920
that liquidity in the market is is much
1101
00:43:53,920 --> 00:43:56,720
less of it much less available capital
1102
00:43:56,720 --> 00:43:58,839
so then they have to be much more I
1103
00:43:58,839 --> 00:44:02,400
guess diligent in who they lend money to
1104
00:44:02,400 --> 00:44:05,359
and because the risks are also high in
1105
00:44:05,359 --> 00:44:08,400
terms of uh High defaults then they also
1106
00:44:08,400 --> 00:44:11,240
need to start checking uh extra
1107
00:44:11,240 --> 00:44:14,079
carefully that people's information is
1108
00:44:14,079 --> 00:44:16,119
true and correct and it's not fraudulent
1109
00:44:16,119 --> 00:44:18,520
you know you know what do they say uh
1110
00:44:18,520 --> 00:44:22,440
desperate people do desperate things um
1111
00:44:22,440 --> 00:44:24,200
and desperate times call for desperate
1112
00:44:24,200 --> 00:44:26,319
measures right sort of similar thing
1113
00:44:26,319 --> 00:44:27,920
where so they have to be aware of that
1114
00:44:27,920 --> 00:44:29,680
right have to be aware of people that
1115
00:44:29,680 --> 00:44:32,880
are doing things deliberately to deceive
1116
00:44:32,880 --> 00:44:34,280
and to to cheat and they have to make
1117
00:44:34,280 --> 00:44:35,599
sure that they they're not allowing
1118
00:44:35,599 --> 00:44:37,559
stuff like to go through and they have
1119
00:44:37,559 --> 00:44:39,280
to look for the ones that are are
1120
00:44:39,280 --> 00:44:40,599
actually creditworthy because there are
1121
00:44:40,599 --> 00:44:42,079
going to be people out there that
1122
00:44:42,079 --> 00:44:43,280
regardless of what's going on in the
1123
00:44:43,280 --> 00:44:45,160
economy they they they're still earning
1124
00:44:45,160 --> 00:44:47,480
well they've got cash reserves and they
1125
00:44:47,480 --> 00:44:49,319
can still make moves so those are the
1126
00:44:49,319 --> 00:44:51,400
ones that lenders and Banks want to to
1127
00:44:51,400 --> 00:44:54,520
lend money to um and it's obviously
1128
00:44:54,520 --> 00:44:56,800
going to be a premium so it's usually
1129
00:44:56,800 --> 00:44:59,359
higher interest rates um risk fees and
1130
00:44:59,359 --> 00:45:02,079
things like that um and also Mark
1131
00:45:02,079 --> 00:45:04,800
players in the market drop out so
1132
00:45:04,800 --> 00:45:06,520
there's been lenders and banks that have
1133
00:45:06,520 --> 00:45:08,440
literally stopped lending they've said
1134
00:45:08,440 --> 00:45:09,960
no more we're
1135
00:45:09,960 --> 00:45:13,280
done and you know a recent example of
1136
00:45:13,280 --> 00:45:15,800
that even this in this current time is
1137
00:45:15,800 --> 00:45:17,880
is Virgin money you know virgin money is
1138
00:45:17,880 --> 00:45:21,440
owned by Bank of Queensland and out of
1139
00:45:21,440 --> 00:45:25,040
nowhere they uh said we're no longer
1140
00:45:25,040 --> 00:45:28,040
Lending money we like oh that's that
1141
00:45:28,040 --> 00:45:30,520
came a bit of a shock um and bank bank
1142
00:45:30,520 --> 00:45:33,760
also bought me me Bank as well so they
1143
00:45:33,760 --> 00:45:35,319
they're maintaining the me Bank brand
1144
00:45:35,319 --> 00:45:37,440
and the bank of Queensland brand but no
1145
00:45:37,440 --> 00:45:40,319
more new Landing for Virgin money right
1146
00:45:40,319 --> 00:45:42,680
so that's a resource so they're cutting
1147
00:45:42,680 --> 00:45:44,520
back and now that's that's less money
1148
00:45:44,520 --> 00:45:47,800
available less competition whatnot um
1149
00:45:47,800 --> 00:45:50,680
and and an even more recent example and
1150
00:45:50,680 --> 00:45:52,000
I'm letting you know Andrew because we
1151
00:45:52,000 --> 00:45:53,400
haven't actually caught up since this
1152
00:45:53,400 --> 00:45:56,760
but about a week and a half ago Adelaide
1153
00:45:56,760 --> 00:45:59,119
Bank who's owned by Bendigo Bank pulled
1154
00:45:59,119 --> 00:46:00,960
out of the commercial Landing Market oh
1155
00:46:00,960 --> 00:46:03,880
wow and and that's that's really
1156
00:46:03,880 --> 00:46:05,440
annoying because they were my go-to
1157
00:46:05,440 --> 00:46:08,559
lender for many reasons uh so moving
1158
00:46:08,559 --> 00:46:10,880
forward I can't use them anymore uh and
1159
00:46:10,880 --> 00:46:12,480
no borrowers can access their their
1160
00:46:12,480 --> 00:46:16,400
products anymore um so I don't know the
1161
00:46:16,400 --> 00:46:19,440
exact cause of that it could have could
1162
00:46:19,440 --> 00:46:21,000
could be with the economy but also could
1163
00:46:21,000 --> 00:46:22,400
be because they're merging the brand
1164
00:46:22,400 --> 00:46:24,240
with Bendigo and that's probably trying
1165
00:46:24,240 --> 00:46:26,720
to consolidate the products and system
1166
00:46:26,720 --> 00:46:30,160
so um but yeah that's obviously an
1167
00:46:30,160 --> 00:46:32,720
impact so you don't ever know that this
1168
00:46:32,720 --> 00:46:34,359
bank that you go with this lender you go
1169
00:46:34,359 --> 00:46:36,920
with this go is going to be around so
1170
00:46:36,920 --> 00:46:38,920
you can you think they are and you you
1171
00:46:38,920 --> 00:46:40,680
proceed like like like everything's
1172
00:46:40,680 --> 00:46:42,119
normal and then all of a sudden at any
1173
00:46:42,119 --> 00:46:43,440
given time they can just pull out of the
1174
00:46:43,440 --> 00:46:46,760
market so having options is always
1175
00:46:46,760 --> 00:46:50,599
important to to sort of shop around and
1176
00:46:50,599 --> 00:46:52,760
be you know have backups and go to
1177
00:46:52,760 --> 00:46:54,480
different lenders that will continue
1178
00:46:54,480 --> 00:46:56,000
lending of course the big four will
1179
00:46:56,000 --> 00:46:58,520
probably not go anywhere but they're
1180
00:46:58,520 --> 00:47:00,240
they're the hardest to apply for loans
1181
00:47:00,240 --> 00:47:02,760
with and they're the probably the most
1182
00:47:02,760 --> 00:47:04,640
um sometimes the most expensive
1183
00:47:04,640 --> 00:47:06,520
depending on the type of transaction as
1184
00:47:06,520 --> 00:47:09,839
well but the you know I think combank
1185
00:47:09,839 --> 00:47:13,240
recorded 10 billion do in profit like so
1186
00:47:13,240 --> 00:47:16,520
they're not going anywhere anytime soon
1187
00:47:16,520 --> 00:47:19,480
um but even then they're cutting they're
1188
00:47:19,480 --> 00:47:21,400
cutting cost as well right there's a
1189
00:47:21,400 --> 00:47:24,680
there's a new movement to to Automation
1190
00:47:24,680 --> 00:47:28,000
and to AI so because of that there's
1191
00:47:28,000 --> 00:47:31,319
going to be more and more jobs lost more
1192
00:47:31,319 --> 00:47:33,800
staff that you know jobs that don't need
1193
00:47:33,800 --> 00:47:35,720
to have people to fill them anymore it's
1194
00:47:35,720 --> 00:47:37,640
going to be computer programs that do a
1195
00:47:37,640 --> 00:47:40,880
lot of this stuff and you know how that
1196
00:47:40,880 --> 00:47:43,400
will affect the lending environment well
1197
00:47:43,400 --> 00:47:46,559
I guess only time will tell but I think
1198
00:47:46,559 --> 00:47:47,720
it'll have to be more and more
1199
00:47:47,720 --> 00:47:49,760
transparent more than anything else
1200
00:47:49,760 --> 00:47:52,680
because in order to make you know
1201
00:47:52,680 --> 00:47:54,880
decisions from data well the data needs
1202
00:47:54,880 --> 00:47:58,480
to come through in its raw and true form
1203
00:47:58,480 --> 00:48:01,319
and you can't manipulate it you can't
1204
00:48:01,319 --> 00:48:03,200
you know not disclose things you kind of
1205
00:48:03,200 --> 00:48:05,440
just say yep here it is and am I credit
1206
00:48:05,440 --> 00:48:08,319
worthy right so that will that will have
1207
00:48:08,319 --> 00:48:09,880
U that can speed things up for people
1208
00:48:09,880 --> 00:48:12,319
that are creditworthy but the ones that
1209
00:48:12,319 --> 00:48:15,720
are not well all you can do is just yeah
1210
00:48:15,720 --> 00:48:18,240
learn improve your financial position so
1211
00:48:18,240 --> 00:48:19,760
then you can apply again in the future
1212
00:48:19,760 --> 00:48:22,040
people were so upset with um you know
1213
00:48:22,040 --> 00:48:24,040
the amount of money that um Commonwealth
1214
00:48:24,040 --> 00:48:27,760
Bank like made as a profit like it is a
1215
00:48:27,760 --> 00:48:29,960
business like they're supposed to profit
1216
00:48:29,960 --> 00:48:32,200
like I'm not sure like exactly the ins
1217
00:48:32,200 --> 00:48:35,440
and outs of it um but like if they're
1218
00:48:35,440 --> 00:48:38,079
making money um that's what they're
1219
00:48:38,079 --> 00:48:39,800
there to do if they weren't making money
1220
00:48:39,800 --> 00:48:41,960
they wouldn't be around um it's just
1221
00:48:41,960 --> 00:48:44,400
funny like bank is just a business that
1222
00:48:44,400 --> 00:48:46,559
a very good business that is there to
1223
00:48:46,559 --> 00:48:48,640
make money um you know regardless of
1224
00:48:48,640 --> 00:48:50,520
whether they're charging higher interest
1225
00:48:50,520 --> 00:48:52,559
rates than other Banks if people are
1226
00:48:52,559 --> 00:48:54,799
willing to pay those rates then they'll
1227
00:48:54,799 --> 00:48:56,760
keep charging them you know what I mean
1228
00:48:56,760 --> 00:48:58,240
so it's just like any other business
1229
00:48:58,240 --> 00:48:59,760
they're there to make as much profit as
1230
00:48:59,760 --> 00:49:03,760
exactly right and you as a consumer or a
1231
00:49:03,760 --> 00:49:07,200
