1 00:00:00,000 --> 00:00:00,399 [Music] 2 00:00:00,399 --> 00:00:02,040 many times people refinance because they 3 00:00:02,040 --> 00:00:05,040 want a better deal and the broker sends 4 00:00:05,040 --> 00:00:07,520 them a comparison and says this is you 5 00:00:07,520 --> 00:00:10,320 know these are the rates you can get 6 00:00:10,320 --> 00:00:13,960 well that may not be the only product 7 00:00:13,960 --> 00:00:16,000 you can get that's just the one that 8 00:00:16,000 --> 00:00:19,160 broker is recommending due to you know 9 00:00:19,160 --> 00:00:22,160 your objectives and also due to them 10 00:00:22,160 --> 00:00:24,400 being comfortable using those lenders 11 00:00:24,400 --> 00:00:26,199 welcome to the debt to Financial Freedom 12 00:00:26,199 --> 00:00:28,519 podcast I'm your host Victor Lagos and 13 00:00:28,519 --> 00:00:30,640 the founder of Lagos Financial 14 00:00:30,640 --> 00:00:32,159 I've been in the finance and lending 15 00:00:32,159 --> 00:00:34,320 industry for 16 years and I've 16 00:00:34,320 --> 00:00:36,079 personally made Financial mistakes and 17 00:00:36,079 --> 00:00:38,920 learned from them I started this podcast 18 00:00:38,920 --> 00:00:40,879 to share stories and lessons on my own 19 00:00:40,879 --> 00:00:43,280 journey and to share insights that may 20 00:00:43,280 --> 00:00:45,399 help others on their journey and I 21 00:00:45,399 --> 00:00:47,239 interview people that I've connected 22 00:00:47,239 --> 00:00:49,160 with that share the same values and 23 00:00:49,160 --> 00:00:51,399 Mission to help others create Financial 24 00:00:51,399 --> 00:00:53,960 Freedom my goal with this podcast is to 25 00:00:53,960 --> 00:00:57,520 share raw honest transparent and helpful 26 00:00:57,520 --> 00:00:59,559 stories that you can relate to and 27 00:00:59,559 --> 00:01:01,199 inspire spires you to take control of 28 00:01:01,199 --> 00:01:03,640 your finances and only have debt that 29 00:01:03,640 --> 00:01:05,920 brings you closer to Financial 30 00:01:05,920 --> 00:01:08,640 Freedom all right we are back with the 31 00:01:08,640 --> 00:01:10,920 Financial Freedom series my name is 32 00:01:10,920 --> 00:01:13,720 Andrew bean and I'm here with my man top 33 00:01:13,720 --> 00:01:16,200 mortgage broker and financial expert 34 00:01:16,200 --> 00:01:18,080 Victor Lagos how are you 35 00:01:18,080 --> 00:01:20,759 mate good Andrew how are you Happy New 36 00:01:20,759 --> 00:01:22,640 Year Happy New Year to you mate it's 37 00:01:22,640 --> 00:01:24,799 been a while but I'm glad we're back to 38 00:01:24,799 --> 00:01:27,840 it even though this is the the final 39 00:01:27,840 --> 00:01:30,479 episode in our financial fre 40 00:01:30,479 --> 00:01:33,079 series I know I can't believe it's uh 41 00:01:33,079 --> 00:01:35,560 coming to an end it's been great yeah 42 00:01:35,560 --> 00:01:37,720 all all good things do have to come to 43 00:01:37,720 --> 00:01:40,320 an end but uh we've got the the final 44 00:01:40,320 --> 00:01:42,119 episode coming for you right now which 45 00:01:42,119 --> 00:01:44,960 is a top episode um because we're 46 00:01:44,960 --> 00:01:47,600 basically talking about how we can 47 00:01:47,600 --> 00:01:49,880 refinance the property that we purchased 48 00:01:49,880 --> 00:01:51,600 putting it all together so it can keep 49 00:01:51,600 --> 00:01:54,840 the portfolio going and buy more cash 50 00:01:54,840 --> 00:01:56,479 flowing real 51 00:01:56,479 --> 00:01:59,039 estate so mate can you just explain what 52 00:01:59,039 --> 00:02:01,920 it means to refinance your property and 53 00:02:01,920 --> 00:02:04,280 and why homeowners and investors might 54 00:02:04,280 --> 00:02:05,719 consider doing 55 00:02:05,719 --> 00:02:08,758 that yeah so refinancing is basically 56 00:02:08,758 --> 00:02:12,680 getting one loan to pay out another and 57 00:02:12,680 --> 00:02:14,400 usually the most common reason someone 58 00:02:14,400 --> 00:02:16,160 we refinance is just to get a better 59 00:02:16,160 --> 00:02:18,360 interest rate um and then that would 60 00:02:18,360 --> 00:02:20,959 also mean to lower their repayments but 61 00:02:20,959 --> 00:02:23,400 when you're an investor there's other 62 00:02:23,400 --> 00:02:25,239 objectives it's not just about the 63 00:02:25,239 --> 00:02:27,040 interest rate and lowering the 64 00:02:27,040 --> 00:02:28,879 repayments it's about setting up the 65 00:02:28,879 --> 00:02:30,319 right structures 66 00:02:30,319 --> 00:02:33,760 so interest only um you know it's also 67 00:02:33,760 --> 00:02:36,040 about extracting Equity so if you're 68 00:02:36,040 --> 00:02:38,040 wanting to use equity as a deposit to 69 00:02:38,040 --> 00:02:39,879 keep growing your portfolio that's 70 00:02:39,879 --> 00:02:43,159 another reason why people would 71 00:02:43,319 --> 00:02:46,319 refinance okay awesome so like in terms 72 00:02:46,319 --> 00:02:48,040 of using Equity can you just explain 73 00:02:48,040 --> 00:02:49,519 this is a conversation that I have with 74 00:02:49,519 --> 00:02:52,599 a lot of um clients as well um can you 75 00:02:52,599 --> 00:02:56,159 just explain the um flow and effect of 76 00:02:56,159 --> 00:02:58,680 using equity for an investment property 77 00:02:58,680 --> 00:03:02,319 how that you know go 100% 78 00:03:02,319 --> 00:03:04,159 financed yeah 79 00:03:04,159 --> 00:03:07,560 so I think the general rule of thumb is 80 00:03:07,560 --> 00:03:10,720 to consider that even if your property 81 00:03:10,720 --> 00:03:13,680 is say worth a million dollars you can 82 00:03:13,680 --> 00:03:17,200 only access 80% of it so a million is an 83 00:03:17,200 --> 00:03:18,879 example obviously could be worth less 84 00:03:18,879 --> 00:03:20,920 than that or more but a million dollars 85 00:03:20,920 --> 00:03:23,720 if you were to access 80% that's 86 00:03:23,720 --> 00:03:28,000 $800,000 total so if you owed already on 87 00:03:28,000 --> 00:03:30,319 your mortgage say 88 00:03:30,319 --> 00:03:33,400 600,000 that means you've got $200,000 89 00:03:33,400 --> 00:03:37,280 of accessible Equity so so misconception 90 00:03:37,280 --> 00:03:39,159 is that people can obviously borrow the 91 00:03:39,159 --> 00:03:41,560 full million well the equity is 92 00:03:41,560 --> 00:03:44,200 obviously important for the for you 93 00:03:44,200 --> 00:03:46,280 that's your skin in the game for the 94 00:03:46,280 --> 00:03:48,200 bank it's obviously the risk not 95 00:03:48,200 --> 00:03:50,680 exceeding the 80% you can go higher if 96 00:03:50,680 --> 00:03:52,680 you pay mortgage insurance but when 97 00:03:52,680 --> 00:03:54,920 you're if you're going to access Equity 98 00:03:54,920 --> 00:03:57,319 to buy another property it's typically 99 00:03:57,319 --> 00:03:59,200 capped at the 80% and that's because 100 00:03:59,200 --> 00:04:00,920 you've got less less restrictions in how 101 00:04:00,920 --> 00:04:03,319 much cash you can access and another 102 00:04:03,319 --> 00:04:05,840 thing another way um what we call it is 103 00:04:05,840 --> 00:04:09,400 is cash out so Cash Out is when you when 104 00:04:09,400 --> 00:04:12,079 a bank will lend you the equity as cash 105 00:04:12,079 --> 00:04:14,879 so then you can use that to put as a 106 00:04:14,879 --> 00:04:17,120 deposit or obviously you can use it for 107 00:04:17,120 --> 00:04:19,199 other things as well but the other way 108 00:04:19,199 --> 00:04:21,079 around it is if you bought a property at 109 00:04:21,079 --> 00:04:23,080 the same time and you don't have access 110 00:04:23,080 --> 00:04:25,639 to the cash that's what's called cross 111 00:04:25,639 --> 00:04:27,759 collateralization and a lot of investors 112 00:04:27,759 --> 00:04:29,639 don't like doing that because it ties 113 00:04:29,639 --> 00:04:31,639 the two properties together and it 114 00:04:31,639 --> 00:04:34,360 actually uh puts it puts the borrower or 115 00:04:34,360 --> 00:04:36,639 the investor at risk because if one 116 00:04:36,639 --> 00:04:38,320 property goes up in value and the other 117 00:04:38,320 --> 00:04:40,400 one goes down you can't access the 118 00:04:40,400 --> 00:04:41,960 equity of the one that just went up 119 00:04:41,960 --> 00:04:43,440 because the other one went down does 120 00:04:43,440 --> 00:04:44,400 that make 121 00:04:44,400 --> 00:04:46,919 sense yeah 100% so if you're with the 122 00:04:46,919 --> 00:04:49,520 same bank you're cross collateralizing 123 00:04:49,520 --> 00:04:51,199 those uh those 124 00:04:51,199 --> 00:04:53,720 assets yeah yeah and you can still use 125 00:04:53,720 --> 00:04:57,160 the same rule around the 80% so say you 126 00:04:57,160 --> 00:04:59,560 you know you borrowed another property 127 00:04:59,560 --> 00:05:03,320 so you bought another property up to say 128 00:05:03,320 --> 00:05:06,639 let's just use an example of 129 00:05:06,639 --> 00:05:09,919 600,000 you bought a $600,000 property 130 00:05:09,919 --> 00:05:11,199 and you borrowed 131 00:05:11,199 --> 00:05:13,560 $400,000 uh from the bank to buy that 132 00:05:13,560 --> 00:05:16,199 property you still need another $2,000 133 00:05:16,199 --> 00:05:19,039 to cover the deposit so therefore if you 134 00:05:19,039 --> 00:05:21,520 had equity on another property that you 135 00:05:21,520 --> 00:05:23,600 use as cash that's how you end up 136 00:05:23,600 --> 00:05:25,759 borrowing 100% because now You' borrowed 137 00:05:25,759 --> 00:05:28,199 200,000 from your existing property 138 00:05:28,199 --> 00:05:30,120 400,000 against the one that you're 139 00:05:30,120 --> 00:05:32,199 buying combined you're borrowing the 140 00:05:32,199 --> 00:05:34,880 full 600k of course there's stamp Duty 141 00:05:34,880 --> 