borrower you know you can use the bank's
1232
00:49:07,200 --> 00:49:09,200
money to help you create Financial
1233
00:49:09,200 --> 00:49:12,200
Freedom right you can leverage debt to
1234
00:49:12,200 --> 00:49:13,559
put you in a better
1235
00:49:13,559 --> 00:49:15,920
position you don't have to take out debt
1236
00:49:15,920 --> 00:49:17,960
to put you in a worse position like
1237
00:49:17,960 --> 00:49:20,040
that's it's a it's available to you but
1238
00:49:20,040 --> 00:49:21,799
you need to kind of take that
1239
00:49:21,799 --> 00:49:25,319
responsibility to to to educate yourself
1240
00:49:25,319 --> 00:49:27,839
uh to have people around you to guide
1241
00:49:27,839 --> 00:49:30,680
you the right way to actually use it for
1242
00:49:30,680 --> 00:49:34,200
your benefit not your detriment right
1243
00:49:34,200 --> 00:49:35,839
because it can happen both ways and it
1244
00:49:35,839 --> 00:49:38,599
does to a lot of
1245
00:49:39,079 --> 00:49:42,960
people 100% so m in terms of like like
1246
00:49:42,960 --> 00:49:44,559
how long it would usually take to
1247
00:49:44,559 --> 00:49:46,319
receive the money after you get a loan
1248
00:49:46,319 --> 00:49:47,920
approved can you just give us a quick
1249
00:49:47,920 --> 00:49:50,359
rundown on literally like the time so
1250
00:49:50,359 --> 00:49:52,920
like investors know or new investors
1251
00:49:52,920 --> 00:49:55,839
know what they can expect it's depends
1252
00:49:55,839 --> 00:49:58,400
on what you're applying for so if you're
1253
00:49:58,400 --> 00:50:00,680
applying for
1254
00:50:00,680 --> 00:50:03,440
um uh say car
1255
00:50:03,440 --> 00:50:06,599
Lo if you've got the car ready to go
1256
00:50:06,599 --> 00:50:08,760
expect you have the money in then
1257
00:50:08,760 --> 00:50:12,359
between 1 to 5
1258
00:50:12,359 --> 00:50:15,559
days if you don't have the car well you
1259
00:50:15,559 --> 00:50:17,079
get the money when the car is available
1260
00:50:17,079 --> 00:50:19,319
right uh if you're buying a residential
1261
00:50:19,319 --> 00:50:21,799
property typically between four and 6
1262
00:50:21,799 --> 00:50:23,839
weeks right that's the settlement period
1263
00:50:23,839 --> 00:50:26,160
so if you apply today um
1264
00:50:26,160 --> 00:50:27,839
yes it might get approved quickly or or
1265
00:50:27,839 --> 00:50:29,960
slowly but the money doesn't exchange
1266
00:50:29,960 --> 00:50:31,559
hands until settlement happens
1267
00:50:31,559 --> 00:50:33,880
settlement is when the transfer of the
1268
00:50:33,880 --> 00:50:35,359
existing title will get moved to your
1269
00:50:35,359 --> 00:50:38,200
name and that is subject to the contract
1270
00:50:38,200 --> 00:50:40,200
of sale and typically depending what
1271
00:50:40,200 --> 00:50:43,079
state it is that's 4 to six weeks it can
1272
00:50:43,079 --> 00:50:45,799
extend it can be 90 days sometimes I say
1273
00:50:45,799 --> 00:50:47,680
six month settlements but typically
1274
00:50:47,680 --> 00:50:49,920
that's the process uh if you're applying
1275
00:50:49,920 --> 00:50:51,920
for if you already own the property and
1276
00:50:51,920 --> 00:50:53,839
you want Equity release so you're
1277
00:50:53,839 --> 00:50:55,920
essentially applying for equity that you
1278
00:50:55,920 --> 00:50:59,119
have as cash or consolidation paying off
1279
00:50:59,119 --> 00:51:04,559
other debts then that can vary so it can
1280
00:51:04,559 --> 00:51:07,040
be I'd say probably the fastest you'll
1281
00:51:07,040 --> 00:51:08,880
probably be able to do it uh would be
1282
00:51:08,880 --> 00:51:12,160
around two weeks I'd say um but
1283
00:51:12,160 --> 00:51:14,400
realistically you know it can be done
1284
00:51:14,400 --> 00:51:16,440
faster depending on the bank if they
1285
00:51:16,440 --> 00:51:17,760
already have a mortgage there's no new
1286
00:51:17,760 --> 00:51:19,640
mortgage required there's no transfer of
1287
00:51:19,640 --> 00:51:22,520
title it's just prove the loan sign the
1288
00:51:22,520 --> 00:51:24,960
documents nominate the bank account here
1289
00:51:24,960 --> 00:51:27,520
it is done right so that can be done in
1290
00:51:27,520 --> 00:51:30,280
a few days uh some banks can take longer
1291
00:51:30,280 --> 00:51:32,040
can take you know if they have to do a
1292
00:51:32,040 --> 00:51:34,200
valuation on the property uh if they
1293
00:51:34,200 --> 00:51:36,359
need Wet signatures and documents so
1294
00:51:36,359 --> 00:51:38,400
that might that might push it out a bit
1295
00:51:38,400 --> 00:51:40,760
longer maybe three weeks possibly four
1296
00:51:40,760 --> 00:51:43,040
weeks something like that um you just
1297
00:51:43,040 --> 00:51:45,720
have to determine what like if if it's
1298
00:51:45,720 --> 00:51:47,680
about the time frame then you may not
1299
00:51:47,680 --> 00:51:50,280
get the best rate right sometimes the
1300
00:51:50,280 --> 00:51:51,960
ones that offer the best rate are going
1301
00:51:51,960 --> 00:51:54,280
to be the slowest because the more
1302
00:51:54,280 --> 00:51:56,000
applications they have the slower they
1303
00:51:56,000 --> 00:51:57,920
are and usually the more applications
1304
00:51:57,920 --> 00:51:58,920
they have is because they're the're
1305
00:51:58,920 --> 00:52:01,359
cheaper right so it's like you can't
1306
00:52:01,359 --> 00:52:03,760
have it all if you want it all well you
1307
00:52:03,760 --> 00:52:05,200
can't have it pick one what's your
1308
00:52:05,200 --> 00:52:07,200
priority if you want fast pay a little
1309
00:52:07,200 --> 00:52:08,880
bit more on the rate if you want cheap
1310
00:52:08,880 --> 00:52:10,640
wait a bit longer yeah like private
1311
00:52:10,640 --> 00:52:12,839
Finance yeah exactly private Finance
1312
00:52:12,839 --> 00:52:15,400
perfect example you have that same day
1313
00:52:15,400 --> 00:52:17,960
sometimes right literally same day for
1314
00:52:17,960 --> 00:52:20,359
like a million dollars or more yeah but
1315
00:52:20,359 --> 00:52:23,040
you'll pay 20% interest
1316
00:52:23,040 --> 00:52:25,480
rate yeah I spoke to a private Finance
1317
00:52:25,480 --> 00:52:27,119
recently a couple months ago and they're
1318
00:52:27,119 --> 00:52:29,440
like yeah okay we can do it for 20% it's
1319
00:52:29,440 --> 00:52:30,200
like
1320
00:52:30,200 --> 00:52:34,160
20% holy but Jesus yeah it's a good uh
1321
00:52:34,160 --> 00:52:35,680
it's a good business to be in private
1322
00:52:35,680 --> 00:52:37,319
Finance right now since interest rates
1323
00:52:37,319 --> 00:52:41,760
have gone up yeah so mate when um you
1324
00:52:41,760 --> 00:52:42,720
got something to say no I was just going
1325
00:52:42,720 --> 00:52:45,119
to say if if I can avoid private Finance
1326
00:52:45,119 --> 00:52:47,119
I will but sometimes it's a it's a
1327
00:52:47,119 --> 00:52:50,920
necessary product depending on the
1328
00:52:50,920 --> 00:52:54,520
circumstances 100% so mate in terms of
1329
00:52:54,520 --> 00:52:56,920
like setting up offset accounts um you
1330
00:52:56,920 --> 00:52:59,160
know back in the day offset accounts
1331
00:52:59,160 --> 00:53:01,520
were like a very very good strategy or
1332
00:53:01,520 --> 00:53:03,680
it was you know made out to be a very
1333
00:53:03,680 --> 00:53:06,400
good strategy um can you just like give
1334
00:53:06,400 --> 00:53:08,599
us your opinion on do they really make a
1335
00:53:08,599 --> 00:53:10,799
big difference on setting up a offset
1336
00:53:10,799 --> 00:53:12,559
account to try and pay down your loan
1337
00:53:12,559 --> 00:53:14,480
quicker um you know obviously you're
1338
00:53:14,480 --> 00:53:16,000
offsetting the interest of your loan
1339
00:53:16,000 --> 00:53:17,680
which is great but if you have no money
1340
00:53:17,680 --> 00:53:19,640
in the offset account it's you know
1341
00:53:19,640 --> 00:53:21,839
pretty much pointless um when does the
1342
00:53:21,839 --> 00:53:23,440
offset account really make a big
1343
00:53:23,440 --> 00:53:25,440
difference and should the um the
1344
00:53:25,440 --> 00:53:31,079
listeners set one up yeah okay
1345
00:53:31,079 --> 00:53:34,559
so with an offset account they typically
1346
00:53:34,559 --> 00:53:36,680
have an annual fee attached to
1347
00:53:36,680 --> 00:53:39,680
them um or a monthly fee depending on
1348
00:53:39,680 --> 00:53:43,640
the bank and the main thing is if you're
1349
00:53:43,640 --> 00:53:47,760
able to offset the loan more than the
1350
00:53:47,760 --> 00:53:50,280
cost of that annual fee and save on
1351
00:53:50,280 --> 00:53:52,240
interest more than that then it's
1352
00:53:52,240 --> 00:53:54,799
probably worth it but if you can't and
1353
00:53:54,799 --> 00:53:55,920
because you you don't have access to
1354
00:53:55,920 --> 00:53:57,799
Capital it's just going to be another
1355
00:53:57,799 --> 00:53:59,760
cost right an ongoing cost an
1356
00:53:59,760 --> 00:54:02,960
unnecessary cost um and depending on the
1357
00:54:02,960 --> 00:54:04,920
bank or the
1358
00:54:04,920 --> 00:54:07,319
lender some of them actually give you a
1359
00:54:07,319 --> 00:54:09,799
bigger discount on your interest rate
1360
00:54:09,799 --> 00:54:12,880
because you chose the offset product so
1361
00:54:12,880 --> 00:54:14,520
if you chose a basic product which
1362
00:54:14,520 --> 00:54:16,680
doesn't have offset and only has redraw
1363
00:54:16,680 --> 00:54:18,160
you're actually paying a higher interest
1364
00:54:18,160 --> 00:54:20,200
rate so you need to work out how much
1365
00:54:20,200 --> 00:54:22,760
interest will I pay on the basic loan
1366