00:05:36,520 and other costs but we can you know 142 00:05:36,520 --> 00:05:38,560 account for that um by increasing the 143 00:05:38,560 --> 00:05:40,319 equity that you're taking 144 00:05:40,319 --> 00:05:42,880 yeah yeah and this is the conversation 145 00:05:42,880 --> 00:05:46,000 what I have with a couple of um clients 146 00:05:46,000 --> 00:05:49,319 um with the buyer agency is that like 147 00:05:49,319 --> 00:05:51,720 like you know that if you use equity um 148 00:05:51,720 --> 00:05:52,759 you know you're going to be paying 149 00:05:52,759 --> 00:05:54,600 interest on the the deposit the equity 150 00:05:54,600 --> 00:05:56,160 that you've drawn out and you're also 151 00:05:56,160 --> 00:05:58,479 going to be getting a loan for your next 152 00:05:58,479 --> 00:06:00,560 property so essentially you're 100% 153 00:06:00,560 --> 00:06:02,759 finance and it's going to be very hard 154 00:06:02,759 --> 00:06:04,960 for that property to cash flow um 155 00:06:04,960 --> 00:06:07,520 because you're literally 100% finance so 156 00:06:07,520 --> 00:06:08,840 if you're only getting a six to six and 157 00:06:08,840 --> 00:06:11,400 a half% return and you're paying 7% 158 00:06:11,400 --> 00:06:14,560 interest rate you are underwater and um 159 00:06:14,560 --> 00:06:16,759 it's funny that like I don't know if 160 00:06:16,759 --> 00:06:19,080 like it's just strange people don't 161 00:06:19,080 --> 00:06:22,599 realize that um that you know being 100% 162 00:06:22,599 --> 00:06:24,039 finance that's that's a lot of Finance 163 00:06:24,039 --> 00:06:25,080 against that 164 00:06:25,080 --> 00:06:27,520 property yeah I have that conversation 165 00:06:27,520 --> 00:06:30,080 all the time um where people like y I 166 00:06:30,080 --> 00:06:31,720 asked them you have you got access to a 167 00:06:31,720 --> 00:06:34,199 deposit they say y got I've got Equity 168 00:06:34,199 --> 00:06:35,560 I'm like okay have you already got 169 00:06:35,560 --> 00:06:37,520 access to the cash or is it just sitting 170 00:06:37,520 --> 00:06:39,000 in equity they're like no I've got it 171 00:06:39,000 --> 00:06:40,759 INE Equity I'm like all right so that 172 00:06:40,759 --> 00:06:42,639 means we have to borrow the funds to use 173 00:06:42,639 --> 00:06:44,720 that as a deposit so therefore the the 174 00:06:44,720 --> 00:06:46,560 rent now needs to cover the interest on 175 00:06:46,560 --> 00:06:48,639 the the purchase loan say it's a 176 00:06:48,639 --> 00:06:49,919 commercial property it needs to cover 177 00:06:49,919 --> 00:06:52,360 that and it needs to cover the equity uh 178 00:06:52,360 --> 00:06:54,160 equity loan that you're taking out to 179 00:06:54,160 --> 00:06:56,080 cover the deposit so once you actually 180 00:06:56,080 --> 00:06:59,520 put the cash flow in to see how that 181 00:06:59,520 --> 00:07:02,680 looks a lot of the time it's negative um 182 00:07:02,680 --> 00:07:04,280 so people need to be prepared for that 183 00:07:04,280 --> 00:07:06,120 but at least it's tax deductible and of 184 00:07:06,120 --> 00:07:08,080 course for commercial property the rent 185 00:07:08,080 --> 00:07:10,560 will go up with fixed increases Etc and 186 00:07:10,560 --> 00:07:12,520 also we're working off today's rates and 187 00:07:12,520 --> 00:07:15,039 rates will likely reduce at some point 188 00:07:15,039 --> 00:07:17,000 so it's not always going to be negative 189 00:07:17,000 --> 00:07:18,680 and it's still better than residential 190 00:07:18,680 --> 00:07:20,560 in terms of cash flow but still 191 00:07:20,560 --> 00:07:22,199 something to consider 192 00:07:22,199 --> 00:07:24,879 upfront your what I what I say is that 193 00:07:24,879 --> 00:07:26,319 like what we need to do is we need to 194 00:07:26,319 --> 00:07:28,680 put put together a pay down strategy so 195 00:07:28,680 --> 00:07:30,360 there needs to be an aggressive pay down 196 00:07:30,360 --> 00:07:33,199 strategy to pay down that deposit or the 197 00:07:33,199 --> 00:07:35,000 part of the deposit so it could be 20 or 198 00:07:35,000 --> 00:07:37,280 30% of the commercial property or it 199 00:07:37,280 --> 00:07:39,720 could be just 10% of the the residential 200 00:07:39,720 --> 00:07:42,560 property but for a commercial property 201 00:07:42,560 --> 00:07:44,280 to do what it's supposed to do which is 202 00:07:44,280 --> 00:07:46,720 cash flow um there needs to be an 203 00:07:46,720 --> 00:07:48,520 aggressive pay down strategy if you're 204 00:07:48,520 --> 00:07:51,680 using all Equity to buy that 205 00:07:51,680 --> 00:07:53,800 property yeah yeah that makes total 206 00:07:53,800 --> 00:07:56,159 sense yeah you can't keep it in the 207 00:07:56,159 --> 00:07:58,800 negative cash flow position for too long 208 00:07:58,800 --> 00:08:01,080 especially if you're wanting to keep 209 00:08:01,080 --> 00:08:04,800 growing your portfolio in your own name 210 00:08:04,800 --> 00:08:08,520 and you've just borrowed say um in in in 211 00:08:08,520 --> 00:08:11,120 a trust right we've talked about this in 212 00:08:11,120 --> 00:08:14,199 a previous episode where if if it's 213 00:08:14,199 --> 00:08:16,520 positive cash flow or if it's 214 00:08:16,520 --> 00:08:18,840 self-sufficient and and an accountant or 215 00:08:18,840 --> 00:08:20,240 your particular accountant will actually 216 00:08:20,240 --> 00:08:21,560 write and say that that is 217 00:08:21,560 --> 00:08:23,199 self-sufficient and able to meet its 218 00:08:23,199 --> 00:08:25,319 Financial commitments well then we can 219 00:08:25,319 --> 00:08:26,960 exclude it from your personal borrowing 220 00:08:26,960 --> 00:08:29,000 capacity but if you're carrying it and 221 00:08:29,000 --> 00:08:30,960 it's negative well the accountant is not 222 00:08:30,960 --> 00:08:33,440 going to put their name at risk and say 223 00:08:33,440 --> 00:08:35,399 that it's positive when it's not so 224 00:08:35,399 --> 00:08:37,000 that's why you got to have that strategy 225 00:08:37,000 --> 00:08:38,640 to get it into positive as quickly as 226 00:08:38,640 --> 00:08:42,440 you can yeah 100% And this is not like 227 00:08:42,440 --> 00:08:44,600 um a magic formula you will need outside 228 00:08:44,600 --> 00:08:47,000 money um to be able to pay that down the 229 00:08:47,000 --> 00:08:48,440 property is not going to be able to pay 230 00:08:48,440 --> 00:08:50,920 itself off um so when I talk about an 231 00:08:50,920 --> 00:08:52,880 aggressive pay down strategy that's 232 00:08:52,880 --> 00:08:55,440 outside funds from that asset from the 233 00:08:55,440 --> 00:08:57,320 from the actual property to be able to 234 00:08:57,320 --> 00:08:59,760 really um keep putting down that that 235 00:08:59,760 --> 00:09:01,560 cash and then once you get it to a point 236 00:09:01,560 --> 00:09:04,839 where it's about 20 or 30% paid down um 237 00:09:04,839 --> 00:09:06,040 that's when the property will start 238 00:09:06,040 --> 00:09:07,480 doing what it's supposed to do cash 239 00:09:07,480 --> 00:09:10,000 flowing and um you can kind of sit back 240 00:09:10,000 --> 00:09:12,160 and then start accumulating that cash 241 00:09:12,160 --> 00:09:13,760 either for another deposit or even 242 00:09:13,760 --> 00:09:16,440 paying down the loan even more um but in 243 00:09:16,440 --> 00:09:19,800 terms of like um interest rates or like 244 00:09:19,800 --> 00:09:21,279 uh you know rates that we're going to be 245 00:09:21,279 --> 00:09:24,519 seeing for refinancing say a residential 246 00:09:24,519 --> 00:09:27,040 property right now Victor what what will 247 00:09:27,040 --> 00:09:30,680 be seeing the market right now 248 00:09:30,680 --> 00:09:32,160 so at the moment we're looking at sort 249 00:09:32,160 --> 00:09:34,320 of uh mid to high 250 00:09:34,320 --> 00:09:37,839 sixes and it's hard to know if that's 251 00:09:37,839 --> 00:09:39,880 going to continue or if there going to 252 00:09:39,880 --> 00:09:43,360 be more rate Rises before they start 253 00:09:43,360 --> 00:09:45,800 reducing uh I think 254 00:09:45,800 --> 00:09:48,680 the the the media out there is sort of 255 00:09:48,680 --> 00:09:51,519 changing the story quite a bit um and 256 00:09:51,519 --> 00:09:53,360 then also we've got to consider Global 257 00:09:53,360 --> 00:09:55,079 markets as well so it's it's really hard 258 00:09:55,079 --> 00:09:57,160 to know exactly which way it's going to 259 00:09:57,160 --> 00:09:59,240 go but I think it's good when you're 260 00:09:59,240 --> 00:10:01,959 doing your numbers to stress test it as 261 00:10:01,959 --> 00:10:04,200 well I think maybe a general rule of 262 00:10:04,200 --> 00:10:07,120 thumb would be 1% above the current rate 263 00:10:07,120 --> 00:10:09,079 so that you're prepared for a few more 264 00:10:09,079 --> 00:10:09,959 rate 265 00:10:09,959 --> 00:10:12,800 Rises but it may not hit that but it's 266 00:10:12,800 --> 00:10:14,600 always important to stress test it for 267 00:10:14,600 --> 00:10:16,200 yourself 268 00:10:16,200 --> 00:10:19,959 too so like just your general feel of 269 00:10:19,959 --> 00:10:23,279 being in you know Finance for so long um 270 00:10:23,279 --> 00:10:25,320 is your general feel that we're somewhat 271 00:10:25,320 --> 00:10:27,120 at the top of where the interest rates 272 00:10:27,120 --> 00:10:29,600 could go and they'll start stabilizing 273 00:10:29,600 --> 00:10:32,160 2024 um what's I know this is like a bit 274 00:10:32,160 --> 00:10:33,880 of a prediction or you know take it with 275 00:10:33,880 --> 00:10:35,920 a grain of Sal but I just want to I want 276 00:10:35,920 --> 00:10:38,160 to understand how you feel about where 277 00:10:38,160 --> 00:10:41,880 we are in in the cycle of