00:54:22,760 --> 00:54:25,440
with no annual fee no offset and how
1367
00:54:25,440 --> 00:54:28,520
much interest will I pay with the offset
1368
00:54:28,520 --> 00:54:31,680
loan and including the annual fee add
1369
00:54:31,680 --> 00:54:33,359
those two up which one in my better off
1370
00:54:33,359 --> 00:54:35,760
pay so sometimes the offset loan makes
1371
00:54:35,760 --> 00:54:37,640
more sense because you get that
1372
00:54:37,640 --> 00:54:39,839
additional discount so even if you don't
1373
00:54:39,839 --> 00:54:43,079
have extra funds to offset you're still
1374
00:54:43,079 --> 00:54:44,640
better off because you picked the basic
1375
00:54:44,640 --> 00:54:46,520
one you're paying higher interest which
1376
00:54:46,520 --> 00:54:48,760
which kind of Trumps the annual fee
1377
00:54:48,760 --> 00:54:51,040
anyway does that make
1378
00:54:51,040 --> 00:54:53,440
sense yeah definitely yeah but then if
1379
00:54:53,440 --> 00:54:55,880
you go to another bank they'll have the
1380
00:54:55,880 --> 00:54:57,680
exact same interest
1381
00:54:57,680 --> 00:55:00,839
rate uh with it's whether it's a basic
1382
00:55:00,839 --> 00:55:04,079
loan or whether it's an offset loan and
1383
00:55:04,079 --> 00:55:05,599
the only difference is the offset loan
1384
00:55:05,599 --> 00:55:07,280
you pay an annual fee so if you're
1385
00:55:07,280 --> 00:55:10,280
picking a bank like that and you don't
1386
00:55:10,280 --> 00:55:11,960
have access to Capital when I'm talking
1387
00:55:11,960 --> 00:55:14,640
when I'm saying 10 grand 20 grand 30 Etc
1388
00:55:14,640 --> 00:55:15,920
if you don't have access to that and you
1389
00:55:15,920 --> 00:55:17,559
won't like you're exhausting every scent
1390
00:55:17,559 --> 00:55:18,880
that you have in order to buy this
1391
00:55:18,880 --> 00:55:21,359
property well what exactly are you
1392
00:55:21,359 --> 00:55:24,240
offsetting um your income right your
1393
00:55:24,240 --> 00:55:25,599
income will obviously you have to pay
1394
00:55:25,599 --> 00:55:26,559
the mortgage you have to pay your
1395
00:55:26,559 --> 00:55:28,839
outgoing cost and whatever's left you
1396
00:55:28,839 --> 00:55:31,039
can offset the loan but if that's only
1397
00:55:31,039 --> 00:55:34,599
100 bucks a month or a few hundred well
1398
00:55:34,599 --> 00:55:37,079
if you're paying 400 bucks a year for
1399
00:55:37,079 --> 00:55:39,319
the offset account you might as well
1400
00:55:39,319 --> 00:55:41,920
just go for a basic loan that only has v
1401
00:55:41,920 --> 00:55:43,599
uh a variable basic loan because then
1402
00:55:43,599 --> 00:55:45,280
you can just put extra funds into the
1403
00:55:45,280 --> 00:55:48,680
loan and has the same net effect as an
1404
00:55:48,680 --> 00:55:50,839
offset account so you're actually just
1405
00:55:50,839 --> 00:55:53,039
paying reducing your interest each month
1406
00:55:53,039 --> 00:55:54,240
and now you just don't have an annual
1407
00:55:54,240 --> 00:55:56,119
fee that's what I would recommend if you
1408
00:55:56,119 --> 00:55:58,960
don't have access to Capital but a lot
1409
00:55:58,960 --> 00:56:00,960
of people do have access to Capital or
1410
00:56:00,960 --> 00:56:03,039
they have their parents even I've seen
1411
00:56:03,039 --> 00:56:04,520
that where people like well my parents
1412
00:56:04,520 --> 00:56:05,839
have got a house paid off and they're
1413
00:56:05,839 --> 00:56:07,640
sitting on half a million dollars worth
1414
00:56:07,640 --> 00:56:09,640
of cash well they can actually Park that
1415
00:56:09,640 --> 00:56:12,000
money in my offset account and whenever
1416
00:56:12,000 --> 00:56:14,039
they need it they can access it so now
1417
00:56:14,039 --> 00:56:16,000
they're actually reducing their interest
1418
00:56:16,000 --> 00:56:17,920
on their home loan from their parents'
1419
00:56:17,920 --> 00:56:20,000
money because they've got an offset and
1420
00:56:20,000 --> 00:56:21,240
the parents are the ones that have
1421
00:56:21,240 --> 00:56:22,559
access to it not them I mean of course
1422
00:56:22,559 --> 00:56:24,160
they can still withdraw it but typically
1423
00:56:24,160 --> 00:56:26,000
there's a trust Factor when you do that
1424
00:56:26,000 --> 00:56:28,799
right um and so now they're getting the
1425
00:56:28,799 --> 00:56:31,400
benefit of an offset but if they had
1426
00:56:31,400 --> 00:56:34,240
redraw it's probably more risky for the
1427
00:56:34,240 --> 00:56:36,440
parents to do that because when you
1428
00:56:36,440 --> 00:56:38,160
don't have offset technically it's the
1429
00:56:38,160 --> 00:56:40,760
bank's money so you talked earlier about
1430
00:56:40,760 --> 00:56:44,000
economic conditions well one of them is
1431
00:56:44,000 --> 00:56:45,720
hypothetic you had a million dollars
1432
00:56:45,720 --> 00:56:47,920
loan and you had no offset account and
1433
00:56:47,920 --> 00:56:50,319
you put $500,000 of your own money into
1434
00:56:50,319 --> 00:56:52,319
the loan you would have 500,000
1435
00:56:52,319 --> 00:56:53,960
available in redraw and you would owe
1436
00:56:53,960 --> 00:56:57,079
500,000 right but technically that's the
1437
00:56:57,079 --> 00:56:59,440
bank's money they're allowing you to
1438
00:56:59,440 --> 00:57:02,319
have access to the money as a redraw
1439
00:57:02,319 --> 00:57:04,680
facility however in all for all
1440
00:57:04,680 --> 00:57:06,319
intensive purposes that's a principal
1441
00:57:06,319 --> 00:57:09,319
payment so if there's a a run on the
1442
00:57:09,319 --> 00:57:11,880
banks they can say sorry you paid back
1443
00:57:11,880 --> 00:57:14,200
that money it's no longer accessible by
1444
00:57:14,200 --> 00:57:16,480
redraw and you still owe us 500,000 and
1445
00:57:16,480 --> 00:57:17,440
they're like hey what happened to my
1446
00:57:17,440 --> 00:57:19,319
other 500 well you decided to put into
1447
00:57:19,319 --> 00:57:21,079
the loan you've paid that back off the
1448
00:57:21,079 --> 00:57:23,000
principal now we've decided we need that
1449
00:57:23,000 --> 00:57:24,880
capital and now you don't have access to
1450
00:57:24,880 --> 00:57:27,079
to it so that's the risk when you don't
1451
00:57:27,079 --> 00:57:28,680
have an offset if you have an offset
1452
00:57:28,680 --> 00:57:30,960
it's a bank account it's your money so
1453
00:57:30,960 --> 00:57:33,200
you you have a sitting an Offset you
1454
00:57:33,200 --> 00:57:34,799
know there's a run on the banks Bank
1455
00:57:34,799 --> 00:57:36,200
can't just say hey we need to withdraw
1456
00:57:36,200 --> 00:57:37,599
the money from the offset and put it
1457
00:57:37,599 --> 00:57:39,440
into the loan like no they can't do that
1458
00:57:39,440 --> 00:57:41,520
it's your bank it's your money so it is
1459
00:57:41,520 --> 00:57:44,319
protected in that respect by sitting an
1460
00:57:44,319 --> 00:57:45,680
offset because it's essentially like a
1461
00:57:45,680 --> 00:57:49,119
transactional account um it's not
1462
00:57:49,119 --> 00:57:52,400
necessarily paying to the loan so that's
1463
00:57:52,400 --> 00:57:54,640
yeah that's another example um what
1464
00:57:54,640 --> 00:57:57,280
about about like with like offsets
1465
00:57:57,280 --> 00:57:59,359
obviously there's a difference between
1466
00:57:59,359 --> 00:58:00,799
if you have a principal and interest
1467
00:58:00,799 --> 00:58:04,160
loan to an interest only loan can you
1468
00:58:04,160 --> 00:58:06,559
just explain to us like the difference
1469
00:58:06,559 --> 00:58:08,079
between have offset attached to an
1470
00:58:08,079 --> 00:58:10,160
interest only loan compared to having
1471
00:58:10,160 --> 00:58:11,760
the you an offset attached to a
1472
00:58:11,760 --> 00:58:13,240
principal and interest
1473
00:58:13,240 --> 00:58:16,200
loan yeah it's a really good question
1474
00:58:16,200 --> 00:58:18,400
because um this comes up quite a lot
1475
00:58:18,400 --> 00:58:20,640
where I have to explain it to to many
1476
00:58:20,640 --> 00:58:22,799
people so I'll try to explain it the
1477
00:58:22,799 --> 00:58:24,359
best way I can because then I can just
1478
00:58:24,359 --> 00:58:26,160
say hey listen to this and then this
1479
00:58:26,160 --> 00:58:28,960
will explain it to
1480
00:58:29,680 --> 00:58:33,839
you okay so same
1481
00:58:33,839 --> 00:58:37,200
example million dollars right you have a
1482
00:58:37,200 --> 00:58:39,960
million dollar loan and the loan is
1483
00:58:39,960 --> 00:58:43,559
principal and interest PNA if you put
1484
00:58:43,559 --> 00:58:46,880
$500,000 um in an offset account you're
1485
00:58:46,880 --> 00:58:49,039
paying interest on$ 500,000 but you
1486
00:58:49,039 --> 00:58:51,799
still owe a million right but your
1487
00:58:51,799 --> 00:58:53,760
repayments are still based on what you
1488
00:58:53,760 --> 00:58:55,880
owe because you owe a million so you're
1489
00:58:55,880 --> 00:58:57,839
making pre P&R payments on a million
1490
00:58:57,839 --> 00:58:59,720
dollars even though you don't owe a
1491
00:58:59,720 --> 00:59:01,559
million hypothetically you only owe half
1492
00:59:01,559 --> 00:59:04,079
a million right because you're not
1493
00:59:04,079 --> 00:59:05,480
paying it to the loan so you're not
1494
00:59:05,480 --> 00:59:07,440
offsetting you're only offsetting the
1495
00:59:07,440 --> 00:59:09,200
interest you're not actually paying back
1496
00:59:09,200 --> 00:59:11,280
the principal so the bank still expect
1497
00:59:11,280 --> 00:59:12,680
you to make principal payments on a
1498
00:59:12,680 --> 00:59:14,839