interest 278 00:10:41,880 --> 00:10:45,320 rates yeah yeah I mean it's a it's a 279 00:10:45,320 --> 00:10:48,480 good question because from my P or 280 00:10:48,480 --> 00:10:51,240 professional experience I started in 281 00:10:51,240 --> 00:10:53,320 finance during the 282 00:10:53,320 --> 00:10:57,760 GFC and in that period of time there was 283 00:10:57,760 --> 00:10:59,560 aggressive rate hikes 284 00:10:59,560 --> 00:11:00,839 similar to what we're going through 285 00:11:00,839 --> 00:11:04,079 right now and from memory we were 286 00:11:04,079 --> 00:11:07,160 hitting these sort of levels as well 287 00:11:07,160 --> 00:11:10,079 sort of that six seven I believe I used 288 00:11:10,079 --> 00:11:12,720 to see 8% rates as well but that was for 289 00:11:12,720 --> 00:11:14,440 for non-banks and non-banks at the 290 00:11:14,440 --> 00:11:18,959 moment are sort of at that 8 n% anyway 291 00:11:18,959 --> 00:11:23,120 so I think it's a fine line between if 292 00:11:23,120 --> 00:11:26,160 you go too high and no one can afford to 293 00:11:26,160 --> 00:11:30,240 buy anymore and the economy stops moving 294 00:11:30,240 --> 00:11:32,480 so that's the game that they're playing 295 00:11:32,480 --> 00:11:34,480 right they want to reduce spending but 296 00:11:34,480 --> 00:11:36,920 if they go too far and nobody can buy 297 00:11:36,920 --> 00:11:38,399 because they cannot because they can't 298 00:11:38,399 --> 00:11:41,200 borrow well then another man's spending 299 00:11:41,200 --> 00:11:43,399 is another man's income so then income 300 00:11:43,399 --> 00:11:46,360 starts to you know to drop across the 301 00:11:46,360 --> 00:11:48,480 board for everyone and then unemployment 302 00:11:48,480 --> 00:11:50,040 starts to drop because people aren't 303 00:11:50,040 --> 00:11:53,360 receiving the income to pay stuff uh so 304 00:11:53,360 --> 00:11:56,519 therefore it's a flow on effect and as 305 00:11:56,519 --> 00:12:00,680 we know you know our entire economy is 306 00:12:00,680 --> 00:12:03,480 tied around property you know including 307 00:12:03,480 --> 00:12:05,800 state governments with stamp Duty 308 00:12:05,800 --> 00:12:08,279 including construction industry which is 309 00:12:08,279 --> 00:12:10,120 a massive industry and how many tradies 310 00:12:10,120 --> 00:12:13,240 get employment and jobs so it keeps the 311 00:12:13,240 --> 00:12:16,519 Australia moving so I don't think they 312 00:12:16,519 --> 00:12:17,920 my feel is that they're not going to 313 00:12:17,920 --> 00:12:19,480 push it so high that they're going to 314 00:12:19,480 --> 00:12:21,320 crash the entire Market because nobody 315 00:12:21,320 --> 00:12:24,120 wins so I do think we're sort of at that 316 00:12:24,120 --> 00:12:27,279 peak level because even right now 317 00:12:27,279 --> 00:12:29,760 there's less and less people that 318 00:12:29,760 --> 00:12:32,320 um can show borrowing 319 00:12:32,320 --> 00:12:35,040 capacity to even demonstrate what they 320 00:12:35,040 --> 00:12:38,000 currently owe and these are people that 321 00:12:38,000 --> 00:12:40,720 can still comfortably feel like they can 322 00:12:40,720 --> 00:12:43,000 borrow again and buy something else but 323 00:12:43,000 --> 00:12:45,399 according to the bank they can't and 324 00:12:45,399 --> 00:12:47,800 that's because of the stress test that 325 00:12:47,800 --> 00:12:50,320 exists right now is 3% above the current 326 00:12:50,320 --> 00:12:53,839 rate so if you're borrowing at seven and 327 00:12:53,839 --> 00:12:56,440 the bank's assessing at 10% principle 328 00:12:56,440 --> 00:12:59,480 and interest well how many people can 329 00:12:59,480 --> 00:13:02,240 afford 10% right so that's why not many 330 00:13:02,240 --> 00:13:04,360 people can actually borrow even though 331 00:13:04,360 --> 00:13:07,040 that's just to work out you know their 332 00:13:07,040 --> 00:13:09,160 current loans once you throw on extra 333 00:13:09,160 --> 00:13:10,880 debt yeah it's it's getting really 334 00:13:10,880 --> 00:13:12,399 really tough at the moment so yeah I 335 00:13:12,399 --> 00:13:15,199 think we're definitely at that towards 336 00:13:15,199 --> 00:13:18,360 the peak there could be one or two left 337 00:13:18,360 --> 00:13:21,160 but others say that that's 338 00:13:21,160 --> 00:13:23,639 it what do you think and weren't they 339 00:13:23,639 --> 00:13:25,279 talking about I remember in in a 340 00:13:25,279 --> 00:13:28,079 previous episode um we were talking 341 00:13:28,079 --> 00:13:31,519 about how the the rate that they were 342 00:13:31,519 --> 00:13:33,199 actually going to assess you would only 343 00:13:33,199 --> 00:13:35,720 be 1% above the rate right now because 344 00:13:35,720 --> 00:13:39,279 of like just the the common sense Factor 345 00:13:39,279 --> 00:13:42,399 um has that not come into 346 00:13:42,399 --> 00:13:47,079 play some in some instances yes but only 347 00:13:47,079 --> 00:13:50,680 for for big Banks APPA has given a 348 00:13:50,680 --> 00:13:53,480 special ruling for refinances uh just to 349 00:13:53,480 --> 00:13:55,000 allow people to get out of the mortgage 350 00:13:55,000 --> 00:13:57,759 prison where they'll just give them a 1% 351 00:13:57,759 --> 00:13:59,560 buffer that that's the special 352 00:13:59,560 --> 00:14:01,320 circumstance not all banks only a 353 00:14:01,320 --> 00:14:03,680 handful that allow that okay and then 354 00:14:03,680 --> 00:14:05,800 and a and a couple of non-banks have 355 00:14:05,800 --> 00:14:09,800 adjusted their buffers to 1% uh above 356 00:14:09,800 --> 00:14:13,440 actual but the majority are still using 357 00:14:13,440 --> 00:14:17,759 3% uh so it it's not official so you 358 00:14:17,759 --> 00:14:20,920 know Common Sense yeah makes sense I 359 00:14:20,920 --> 00:14:23,240 agree with you only put three uh 1% 360 00:14:23,240 --> 00:14:25,399 because how how high could the rates go 361 00:14:25,399 --> 00:14:27,519 but imagine they they applied that two 362 00:14:27,519 --> 00:14:29,279 and a half years ago 363 00:14:29,279 --> 00:14:31,880 and they said oh let's only go up 1% 364 00:14:31,880 --> 00:14:33,320 like it would be in a very different 365 00:14:33,320 --> 00:14:35,279 position right now if if they were 366 00:14:35,279 --> 00:14:37,199 lending people oh can they stress test 367 00:14:37,199 --> 00:14:39,880 3% let's give him the money and now 368 00:14:39,880 --> 00:14:41,880 we're sitting at six and above like 369 00:14:41,880 --> 00:14:43,839 that's that's a massive jump compared to 370 00:14:43,839 --> 00:14:45,160 what they calculate they've already 371 00:14:45,160 --> 00:14:48,160 exceeded the stress test uh 3% above say 372 00:14:48,160 --> 00:14:51,880 2% was like five maybe five and a half 373 00:14:51,880 --> 00:14:55,040 so now we're above that so you see why 374 00:14:55,040 --> 00:14:57,560 it exists it's for that particular 375 00:14:57,560 --> 00:14:59,680 reason yeah yeah and are you are you 376 00:14:59,680 --> 00:15:02,240 seeing seeing or hearing that um there 377 00:15:02,240 --> 00:15:04,199 are foreclosures and there's blood in 378 00:15:04,199 --> 00:15:05,600 the street where people are losing their 379 00:15:05,600 --> 00:15:08,600 houses cuz it's not really widely 380 00:15:08,600 --> 00:15:10,680 reported um that that's actually 381 00:15:10,680 --> 00:15:12,880 happening but I know that it it somewhat 382 00:15:12,880 --> 00:15:14,000 is in the 383 00:15:14,000 --> 00:15:16,160 background no I'm actually not hearing 384 00:15:16,160 --> 00:15:19,000 anything like that right now so I 385 00:15:19,000 --> 00:15:22,199 actually think that that hasn't happened 386 00:15:22,199 --> 00:15:25,959 because we had Co where people were 387 00:15:25,959 --> 00:15:29,199 building up cash buffers and 388 00:15:29,199 --> 00:15:31,440 people yes they were spending when they 389 00:15:31,440 --> 00:15:34,279 were able to but they were also 390 00:15:34,279 --> 00:15:37,319 saving people weren't able to travel to 391 00:15:37,319 --> 00:15:39,160 Europe or America or wherever they used 392 00:15:39,160 --> 00:15:41,319 to take their annual trips and some of 393 00:15:41,319 --> 00:15:43,319 these trips can cost you know tens of 394 00:15:43,319 --> 00:15:45,000 thousands if you're a 395 00:15:45,000 --> 00:15:48,800 family um and people um were able to 396 00:15:48,800 --> 00:15:52,360 keep that in their offset accounts so I 397 00:15:52,360 --> 00:15:55,920 do believe that there is some stress out 398 00:15:55,920 --> 00:15:58,600 there but the reports that we're getting 399 00:15:58,600 --> 00:16:00,360 from Banks and the data that they're 400 00:16:00,360 --> 00:16:02,720 sharing is it's a very very low 401 00:16:02,720 --> 00:16:04,160 percentage of of 402 00:16:04,160 --> 00:16:07,399 delinquencies and my theory is that it's 403 00:16:07,399 --> 00:16:09,399 not just the fact that they they've got 404 00:16:09,399 --> 00:16:11,120 some cash to cover the you know the 405 00:16:11,120 --> 00:16:13,120 shortfall in the in the mortgage 406 00:16:13,120 --> 00:16:15,160 repayments and they're adjusting their 407 00:16:15,160 --> 00:16:17,560 household budget but I think it's my 408 00:16:17,560 --> 00:16:19,800 theory is that they're actually people 409 00:16:19,800 --> 00:16:22,720 know what happened in Co and that they 410 00:16:22,720 --> 00:16:25,040 said it was going to crash but it did 411 00:16:25,040 --> 00:16:28,600 the opposite and prices went crazy so 412 00:16:28,600 --> 00:16:31,079 because they know that they don't want 413 00:16:31,079 --> 00:16:33,759 to exactly let go of their houses right 414 00:16:33,759 --> 00:16:36,279 now cuz they know if they can hang on 415 00:16:36,279 --> 