million dollars and that's where people
1499
00:59:14,839 --> 00:59:16,200
always get a bit frustrated because
1500
00:59:16,200 --> 00:59:18,400
they're like I I only owe 500 but I'm
1501
00:59:18,400 --> 00:59:20,559
still making higher payments well you
1502
00:59:20,559 --> 00:59:22,920
can't have it both ways in this instance
1503
00:59:22,920 --> 00:59:25,520
you can't say I want to make payments of
1504
00:59:25,520 --> 00:59:27,960
500,000 while still having access to the
1505
00:59:27,960 --> 00:59:30,280
other 500 because now you're saying that
1506
00:59:30,280 --> 00:59:32,200
you haven't paid it back it's like if
1507
00:59:32,200 --> 00:59:33,839
you tell the bank I don't want access to
1508
00:59:33,839 --> 00:59:36,200
the 500k anymore it's your money then
1509
00:59:36,200 --> 00:59:38,240
they'll do what's called reamortization
1510
00:59:38,240 --> 00:59:39,880
so they'll actually you move the money
1511
00:59:39,880 --> 00:59:42,039
from Offset you put it into the loan and
1512
00:59:42,039 --> 00:59:45,119
then they'll reamortize on 500,000 and
1513
00:59:45,119 --> 00:59:46,720
recalculate your payments over the
1514
00:59:46,720 --> 00:59:48,240
remaining term then you'll get lower
1515
00:59:48,240 --> 00:59:49,839
payments but now if you ever wanted
1516
00:59:49,839 --> 00:59:51,520
access to the 500k again you need to
1517
00:59:51,520 --> 00:59:52,880
apply for it again go through the loan
1518
00:59:52,880 --> 00:59:54,960
process right borrowing capacity credit
1519
00:59:54,960 --> 00:59:57,960
history all of that um if you did
1520
00:59:57,960 --> 00:59:59,319
interest
1521
00:59:59,319 --> 01:00:02,000
only this is where you get the best of
1522
01:00:02,000 --> 01:00:05,480
both worlds in that if you if you have a
1523
01:00:05,480 --> 01:00:07,599
million dollars and the loan is interest
1524
01:00:07,599 --> 01:00:09,960
only you're paying interest only that's
1525
01:00:09,960 --> 01:00:12,000
it right each month the bank's minimum
1526
01:00:12,000 --> 01:00:13,760
requirement is that you pay interest if
1527
01:00:13,760 --> 01:00:16,680
you put $500,000 into an offset account
1528
01:00:16,680 --> 01:00:19,000
then your interest is dropping right the
1529
01:00:19,000 --> 01:00:20,400
interest would change because now you're
1530
01:00:20,400 --> 01:00:22,640
getting your your interest is calculated
1531
01:00:22,640 --> 01:00:25,039
on 500,000 so therefore your minimum
1532
01:00:25,039 --> 01:00:28,160
repayment is interest on 500,000 so
1533
01:00:28,160 --> 01:00:29,760
you're not paying interest on the money
1534
01:00:29,760 --> 01:00:32,240
that's offset anymore so the 500k
1535
01:00:32,240 --> 01:00:33,760
interest threee essentially and the
1536
01:00:33,760 --> 01:00:36,079
other 500k you're paying interest so
1537
01:00:36,079 --> 01:00:38,119
then you're getting the best of both
1538
01:00:38,119 --> 01:00:39,359
world because now you have still have
1539
01:00:39,359 --> 01:00:41,280
access to 500k and your minimum
1540
01:00:41,280 --> 01:00:43,440
repayment has dropped based on the
1541
01:00:43,440 --> 01:00:44,720
remaining balance even though you still
1542
01:00:44,720 --> 01:00:46,599
owe a million technically because the
1543
01:00:46,599 --> 01:00:48,880
interest is being offset the actual
1544
01:00:48,880 --> 01:00:50,680
interest charge has dropped so your rep
1545
01:00:50,680 --> 01:00:53,520
payment has dropped and also the other
1546
01:00:53,520 --> 01:00:54,920
misconception is that if you're paying
1547
01:00:54,920 --> 01:00:56,760
interest only you can't pay principal
1548
01:00:56,760 --> 01:00:58,400
well that's not true you can pay
1549
01:00:58,400 --> 01:01:00,200
principal but you've got the choice to
1550
01:01:00,200 --> 01:01:01,720
pay principal when you want to pay it
1551
01:01:01,720 --> 01:01:03,559
not when the bank wants you to pay right
1552
01:01:03,559 --> 01:01:05,359
so you can still make extra payments pay
1553
01:01:05,359 --> 01:01:06,880
it straight to the loan not to the
1554
01:01:06,880 --> 01:01:09,000
offset at any given time you can do it
1555
01:01:09,000 --> 01:01:11,119
in lump sum weekly monthly whatever it
1556
01:01:11,119 --> 01:01:14,760
is um the only caveat I guess is that
1557
01:01:14,760 --> 01:01:17,000
you have to then pay a higher interest
1558
01:01:17,000 --> 01:01:19,599
rate typically for interest only loans
1559
01:01:19,599 --> 01:01:22,960
right but I think that the benefit can
1560
01:01:22,960 --> 01:01:25,440
outweigh the cost uh the
1561
01:01:25,440 --> 01:01:27,119
other
1562
01:01:27,119 --> 01:01:29,559
detriment of interest only I know when
1563
01:01:29,559 --> 01:01:31,200
it when it's not really about your
1564
01:01:31,200 --> 01:01:33,039
question but I thought I'd mention it is
1565
01:01:33,039 --> 01:01:35,720
that it impacts your borrowing capacity
1566
01:01:35,720 --> 01:01:38,400
uh sometimes so if you get an interest
1567
01:01:38,400 --> 01:01:41,599
only loan then your borrowing capacity
1568
01:01:41,599 --> 01:01:43,359
is at a detriment the longer the
1569
01:01:43,359 --> 01:01:45,039
interest only term so if you take it out
1570
01:01:45,039 --> 01:01:47,839
for 5 years then that's affecting your
1571
01:01:47,839 --> 01:01:49,960
borrowing capacity for regular
1572
01:01:49,960 --> 01:01:52,079
residential consumer
1573
01:01:52,079 --> 01:01:54,240
lending any consumer lending at this
1574
01:01:54,240 --> 01:01:56,359
point typically if it's a bank because
1575
01:01:56,359 --> 01:01:57,680
they're going to look at your principle
1576
01:01:57,680 --> 01:02:00,039
and interest remaining term when they
1577
01:02:00,039 --> 01:02:01,880
calculate repayments so if you did a
1578
01:02:01,880 --> 01:02:04,359
30-year loan term you did a 5year
1579
01:02:04,359 --> 01:02:07,039
interest only you've got 25 years left
1580
01:02:07,039 --> 01:02:09,119
so they're calculating your U stress
1581
01:02:09,119 --> 01:02:12,000
testing your repayments at 25 years p&i
1582
01:02:12,000 --> 01:02:15,000
principal interest versus if you say did
1583
01:02:15,000 --> 01:02:17,480
p&i from the beginning 30 years you've
1584
01:02:17,480 --> 01:02:19,400
stretched it over 30 your minimum
1585
01:02:19,400 --> 01:02:21,200
payment is lower they're stress testing
1586
01:02:21,200 --> 01:02:24,160
30 so now you're able to borrow more uh
1587
01:02:24,160 --> 01:02:26,400
that's that's the only downfall I guess
1588
01:02:26,400 --> 01:02:28,640
so what I try to do my customers is
1589
01:02:28,640 --> 01:02:30,480
typically go for a two or three year
1590
01:02:30,480 --> 01:02:32,799
interest early Max because let's face it
1591
01:02:32,799 --> 01:02:34,079
you're not really going to stick to that
1592
01:02:34,079 --> 01:02:35,640
bank for five years you're probably
1593
01:02:35,640 --> 01:02:37,880
going to refinance in that time anyway
1594
01:02:37,880 --> 01:02:40,400
so that gives you the opportunity to
1595
01:02:40,400 --> 01:02:42,599
then refinance restructure and go back
1596
01:02:42,599 --> 01:02:44,760
to interest only again for another two
1597
01:02:44,760 --> 01:02:46,559
years another three years yeah
1598
01:02:46,559 --> 01:02:48,079
definitely and that's exactly the same
1599
01:02:48,079 --> 01:02:50,920
thing I tell um um our clients of
1600
01:02:50,920 --> 01:02:53,760
policey property is that like like why
1601
01:02:53,760 --> 01:02:55,559
would I go interest only why wouldn't I
1602
01:02:55,559 --> 01:02:57,200
just go p&i and I can start paying the
1603
01:02:57,200 --> 01:02:59,119
commercial property off and I'm like
1604
01:02:59,119 --> 01:03:00,480
well you go interest only because it
1605
01:03:00,480 --> 01:03:02,400
gives you the option if you want to pay
1606
01:03:02,400 --> 01:03:04,119
principal off so you might set it up so
1607
01:03:04,119 --> 01:03:06,640
you pay you're only paying interest and
1608
01:03:06,640 --> 01:03:08,400
then you can pay the principal into the
1609
01:03:08,400 --> 01:03:10,440
loan but then one month you might have
1610
01:03:10,440 --> 01:03:11,880
some huge expense you might need an
1611
01:03:11,880 --> 01:03:14,039
operation or something and you're not
1612
01:03:14,039 --> 01:03:16,920
required to pay the principal so you
1613
01:03:16,920 --> 01:03:19,599
have that flexibility going forward to
1614
01:03:19,599 --> 01:03:22,640
have lowest repayments possible now and
1615
01:03:22,640 --> 01:03:24,400
if you want to you can set it up with
1616
01:03:24,400 --> 01:03:27,200
10year pay Down plan so you are paying
1617
01:03:27,200 --> 01:03:29,160
the principal off it's just not required
1618
01:03:29,160 --> 01:03:31,400
from the
1619
01:03:31,400 --> 01:03:34,079
bank exactly I would I would put it
1620
01:03:34,079 --> 01:03:36,319
exactly the same way as you you want to
1621
01:03:36,319 --> 01:03:38,839
have less Financial pressure right uh
1622
01:03:38,839 --> 01:03:40,799
it's not just that you might have a
1623
01:03:40,799 --> 01:03:43,079
change in circumstances right you're you
1624
01:03:43,079 --> 01:03:44,599
know one of you stops working you and
1625
01:03:44,599 --> 01:03:45,960
your partner the other one you have a
1626
01:03:45,960 --> 01:03:48,880
baby one goes part-time so now all of a
1627
01:03:48,880 --> 01:03:50,880
sudden your what your loan got approved
1628
01:03:50,880 --> 01:03:54,279
at to pay principle and interest well
1629
01:03:54,279 --> 01:03:55,240
you're not in a position you don't want
1630
01:03:55,240 --> 01:03:56,559
to have to call the bank and say [ __ ] I
1631
01:03:56,559 --> 01:03:58,960
can't afford I'm on financial hardship
1632
01:03:58,960 --> 01:04:01,400
so paying interest makes it makes it
1633
01:04:01,400 --> 01:04:03,440
manageable and then go back to principle
1634
01:04:03,440 --> 01:04:05,559
later and the other misconception is
1635
01:04:05,559 --> 01:04:07,440
that you can switch to interest only
1636
01:04:07,440 --> 01:04:09,640
whenever you want no you can't so a lot
1637
01:04:09,640 --> 01:04:11,720
of time people will apply they'll apply
1638
01:04:11,720 --> 01:04:13,720
for p and I just got interest only call
1639
01:04:13,720 --> 01:04:15,640
the bank can I get interest only uh yeah
1640
01:04:15,640 --> 01:04:17,400
you can but you need to apply for you
1641
01:04:17,400 --> 01:04:18,920
need to apply for a new application
1642
01:04:18,920 --> 01:04:20,520
they're like what and in the back of the
1643
01:04:20,520 --> 01:04:22,319
head I can't because I'm unemployed now
1644
01:04:22,319 --> 01:04:24,680
right but they won't say that so that's
1645
01:04:24,680 --> 01:04:26,440
why but you can do it the other way so
1646
01:04:26,440 --> 01:04:29,000
if you start at interest only and then
1647
01:04:29,000 --> 01:04:30,640
at one point you know you sell some
1648
01:04:30,640 --> 01:04:33,400
assets you get some you know you get pay
1649
01:04:33,400 --> 01:04:34,680
increases you're like I don't want to
1650
01:04:34,680 --> 01:04:36,279
pay interest on it anymore I want to
1651
01:04:36,279 --> 01:04:38,240
actually pay out to principal if it was
1652
01:04:38,240 --> 01:04:39,920
really that important to you and you
1653
01:04:39,920 --> 01:04:41,680
wanted to see the minimum payment
1654
01:04:41,680 --> 01:04:43,720
changed you could call the bank and say
1655
01:04:43,720 --> 01:04:45,760
please switch me to p&i and they will do
1656
01:04:45,760 --> 01:04:47,359
that and they'll give you a lower rate
1657
01:04:47,359 --> 01:04:49,520
no Financial assessment required no
1658
01:04:49,520 --> 01:04:51,279
application required no documents just
1659
01:04:51,279 --> 01:04:53,520
do it over the phone but the other way
1660
01:04:53,520 --> 01:04:54,720
if you want to go from principal
1661
01:04:54,720 --> 01:04:57,039
interest interest only no they have to
1662
01:04:57,039 --> 01:04:59,880
reassess everything so that's why better
1663
01:04:59,880 --> 01:05:01,559
to start interest only switch it the
1664
01:05:01,559 --> 01:05:03,200
other way then otherwise you might end
1665
01:05:03,200 --> 01:05:05,079
up in a position where you can't go to
1666
01:05:05,079 --> 01:05:06,960
interest only yeah because you're paying
1667
01:05:06,960 --> 01:05:08,559
interest only and you're like hey I want
1668
01:05:08,559 --> 01:05:10,880
to um change you know to p&i and that
1669
01:05:10,880 --> 01:05:12,839
bank's like okay pay me more sweet you
1670
01:05:12,839 --> 01:05:14,160
know of course they're going to like say
1671
01:05:14,160 --> 01:05:16,079
yeah do it do it come in come in come on
1672
01:05:16,079 --> 01:05:17,200
pay me more but the other way around
1673
01:05:17,200 --> 01:05:19,079
it's like hey you want like you paying
1674
01:05:19,079 --> 01:05:22,160
this and now you want to pay a lot lower
1675
01:05:22,160 --> 01:05:24,760
price why are we doing
1676
01:05:24,760 --> 01:05:27,000
let's check let's just check the
1677
01:05:27,000 --> 01:05:30,960
situation know what I mean yeah exactly
1678
01:05:30,960 --> 01:05:32,559
correct yeah that's a good way I've look
1679
01:05:32,559 --> 01:05:34,720
at it yeah it's like when you owe your
1680
01:05:34,720 --> 01:05:36,200
say you owe your brother some money and
1681
01:05:36,200 --> 01:05:37,680
you'd be paying a th000 bucks a month
1682
01:05:37,680 --> 01:05:39,279
hey can I just pay 500 bucks a month
1683
01:05:39,279 --> 01:05:42,960
from now on why uh uh no reason just to
1684
01:05:42,960 --> 01:05:44,680
manage cash
1685
01:05:44,680 --> 01:05:47,279
flow give me back my
1686
01:05:47,279 --> 01:05:50,000
money so we I just want to also touch
1687
01:05:50,000 --> 01:05:53,160
based on the paying uh with an offset
1688
01:05:53,160 --> 01:05:56,160
account with paying the p& so the the
1689
01:05:56,160 --> 01:05:57,680
actual like I just want to make sure
1690
01:05:57,680 --> 01:05:59,319
like this is how I think about it in my
1691
01:05:59,319 --> 01:06:01,559
head so the actual repayments don't
1692
01:06:01,559 --> 01:06:03,599
actually change if you have money in an
1693
01:06:03,599 --> 01:06:07,160
offset for a p&i it's just just changes
1694
01:06:07,160 --> 01:06:09,079
what portion you are actually paying
1695
01:06:09,079 --> 01:06:10,880
down you know what I mean so if you have
1696
01:06:10,880 --> 01:06:13,119
money in the offset then you're paying
1697
01:06:13,119 --> 01:06:15,039
down more of the principal but your
1698
01:06:15,039 --> 01:06:16,880
actual interest repayment does not
1699
01:06:16,880 --> 01:06:19,319
change and if you have no money in that
1700
01:06:19,319 --> 01:06:22,160
offset then you're paying more interest
1701
01:06:22,160 --> 01:06:24,680
um so that's in my mind that's how works
1702
01:06:24,680 --> 01:06:26,839
that's how I understand
1703
01:06:26,839 --> 01:06:30,520
it no no no that's exactly how I explain
1704
01:06:30,520 --> 01:06:32,160
it it's like if you imagine you're
1705
01:06:32,160 --> 01:06:34,200
making the same minimum repayment
1706
01:06:34,200 --> 01:06:35,640
whether you when you have money in
1707
01:06:35,640 --> 01:06:38,079
offset well then because the interest is
1708
01:06:38,079 --> 01:06:40,240
reducing each day uh each month because
1709
01:06:40,240 --> 01:06:42,000
you remember interest acrs daily and
1710
01:06:42,000 --> 01:06:44,319
charges monthly so the the the more
1711
01:06:44,319 --> 01:06:46,279
often you put money into the offset and
1712
01:06:46,279 --> 01:06:47,680
the more amount you put in the offset
1713
01:06:47,680 --> 01:06:49,960
will reduce the interest uh on your
1714
01:06:49,960 --> 01:06:52,520
monthly due date every single month and
1715
01:06:52,520 --> 01:06:54,000
then when you see that interest drop
1716
01:06:54,000 --> 01:06:56,480
drop but your payment is still the same
1717
01:06:56,480 --> 01:06:57,920
then more of your payment will go
1718
01:06:57,920 --> 01:06:59,799
towards the principal rather than the
1719
01:06:59,799 --> 01:07:01,960
interest so then you're essentially
1720
01:07:01,960 --> 01:07:04,359
paying off the loan faster so instead of
1721
01:07:04,359 --> 01:07:06,160
30 years by having money in Offset you
1722
01:07:06,160 --> 01:07:08,240
might pay it off in say 25 years or 20
1723
01:07:08,240 --> 01:07:09,720
years depending how much you keep adding
1724
01:07:09,720 --> 01:07:13,079
in there that's how it works um but yeah
1725
01:07:13,079 --> 01:07:14,599
you explained exactly the right way
1726
01:07:14,599 --> 01:07:16,319
splitting the mortgage mate I've done
1727
01:07:16,319 --> 01:07:18,160
this before in the past where I've had a
1728
01:07:18,160 --> 01:07:20,720
portion that's fixed a fixed rate and
1729
01:07:20,720 --> 01:07:23,240
I've also had a smaller portion that's
1730
01:07:23,240 --> 01:07:25,039
variable and that's basically like to
1731
01:07:25,039 --> 01:07:27,359
limit my risk against inflation uh
1732
01:07:27,359 --> 01:07:29,839
interest changes uh in the market can
1733
01:07:29,839 --> 01:07:32,359
you just explain like how splitting the
1734
01:07:32,359 --> 01:07:34,400
mortgage can be a good strategy when you
1735
01:07:34,400 --> 01:07:36,079
first buy a
1736
01:07:36,079 --> 01:07:38,839
property yeah yeah so look it's very
1737
01:07:38,839 --> 01:07:41,279
common that people split their loans um
1738
01:07:41,279 --> 01:07:43,559
I usually tell talk to my clients about
1739
01:07:43,559 --> 01:07:45,640
splitting it to get the Best of Both
1740
01:07:45,640 --> 01:07:48,119
Worlds part fixed with limited risk part
1741
01:07:48,119 --> 01:07:50,640
variable with more flexibility um but
1742
01:07:50,640 --> 01:07:53,680
more risk in terms of uh rate increases
1743
01:07:53,680 --> 01:07:55,319
um
1744
01:07:55,319 --> 01:07:57,400
but at the moment it's a time in the
1745
01:07:57,400 --> 01:07:58,880
market where the fix rate's actually
1746
01:07:58,880 --> 01:08:00,960
higher than your fixed sorry your fix
1747
01:08:00,960 --> 01:08:03,200
rate's higher than you're variable so by
1748
01:08:03,200 --> 01:08:06,240
doing that you're kind of gambling to an
1749
01:08:06,240 --> 01:08:08,640
extent you're sort of trying to time the
1750
01:08:08,640 --> 01:08:12,200
market and say Hey I want certainty and
1751
01:08:12,200 --> 01:08:14,359
for that certainty I'm willing to pay a
1752
01:08:14,359 --> 01:08:17,520
premium because just in case rates go
1753
01:08:17,520 --> 01:08:21,040
higher I want to know that I've locked
1754
01:08:21,040 --> 01:08:23,158
in my rate even though because the
1755
01:08:23,158 --> 01:08:24,880
variable rate will then go higher than
1756
01:08:24,880 --> 01:08:27,040
the fixed so then at that point in the
1757
01:08:27,040 --> 01:08:29,080
future if that happens then I'm going to
1758
01:08:29,080 --> 01:08:32,000
be uh winning essentially at the moment
1759
01:08:32,000 --> 01:08:33,839
I'm losing I'm taking short-term loss
1760
01:08:33,839 --> 01:08:35,960
with the chance that I'm going to get a
1761
01:08:35,960 --> 01:08:38,319
gain if the fix if the variable rates
1762
01:08:38,319 --> 01:08:42,679
are surpass the fix rates so that's
1763
01:08:42,679 --> 01:08:44,560
that's the time in the market that we're
1764
01:08:44,560 --> 01:08:47,960