00:16:40,279 for dear life that eventually it will 416 00:16:40,279 --> 00:16:42,040 come back and they'll make up their 417 00:16:42,040 --> 00:16:46,600 money and more so it is a buyer market 418 00:16:46,600 --> 00:16:50,160 right now so therefore sellers aren't 419 00:16:50,160 --> 00:16:52,600 getting the prices that they want so 420 00:16:52,600 --> 00:16:54,600 they the ones that can afford to hold it 421 00:16:54,600 --> 00:16:56,480 will hold it for as long as they can 422 00:16:56,480 --> 00:16:58,480 currently because they know if they can 423 00:16:58,480 --> 00:17:00,399 and weather this period they're going to 424 00:17:00,399 --> 00:17:02,240 make a lot more money so that's that's 425 00:17:02,240 --> 00:17:04,199 my theory what do you 426 00:17:04,199 --> 00:17:07,199 reckon yeah well there is definitely a a 427 00:17:07,199 --> 00:17:09,599 property boom um right around the corner 428 00:17:09,599 --> 00:17:12,240 um housing prices uh for residential and 429 00:17:12,240 --> 00:17:15,559 Commercial um they haven't really gone 430 00:17:15,559 --> 00:17:17,959 down um it's more like stayed stable or 431 00:17:17,959 --> 00:17:20,119 or gone up um there are a lot of great 432 00:17:20,119 --> 00:17:22,119 places and markets across Australia with 433 00:17:22,119 --> 00:17:25,039 residential property particularly um 434 00:17:25,039 --> 00:17:27,599 that they've seen 8% growth in 2023 and 435 00:17:27,599 --> 00:17:30,840 8% grow growth is classed as a property 436 00:17:30,840 --> 00:17:32,480 boom it's just because it's not in 437 00:17:32,480 --> 00:17:34,720 Sydney or Melbourne it's not widely 438 00:17:34,720 --> 00:17:36,919 reported but there are so many different 439 00:17:36,919 --> 00:17:39,440 markets in Australia that are uh you 440 00:17:39,440 --> 00:17:41,280 know officially booming with a 8% 441 00:17:41,280 --> 00:17:43,080 increase on last year on 442 00:17:43,080 --> 00:17:47,039 2023 um and once interest rates start do 443 00:17:47,039 --> 00:17:49,640 start stabilizing and there's a bit more 444 00:17:49,640 --> 00:17:52,120 clear um you know sentiment in the 445 00:17:52,120 --> 00:17:53,640 market where people are sure that 446 00:17:53,640 --> 00:17:55,400 interest rates have stabilized and 447 00:17:55,400 --> 00:17:57,159 they're going down um there's going to 448 00:17:57,159 --> 00:17:58,720 be a flood of investors back to the 449 00:17:58,720 --> 00:18:01,400 market um that's only going to push uh 450 00:18:01,400 --> 00:18:03,520 housing prices and commercial property 451 00:18:03,520 --> 00:18:06,919 prices up um so you know there are some 452 00:18:06,919 --> 00:18:09,080 U very very good Minds uh that have been 453 00:18:09,080 --> 00:18:11,640 looking at um you know the property 454 00:18:11,640 --> 00:18:15,360 Market um for a very long time um and 455 00:18:15,360 --> 00:18:17,520 everything I'm reading and hearing and 456 00:18:17,520 --> 00:18:19,600 and seeing um points that there's going 457 00:18:19,600 --> 00:18:21,919 to be is a big property boom around the 458 00:18:21,919 --> 00:18:25,159 corner yeah well so there you go more 459 00:18:25,159 --> 00:18:27,120 and more people are probably coming to 460 00:18:27,120 --> 00:18:29,480 that same conclusion and AR in a rush to 461 00:18:29,480 --> 00:18:32,000 sell so 462 00:18:32,000 --> 00:18:35,120 good yeah so mate in terms of like 463 00:18:35,120 --> 00:18:37,440 refinancing um what are some of the 464 00:18:37,440 --> 00:18:40,159 asset types that people can use like 465 00:18:40,159 --> 00:18:42,360 refinance their property to buy I mean 466 00:18:42,360 --> 00:18:44,799 it's not just property um surely so can 467 00:18:44,799 --> 00:18:46,000 you just go through a couple of the 468 00:18:46,000 --> 00:18:47,760 different asset types that you know 469 00:18:47,760 --> 00:18:50,919 people do um use the equity from their 470 00:18:50,919 --> 00:18:52,720 houses or their you know commercial 471 00:18:52,720 --> 00:18:56,120 properties um to further their 472 00:18:56,120 --> 00:18:59,200 Investments yeah so I guess I guess if 473 00:18:59,200 --> 00:19:02,480 you think about some examples um if 474 00:19:02,480 --> 00:19:05,000 someone's owner occupied property has 475 00:19:05,000 --> 00:19:08,640 gone up in value um they want to buy 476 00:19:08,640 --> 00:19:11,640 another property you know commercial one 477 00:19:11,640 --> 00:19:13,799 as an example I'm doing one right 478 00:19:13,799 --> 00:19:18,200 now and they're sitting on about 300K in 479 00:19:18,200 --> 00:19:20,880 equity so that 480 00:19:20,880 --> 00:19:24,360 300K is to cover the deposit on a 481 00:19:24,360 --> 00:19:26,679 commercial property for 482 00:19:26,679 --> 00:19:30,520 700,000 so that's able to cover uh 483 00:19:30,520 --> 00:19:33,880 45% deposit plus stamp Duty plus buyers 484 00:19:33,880 --> 