in um we if someone wants to do that
1765
01:08:47,960 --> 01:08:49,799
there's no guarantee that the variable
1766
01:08:49,799 --> 01:08:51,520
rates will keep going higher than the
1767
01:08:51,520 --> 01:08:53,600
fixed and where that can work against
1768
01:08:53,600 --> 01:08:56,000
you is if the fix rate if the variable
1769
01:08:56,000 --> 01:08:58,439
rates drop because say next year they
1770
01:08:58,439 --> 01:09:01,040
start dropping rates and you fix the
1771
01:09:01,040 --> 01:09:02,319
majority of your
1772
01:09:02,319 --> 01:09:05,198
loan well you're in a bit of a in a
1773
01:09:05,198 --> 01:09:08,679
pickle uh so to say because if you want
1774
01:09:08,679 --> 01:09:11,198
to get out of the loan say you you fix
1775
01:09:11,198 --> 01:09:13,319
it at say I don't know 6 and a half% and
1776
01:09:13,319 --> 01:09:15,600
the variable rate drops to say five and
1777
01:09:15,600 --> 01:09:17,600
you're like damn it I want to get 5%
1778
01:09:17,600 --> 01:09:19,359
rate but I'm stuck on six and a half in
1779
01:09:19,359 --> 01:09:21,158
the next two years so you say to the
1780
01:09:21,158 --> 01:09:22,880
bank I want to get out of the loan I
1781
01:09:22,880 --> 01:09:24,279
want to switch it to ver
1782
01:09:24,279 --> 01:09:25,759
they say you can do that but now you
1783
01:09:25,759 --> 01:09:27,719
have to pay break costs and those break
1784
01:09:27,719 --> 01:09:30,198
costs can be significant it can be tens
1785
01:09:30,198 --> 01:09:32,560
of thousands of dollars sometimes so
1786
01:09:32,560 --> 01:09:33,960
then you'll just say well I'm not going
1787
01:09:33,960 --> 01:09:35,799
to pay $10,000 in break fees I'm just
1788
01:09:35,799 --> 01:09:37,238
going to stick it out for the next two
1789
01:09:37,238 --> 01:09:40,920
years and pay 6 and a half% so by having
1790
01:09:40,920 --> 01:09:42,120
the loan
1791
01:09:42,120 --> 01:09:44,560
split then at least you're getting the
1792
01:09:44,560 --> 01:09:47,319
benefit of the reduced variable rates
1793
01:09:47,319 --> 01:09:49,640
for some of your loan right so then
1794
01:09:49,640 --> 01:09:51,120
you're not sort of thinking damn it I'm
1795
01:09:51,120 --> 01:09:53,399
stuck paying fix for this whole 2 three
1796
01:09:53,399 --> 01:09:54,400
years
1797
01:09:54,400 --> 01:09:55,880
some of its variables so you're still
1798
01:09:55,880 --> 01:09:58,880
benefiting some somewhere when it drops
1799
01:09:58,880 --> 01:10:02,679
the other thing is the flexibility on um
1800
01:10:02,679 --> 01:10:05,040
on variable loan so if it's variable yes
1801
01:10:05,040 --> 01:10:08,280
it can fluctuate up and down um however
1802
01:10:08,280 --> 01:10:10,840
you can pay it off at any given time
1803
01:10:10,840 --> 01:10:12,360
without any restriction without any
1804
01:10:12,360 --> 01:10:14,159
limitation like we talked about paying
1805
01:10:14,159 --> 01:10:15,960
extra payments and you can have an
1806
01:10:15,960 --> 01:10:18,239
offset account typically if you have a
1807
01:10:18,239 --> 01:10:19,760
fixed loan you can't have an offset
1808
01:10:19,760 --> 01:10:21,199
account there's only like two or three
1809
01:10:21,199 --> 01:10:23,800
banks that offer offset on a fixed loan
1810
01:10:23,800 --> 01:10:25,800
but the majority of them don't so
1811
01:10:25,800 --> 01:10:27,719
therefore you've got the flexibility of
1812
01:10:27,719 --> 01:10:29,880
offsetting making large principal
1813
01:10:29,880 --> 01:10:32,320
payments when you want putting money in
1814
01:10:32,320 --> 01:10:35,040
redrawing it out you know all that
1815
01:10:35,040 --> 01:10:36,719
interest only offset that we talked
1816
01:10:36,719 --> 01:10:38,600
about if it's variable you can do all of
1817
01:10:38,600 --> 01:10:41,320
that if it's fixed can't do any of it
1818
01:10:41,320 --> 01:10:43,960
the maximum you can pay extra is like 10
1819
01:10:43,960 --> 01:10:46,239
grand a year uh and anything more than
1820
01:10:46,239 --> 01:10:48,159
that they can penalize you and say sorry
1821
01:10:48,159 --> 01:10:49,679
you've you've breached your contract you
1822
01:10:49,679 --> 01:10:51,040
told us you're going to lock this fix
1823
01:10:51,040 --> 01:10:53,640
rate in and now we have to charge you
1824
01:10:53,640 --> 01:10:57,080
break cost to break your loan so so
1825
01:10:57,080 --> 01:10:58,600
that's a yeah that's I guess the
1826
01:10:58,600 --> 01:11:00,800
downfall of having too much of your loan
1827
01:11:00,800 --> 01:11:04,840
fixed it leave leaves you without the um
1828
01:11:04,840 --> 01:11:07,560
flexibility and if rates drop you're not
1829
01:11:07,560 --> 01:11:09,400
getting the lower rate and you have no
1830
01:11:09,400 --> 01:11:12,800
offset account linked to it typically so
1831
01:11:12,800 --> 01:11:15,400
yeah I think the obviously the certainty
1832
01:11:15,400 --> 01:11:17,360
part you need to work out your budget
1833
01:11:17,360 --> 01:11:19,560
for your household and if if you
1834
01:11:19,560 --> 01:11:21,280
literally cannot afford it and I have
1835
01:11:21,280 --> 01:11:22,719
customers like this where they're like
1836
01:11:22,719 --> 01:11:25,000
no I've had fixed before I just want to
1837
01:11:25,000 --> 01:11:26,960
know that this is my repayment I don't
1838
01:11:26,960 --> 01:11:28,760
care if race go up or down I just need
1839
01:11:28,760 --> 01:11:30,560
to know that I can budget and know that
1840
01:11:30,560 --> 01:11:32,239
if I can afford x amount every single
1841
01:11:32,239 --> 01:11:34,400
month for the next three years or two
1842
01:11:34,400 --> 01:11:38,480
years whatever then I'm happy I can save
1843
01:11:38,480 --> 01:11:41,400
I can pay back debt and that's fine we
1844
01:11:41,400 --> 01:11:43,040
can do the fixed loan and we can only
1845
01:11:43,040 --> 01:11:46,520
have a small amount variable 20 grand 30
1846
01:11:46,520 --> 01:11:48,440
grand up to whatever amount you believe
1847
01:11:48,440 --> 01:11:50,560
you can offset during that term so in
1848
01:11:50,560 --> 01:11:52,080
the two years if you think you can save
1849
01:11:52,080 --> 01:11:55,040
20 grand then then have a 20 G variable
1850
01:11:55,040 --> 01:11:57,040
loan because then you can pay that off
1851
01:11:57,040 --> 01:12:00,239
and still have access to it uh as redraw
1852
01:12:00,239 --> 01:12:02,480
and have the flexibility to pay it down
1853
01:12:02,480 --> 01:12:04,440
but if you did everything fixed and all
1854
01:12:04,440 --> 01:12:06,760
of a sudden you had all this extra cash
1855
01:12:06,760 --> 01:12:08,440
and you're limited in terms of where you
1856
01:12:08,440 --> 01:12:09,679
can put it because otherwise you're
1857
01:12:09,679 --> 01:12:11,360
going to lose your fix rate or break the
1858
01:12:11,360 --> 01:12:14,080
loan well you probably should have had
1859
01:12:14,080 --> 01:12:17,560
some of a variable split loan make sense
1860
01:12:17,560 --> 01:12:19,679
yeah 100% And this is what like it's
1861
01:12:19,679 --> 01:12:22,679
we're in a bit of a um cuz we're at
1862
01:12:22,679 --> 01:12:23,880
interest rates where it's like the
1863
01:12:23,880 --> 01:12:26,679
average norm um so it's it's actually
1864
01:12:26,679 --> 01:12:28,600
pretty uncertain whether you should fix
1865
01:12:28,600 --> 01:12:30,800
or you should just wait
1866
01:12:30,800 --> 01:12:33,440
um like personally I'm not going to be
1867
01:12:33,440 --> 01:12:36,320
fixing any of my loans
1868
01:12:36,320 --> 01:12:39,239
um sorry personally I'm not going to be
1869
01:12:39,239 --> 01:12:41,840
fixing any of my loans um for the
1870
01:12:41,840 --> 01:12:43,800
foreseeable future because I do believe
1871
01:12:43,800 --> 01:12:45,400
the interest rates will come back
1872
01:12:45,400 --> 01:12:47,480
slightly but I think they'll stay around
1873
01:12:47,480 --> 01:12:49,800
this level um for the for a while now
1874
01:12:49,800 --> 01:12:52,719
because this is the average um it comes
1875
01:12:52,719 --> 01:12:54,040
back down to when when interest rates
1876
01:12:54,040 --> 01:12:57,480
are very very low um people were fixing
1877
01:12:57,480 --> 01:12:59,280
and that's created the mortgage Cliff
1878
01:12:59,280 --> 01:13:01,080
can you just explain what that is and
1879
01:13:01,080 --> 01:13:03,560
and how impactful that is for like a lot
1880
01:13:03,560 --> 01:13:05,440
of
1881
01:13:05,440 --> 01:13:08,400
Australians yeah so obviously during
1882
01:13:08,400 --> 01:13:11,280
that period of time when interest rates
1883
01:13:11,280 --> 01:13:13,280
were really low people were fixing at
1884
01:13:13,280 --> 01:13:15,760
you know 2% below
1885
01:13:15,760 --> 01:13:19,960
2% and the mortgage Cliff is that when
1886
01:13:19,960 --> 01:13:22,800
the loan comes off of fixed in that
1887
01:13:22,800 --> 01:13:25,800
period of time they're going to now go
1888
01:13:25,800 --> 01:13:29,480
to a variable rate that's you know 6% or
1889
01:13:29,480 --> 01:13:32,520
more and that's a massive shock to the
1890
01:13:32,520 --> 01:13:34,920
system because their repayments on 6%
1891
01:13:34,920 --> 01:13:38,960
versus 2% are significant um and their
1892
01:13:38,960 --> 01:13:41,440
household may not be able to afford that
1893
01:13:41,440 --> 01:13:43,080
and that's assuming their circumstances
1894
01:13:43,080 --> 01:13:45,719
haven't changed if they've gone worse
1895
01:13:45,719 --> 01:13:48,080
less income and obviously we have
1896
01:13:48,080 --> 01:13:50,000
inflation and cost of living's gone up
1897
01:13:50,000 --> 01:13:52,600
so maybe there's less disposable income
1898
01:13:52,600 --> 01:13:55,120
that's a a scary place to be because now
1899
01:13:55,120 --> 01:13:58,000
your loan is unaffordable so then if you
1900
01:13:58,000 --> 01:13:59,639
can't afford to keep the house all you
1901
01:13:59,639 --> 01:14:01,920
can do is sell it and then what are you
1902
01:14:01,920 --> 01:14:03,760
going to do rent or move to another area
1903
01:14:03,760 --> 01:14:06,800
to buy somewhere cheaper um and still
1904
01:14:06,800 --> 01:14:08,360
paying a higher interest rate just less
1905
01:14:08,360 --> 01:14:12,040
of a loan amount um but also the the um
1906
01:14:12,040 --> 01:14:14,320
mortgage prison another termin term
1907
01:14:14,320 --> 01:14:17,040
that's sort of um thrown around that's
1908
01:14:17,040 --> 01:14:19,400
if you're stuck with that bank so if
1909
01:14:19,400 --> 01:14:21,040
you're because remember they they can't
1910
01:14:21,040 --> 01:14:23,560
call that the loan in they can't say now
1911
01:14:23,560 --> 01:14:26,719
that now that you're on 62% and you on
1912
01:14:26,719 --> 01:14:28,320
paper you could only afford you know up
1913
01:14:28,320 --> 01:14:30,239
to say 4 and A2 when we assess the loan
1914
01:14:30,239 --> 01:14:32,760
or 5 and a half they can't just say now
1915
01:14:32,760 --> 01:14:35,120
you need to pay us the loan back in full
1916
01:14:35,120 --> 01:14:36,960
right they don't do that the bank gave
1917
01:14:36,960 --> 01:14:38,920
you a 30-year loan so they kind of have
1918
01:14:38,920 --> 01:14:42,040
to work with you to base based on what
1919
01:14:42,040 --> 01:14:45,600
you can afford to repay and if you're
1920
01:14:45,600 --> 01:14:47,159
wanting to get a better interest rate
1921
01:14:47,159 --> 01:14:48,719
because they've put you on say six and a
1922
01:14:48,719 --> 01:14:50,600
half but the you know a competitor will
1923
01:14:50,600 --> 01:14:52,880
give you say I don't know 5.9 or
1924
01:14:52,880 --> 01:14:53,840
something
1925
01:14:53,840 --> 01:14:56,080
well you want to refinance and logically
1926
01:14:56,080 --> 01:14:58,480
you think well if if I'm paying 6 and a
1927
01:14:58,480 --> 01:15:00,320
half now and another bank's pay paying
1928
01:15:00,320 --> 01:15:01,040
me
1929
01:15:01,040 --> 01:15:03,920
5.9 why can't I get the loan because
1930
01:15:03,920 --> 01:15:06,440
it's lower so if I can if I can show
1931
01:15:06,440 --> 01:15:08,560
that I can pay the 6.5 then I should be
1932
01:15:08,560 --> 01:15:09,920
able to get the loan for 5.9 because
1933
01:15:09,920 --> 01:15:11,920
it's a lower payment right but it's not
1934
01:15:11,920 --> 01:15:14,760
as simple as that the banks do a stress
1935
01:15:14,760 --> 01:15:16,920
test so they calculate 3% above the
1936
01:15:16,920 --> 01:15:19,000
actual rate so they're going to stress
1937
01:15:19,000 --> 01:15:21,000
test your situation and say all right F
1938
01:15:21,000 --> 01:15:23,760
pay 5.9 on the new new loan on the
1939
01:15:23,760 --> 01:15:25,159
existing balance you've had the same
1940
01:15:25,159 --> 01:15:26,639
balance or it's come down slightly in
1941
01:15:26,639 --> 01:15:28,880
the last two or three years uh we're
1942
01:15:28,880 --> 01:15:30,239
going to calculate that instead of
1943
01:15:30,239 --> 01:15:32,400
calculating 5.9 we're going to calculate
1944
01:15:32,400 --> 01:15:37,480
that at um what's that 8.9 all right so
1945
01:15:37,480 --> 01:15:39,080
can you afford the repairments at nearly
1946
01:15:39,080 --> 01:15:42,679
9% probably not and because you can't
1947
01:15:42,679 --> 01:15:44,239
they can't approve the loan for you even
1948
01:15:44,239 --> 01:15:45,560
though it's the exact same amount you
1949
01:15:45,560 --> 01:15:47,760
already owe so that's the prison that
1950
01:15:47,760 --> 01:15:49,360
you're in because you can't get a new
1951
01:15:49,360 --> 01:15:51,280
loan to refinance you're stuck with the
1952
01:15:51,280 --> 01:15:52,639
same bank that originally let you the
1953
01:15:52,639 --> 01:15:56,920
money so you're at I guess you're at the
1954
01:15:56,920 --> 01:15:58,639
control of whatever they want to charge
1955
01:15:58,639 --> 01:16:00,719
you they don't unless you sell that's
1956
01:16:00,719 --> 01:16:04,400
your only way out so the way they've
1957
01:16:04,400 --> 01:16:08,520
tackled that so that people still can
1958
01:16:08,520 --> 01:16:12,000
have a opportunity to refinance is four
1959
01:16:12,000 --> 01:16:14,040
Banks or five banks have come up with a
1960
01:16:14,040 --> 01:16:16,760
a streamline process with a special APPA
1961
01:16:16,760 --> 01:16:21,400
ruling where they can use a 1% buffer
1962
01:16:21,400 --> 01:16:24,880
instead of a 3% buff them so if they can
1963
01:16:24,880 --> 01:16:27,360
get a rate of say 5.9 they'll calculate
1964
01:16:27,360 --> 01:16:30,000
it at 6.9 so if they can still show some
1965
01:16:30,000 --> 01:16:32,239
level of affordability that stress test
1966
01:16:32,239 --> 01:16:34,440
then they can still refinance but to be
1967
01:16:34,440 --> 01:16:35,880
honest with you I haven't done many of
1968
01:16:35,880 --> 01:16:38,560
them I've done like two the most of
1969
01:16:38,560 --> 01:16:40,480
people who are with a a bank that
1970
01:16:40,480 --> 01:16:43,000
they're in a mortgage uh prison
1971
01:16:43,000 --> 01:16:46,000
typically the banks have been flexible
1972
01:16:46,000 --> 01:16:49,560
in giving them a competitive rate what
1973
01:16:49,560 --> 01:16:52,360
the in terms of what the variable uh
1974
01:16:52,360 --> 01:16:54,120
rate would be that the market is
1975
01:16:54,120 --> 01:16:58,120
offering so so they're not in a in a in
1976
01:16:58,120 --> 01:16:59,960
a way they are in a prison but the
1977
01:16:59,960 --> 01:17:01,560
prison is giving them a rate that they
1978
01:17:01,560 --> 01:17:03,719
would get anyway so that's
1979
01:17:03,719 --> 01:17:07,199
okay right it's only if that bank is not
1980
01:17:07,199 --> 01:17:09,840
giving them a um a discount if they're
1981
01:17:09,840 --> 01:17:12,800
not matching other Banks and they're
1982
01:17:12,800 --> 01:17:14,840
just forcing them to pay a higher rate
1983
01:17:14,840 --> 01:17:16,400
that's when that that's it's obviously
1984
01:17:16,400 --> 01:17:17,880
not a good situation to be in but if
1985
01:17:17,880 --> 01:17:19,520
they're willing to price it for you and
1986
01:17:19,520 --> 01:17:21,000
and bring the rate down to whatever the
1987
01:17:21,000 --> 01:17:24,320
Market's offering then yeah that's
1988
01:17:24,320 --> 01:17:25,679
you're pretty much that's the best
1989
01:17:25,679 --> 01:17:27,320
you're going to get to an extent at
1990
01:17:27,320 --> 01:17:29,159
least for this period of time because
1991
01:17:29,159 --> 01:17:32,000
remember if you're adding 3% buffer well
1992
01:17:32,000 --> 01:17:33,400
then that means that you you're
1993
01:17:33,400 --> 01:17:35,760
protecting the market for rates to go up
1994
01:17:35,760 --> 01:17:37,960
to 9% but realistically will they go up
1995
01:17:37,960 --> 01:17:40,040
that high what market conditions do we
1996
01:17:40,040 --> 01:17:41,880
need to be in for that to
1997
01:17:41,880 --> 01:17:44,840
happen I don't know you tell me like if
1998
01:17:44,840 --> 01:17:46,280
people owe more of a million dollars if
1999
01:17:46,280 --> 01:17:48,760
they're paying 9% I'm pretty sure most
2000
01:17:48,760 --> 01:17:49,719
people aren't going to be borrowing
2001
01:17:49,719 --> 01:17:51,320
money anymore and that's going to affect
2002
01:17:51,320 --> 01:17:53,719
the economy at at Large yeah there has
2003
01:17:53,719 --> 01:17:56,560
to be like some you know sense in in the
2004
01:17:56,560 --> 01:17:58,480
actual rate that they're putting on top
2005
01:17:58,480 --> 01:18:00,760
of the of the rate that's already there
2006
01:18:00,760 --> 01:18:03,159
like because we were so low because it
2007
01:18:03,159 --> 01:18:05,040
was like literally like record low
2008
01:18:05,040 --> 01:18:08,400
interest at 2% 3% on top of that was
2009
01:18:08,400 --> 01:18:09,800
actually pretty fair it's actually
2010
01:18:09,800 --> 01:18:11,120
probably a little bit under it probably
2011
01:18:11,120 --> 01:18:13,159
should have been like 4% to get us like
2012
01:18:13,159 --> 01:18:17,239
this like 6% like where it could go but
2013
01:18:17,239 --> 01:18:19,400
there has to be uh you know a little bit
2014
01:18:19,400 --> 01:18:21,639
of sense on like okay well is it going
2015
01:18:21,639 --> 01:18:24,760
to go to 9% probably not like that
2016
01:18:24,760 --> 01:18:27,679
that's a really like we've already like
2017
01:18:27,679 --> 01:18:30,960
have a huge cost of living right now CPI
2018
01:18:30,960 --> 01:18:33,560
is going down although petrol prices are
2019
01:18:33,560 --> 01:18:36,880
still up a little um but
2020
01:18:36,880 --> 01:18:39,239
realistically there has to be some sense
2021
01:18:39,239 --> 01:18:40,800
saying it's probably not going to go to
2022
01:18:40,800 --> 01:18:42,520
9% and if it
2023
01:18:42,520 --> 01:18:45,040
is there's going to be some economic
2024
01:18:45,040 --> 01:18:46,520
catastrophe again like it's just going
2025
01:18:46,520 --> 01:18:49,120
to be way too much interest for people
2026
01:18:49,120 --> 01:18:51,000
and there's going to be some serious
2027
01:18:51,000 --> 01:18:53,600
like ramifications from that um and
2028
01:18:53,600 --> 01:18:55,239
there already have been it hasn't been
2029
01:18:55,239 --> 01:18:58,560
like as hugely widely reported um but
2030
01:18:58,560 --> 01:19:00,400
people have been having to sell people
2031
01:19:00,400 --> 01:19:02,600
have been losing their houses um it's
2032
01:19:02,600 --> 01:19:06,679
just not widely reported um but in terms
2033
01:19:06,679 --> 01:19:08,360
of like where the interest rates could
2034
01:19:08,360 --> 01:19:11,159
go now um if we're at like you know six
2035
01:19:11,159 --> 01:19:14,080
or 7% for a commercial property then the
2036
01:19:14,080 --> 01:19:15,639
the actual buffer they put on it should
2037
01:19:15,639 --> 01:19:18,040
only be like one or one and a half% it
2038
01:19:18,040 --> 01:19:20,600
should it should be minimized like it
2039
01:19:20,600 --> 01:19:21,960
has been with um that product you're
2040
01:19:21,960 --> 01:19:24,840
talking about
2041
01:19:25,199 --> 01:19:27,560
yeah yeah exactly right I think that's
2042
01:19:27,560 --> 01:19:29,400
probably where things will go at some
2043
01:19:29,400 --> 01:19:31,920
point next year um where they realize
2044
01:19:31,920 --> 01:19:33,360
that rates aren't going to go that high
2045
01:19:33,360 --> 01:19:35,600
so they're probably going to go across
2046
01:19:35,600 --> 01:19:37,120
the board and only put a one and a half
2047
01:19:37,120 --> 01:19:40,440
percent buffer or 2% buffer maybe Max um
2048
01:19:40,440 --> 01:19:42,840
to allow more people to borrow and to
2049
01:19:42,840 --> 01:19:45,760
keep the economy moving um and one other
2050
01:19:45,760 --> 01:19:48,440
thing I want to touch on which was the
2051
01:19:48,440 --> 01:19:51,120
the Le stock product um for commercial
2052
01:19:51,120 --> 01:19:54,440
property so that's a that's been a tough
2053
01:19:54,440 --> 01:19:56,840
product to get across the line since
2054
01:19:56,840 --> 01:19:59,440
we've had rate Rises because because of
2055
01:19:59,440 --> 01:20:01,480
the rate Rises they've added on the
2056
01:20:01,480 --> 01:20:03,239
stress test calculations on the way they
2057
01:20:03,239 --> 01:20:05,840
calculate the interest coverage
2058
01:20:05,840 --> 01:20:08,360
ratio but one of the banks and I won't
2059
01:20:08,360 --> 01:20:10,920
tell you who that bank is because um I I
2060
01:20:10,920 --> 01:20:12,639
need to determine your circumstances
2061
01:20:12,639 --> 01:20:14,560
first but One bank has just come out
2062
01:20:14,560 --> 01:20:16,600
with a new le stock product uh in the
2063
01:20:16,600 --> 01:20:20,360
last two months and it is basically
2064
01:20:20,360 --> 01:20:22,239
blowing the other Banks out of the water
2065
01:20:22,239 --> 01:20:24,400
in terms of of borrowing capacity it's
2066
01:20:24,400 --> 01:20:26,480
back to what it was it's 1.5 times
2067
01:20:26,480 --> 01:20:28,920
interest cover ratio on the actual rate
2068
01:20:28,920 --> 01:20:31,960
it's up to 65% lvr and we're talking
2069
01:20:31,960 --> 01:20:35,800
about rates between 6.54 and 6.59% that
2070
01:20:35,800 --> 01:20:37,600
we're getting right now so if we're
2071
01:20:37,600 --> 01:20:41,600
netting net percent net 6.5% net yield
2072
01:20:41,600 --> 01:20:45,080
even 6.2 maybe on a commercial property
2073
01:20:45,080 --> 01:20:47,360
that should be enough to actually borrow
2074
01:20:47,360 --> 01:20:50,719
65% lvr so if you can get 65 at that
2075
01:20:50,719 --> 01:20:52,560
rate and at the moment there's a promo I
2076
01:20:52,560 --> 01:20:53,480
don't I don't know how long that promo
2077
01:20:53,480 --> 01:20:56,080
is going to be but they're waving uh
2078
01:20:56,080 --> 01:20:57,480
depending on which state you're in I've
2079
01:20:57,480 --> 01:20:58,880
noticed that they're actually waving the
2080
01:20:58,880 --> 01:21:01,880
application fee which is up to 75% of
2081
01:21:01,880 --> 01:21:04,159
the loan amount so no application fee
2082
01:21:04,159 --> 01:21:05,920
and they're also covering the valuation
2083
01:21:05,920 --> 01:21:07,719
cost as well and you can imagine that
2084
01:21:07,719 --> 01:21:09,320
could be two three grand sometimes for
2085
01:21:09,320 --> 01:21:11,440
commercial property so essentially next
2086
01:21:11,440 --> 01:21:14,719
to nothing in fees um no service ability
2087
01:21:14,719 --> 01:21:15,960
assessment except for the rent and
2088
01:21:15,960 --> 01:21:19,080
you're getting 65% lvr and remember I
2089
01:21:19,080 --> 01:21:21,040
also do Equity release to cover that
2090
01:21:21,040 --> 01:21:22,840
deposit as well so if you've got enough
2091
01:21:22,840 --> 01:21:25,560
capacity to to borrow the deposit the
2092
01:21:25,560 --> 01:21:28,760
35% that you need uh plus stamp Duty
2093
01:21:28,760 --> 01:21:31,239
plus say buyers agent fee well you could
2094
01:21:31,239 --> 01:21:35,840
literally get um 100% loan and otherwise
2095
01:21:35,840 --> 01:21:36,920
wasn't possible because of your
2096
01:21:36,920 --> 01:21:40,000
borrowing power um it won't be you know
2097
01:21:40,000 --> 01:21:41,239
positive cash flow if you borrowed
2098
01:21:41,239 --> 01:21:42,920
everything but at least you're getting
2099
01:21:42,920 --> 01:21:45,040
in right and if you got access to that
2100
01:21:45,040 --> 01:21:47,320
that equity and that you know even if
2101
01:21:47,320 --> 01:21:49,400
you got some cash contribution you know
2102
01:21:49,400 --> 01:21:51,320
I'm doing one at the moment for you know
2103
01:21:51,320 --> 01:21:54,520
one and a half million so the max loan
2104
01:21:54,520 --> 01:21:55,960
amount is 1 and a half million for this
2105
01:21:55,960 --> 01:21:58,360
product so what's 1 and a half million
2106
01:21:58,360 --> 01:22:00,960
what 65% on 1 and a half million what's
2107
01:22:00,960 --> 01:22:03,080
that I don't know uh I can't calculate
2108
01:22:03,080 --> 01:22:04,520
in my head right now but that's that's
2109
01:22:04,520 --> 01:22:07,159
getting them at least to2 something
2110
01:22:07,159 --> 01:22:08,440
million doll property so it's a one and
2111
01:22:08,440 --> 01:22:11,920
a half million um starting
2112
01:22:11,920 --> 01:22:13,880
deposit No
2113
01:22:13,880 --> 01:22:17,040
loan no one and a half million is 65% so
2114
01:22:17,040 --> 01:22:19,120
calculate that so if you get one and a
2115
01:22:19,120 --> 01:22:22,280
half million make that 65% so yeah so
2116
01:22:22,280 --> 01:22:25,880
divide that by 65 and times it by by by
2117
01:22:25,880 --> 01:22:32,199
10 so div by 65 by 100 is 65% of 1.5
2118
01:22:32,400 --> 01:22:35,480
million no the other way around you want
2119
01:22:35,480 --> 01:22:39,800
1.5 million to actually be 65% of a x
2120
01:22:39,800 --> 01:22:42,880
purchase price somewhat does that make
2121
01:22:42,880 --> 01:22:45,880
sense
2122
01:22:46,120 --> 01:22:49,480
so so the way I would calculate that is
2123
01:22:49,480 --> 01:22:54,560
one and a half million divided by
2124
01:22:55,520 --> 01:23:01,639
65 okay times it by 100.5 divided by 65
2125
01:23:01,639 --> 01:23:04,760
times 100 so it's
2126
01:23:04,760 --> 01:23:07,960
2376 by
2127
01:23:09,080 --> 01:23:12,120
100 see yeah so $2.3 million purchase
2128
01:23:12,120 --> 01:23:13,600
price you can
2129
01:23:13,600 --> 01:23:17,280
get as a purchase price and borrow 1.5
2130
01:23:17,280 --> 01:23:20,400
million on a least stock loan yes 65%
2131
01:23:20,400 --> 01:23:22,679
you'll have to uh share what uh Bank
2132
01:23:22,679 --> 01:23:24,440
doing that with me off air cuz that
2133
01:23:24,440 --> 01:23:27,080
sounds like an absolute Ripper product
2134
01:23:27,080 --> 01:23:30,679
and if you want Victor to also share um
2135
01:23:30,679 --> 01:23:33,719
how you can get some free money give him
2136
01:23:33,719 --> 01:23:35,639
a call so mate where can the listeners
2137
01:23:35,639 --> 01:23:38,120
go to find out more about
2138
01:23:38,120 --> 01:23:40,480
yourself okay just for starters there no
2139
01:23:40,480 --> 01:23:42,159
free money here you have to pay interest
2140
01:23:42,159 --> 01:23:46,719
in fees it is free
2141
01:23:47,280 --> 01:23:50,080
money we all are free bud don't
2142
01:23:50,080 --> 01:23:52,840
we well listeners listeners can find me
2143
01:23:52,840 --> 01:23:55,920
at my website Lagos Financial .com. or
2144
01:23:55,920 --> 01:23:57,719
they can just Google Lagos Financial
2145
01:23:57,719 --> 01:23:59,600
they can also find me on my own podcast
2146
01:23:59,600 --> 01:24:01,480
which is debt to Financial Freedom you
2147
01:24:01,480 --> 01:24:03,639
find that on YouTube as well as um you
2148
01:24:03,639 --> 01:24:06,040
know iTunes and
2149
01:24:06,040 --> 01:24:08,760
Spotify and yeah look you can book in a
2150
01:24:08,760 --> 01:24:11,520
a free chat we can just get to you know
2151
01:24:11,520 --> 01:24:13,360
see if your circumstances allow you to
2152
01:24:13,360 --> 01:24:15,639
borrow um there's no cost to have a chat
2153
01:24:15,639 --> 01:24:17,840
with me and if if we're the right fit to
2154
01:24:17,840 --> 01:24:20,000
work together we can discuss where to go
2155
01:24:20,000 --> 01:24:22,639
from there all right man well that's a
2156
01:24:22,639 --> 01:24:26,400
wrap this has been the financial experts
2157
01:24:26,400 --> 01:24:28,400
Victor Lagos and Andrew Bean on the
2158
01:24:28,400 --> 01:24:31,000
Financial Freedom series make sure you
2159
01:24:31,000 --> 01:24:32,639
go and uh talk to Victor to get some
2160
01:24:32,639 --> 01:24:35,000
free money he's just handing it out all
2161
01:24:35,000 --> 01:24:36,120
right
2162
01:24:36,120 --> 01:24:39,440
guys see you guys thank you take care
2163
01:24:39,440 --> 01:24:42,239
thanks Andrew
2164
01:24:42,600 --> 01:24:45,600
cheers