00:19:36,840 agent fees and costs so therefore it 485 00:19:36,840 --> 00:19:39,720 becomes a staged scenario we we have to 486 00:19:39,720 --> 00:19:43,280 do a residential loan first ask the bank 487 00:19:43,280 --> 00:19:46,120 to refinance their existing loan and 488 00:19:46,120 --> 00:19:47,400 give them another 489 00:19:47,400 --> 00:19:52,039 300K as as cash out and then what we do 490 00:19:52,039 --> 00:19:54,640 is we split the loan and we give them a 491 00:19:54,640 --> 00:19:58,039 second loan split for the cash out and 492 00:19:58,039 --> 00:20:00,000 we structure that as interest 493 00:20:00,000 --> 00:20:02,240 only and the reason why we do it as 494 00:20:02,240 --> 00:20:04,240 interest only for the second loan for 495 00:20:04,240 --> 00:20:06,960 the equity portion is because they're 496 00:20:06,960 --> 00:20:08,360 not going to use that money straight 497 00:20:08,360 --> 00:20:10,679 away it's going to sit there until they 498 00:20:10,679 --> 00:20:12,440 find the property that they that they're 499 00:20:12,440 --> 00:20:14,720 ready to buy the next one and you don't 500 00:20:14,720 --> 00:20:16,679 want to be paying they don't want to be 501 00:20:16,679 --> 00:20:20,200 paying interest or making repayments 502 00:20:20,200 --> 00:20:22,600 until they've used the money so by 503 00:20:22,600 --> 00:20:24,840 having an interest only loan and an 504 00:20:24,840 --> 00:20:27,159 offset account linked to it they can 505 00:20:27,159 --> 00:20:29,919 essentially pre- borrow the money and 506 00:20:29,919 --> 00:20:32,640 have it sit there waiting until they're 507 00:20:32,640 --> 00:20:35,480 ready to use it so that's a typical 508 00:20:35,480 --> 00:20:38,240 scenario that I work with um and that 509 00:20:38,240 --> 00:20:40,520 money doesn't have to be used for 510 00:20:40,520 --> 00:20:42,320 residential it can also be used for 511 00:20:42,320 --> 00:20:44,440 commercial 512 00:20:44,440 --> 00:20:46,640 properties and what about other asset 513 00:20:46,640 --> 00:20:49,360 types what what what else can we invest 514 00:20:49,360 --> 00:20:52,919 in So when you say other assets time 515 00:20:52,919 --> 00:20:54,280 you're talking about outside of 516 00:20:54,280 --> 00:20:56,360 property yeah that's right so like you 517 00:20:56,360 --> 00:20:58,720 could obviously refinance um and you can 518 00:20:58,720 --> 00:21:00,400 ultimately use the money for pretty much 519 00:21:00,400 --> 00:21:03,080 whatever you want um in some most cases 520 00:21:03,080 --> 00:21:04,720 so what are the other things that people 521 00:21:04,720 --> 00:21:07,240 do use there there to like refinance 522 00:21:07,240 --> 00:21:09,840 cash that they're line of credit for um 523 00:21:09,840 --> 00:21:12,520 that's you know outside of the property 524 00:21:12,520 --> 00:21:16,880 realm yeah so it depends on on the 525 00:21:16,880 --> 00:21:19,960 client's investment strategy and what 526 00:21:19,960 --> 00:21:21,600 sort of help that they're getting and I 527 00:21:21,600 --> 00:21:26,520 guess also their um experience but if 528 00:21:26,520 --> 00:21:28,520 you you're also going to be mindful of 529 00:21:28,520 --> 00:21:30,919 what you tell the bank right because 530 00:21:30,919 --> 00:21:33,120 what you tell them yeah sometimes you 531 00:21:33,120 --> 00:21:36,360 can't untel them right so for example if 532 00:21:36,360 --> 00:21:39,120 you told them you want to invest into 533 00:21:39,120 --> 00:21:40,640 into 534 00:21:40,640 --> 00:21:42,440 cryptocurrency the bank's not going to 535 00:21:42,440 --> 00:21:45,279 agree to that because it's considered 536 00:21:45,279 --> 00:21:49,320 speculative and it's high risk um it's 537 00:21:49,320 --> 00:21:51,960 borderline gambling so Banks don't want 538 00:21:51,960 --> 00:21:55,159 to support that um if you're wanting to 539 00:21:55,159 --> 00:21:58,799 invest in say ETFs 540 00:21:58,799 --> 00:22:01,400 or manage 541 00:22:01,400 --> 00:22:04,880 funds or you know 542 00:22:04,880 --> 00:22:07,279 stocks a bank will give you cash they'll 543 00:22:07,279 --> 00:22:09,640 let you access them but it all depends 544 00:22:09,640 --> 00:22:12,120 on how much you're asking for you know 545 00:22:12,120 --> 00:22:14,840 I've done cash outs for over a million 546 00:22:14,840 --> 00:22:17,600 before and but not all banks will allow 547 00:22:17,600 --> 00:22:20,360 that some will cap it at say two or 548 00:22:20,360 --> 00:22:23,440 300,000 and some will ask for 549 00:22:23,440 --> 00:22:25,480 evidence so 550 00:22:25,480 --> 00:22:28,279 evidence what what can they provide to 551 00:22:28,279 --> 00:22:29,760 show that they're actually going to buy 552 00:22:29,760 --> 00:22:31,000 the shares or they're actually going to 553 00:22:31,000 --> 00:22:32,640 buy the ETFs do they have something from 554 00:22:32,640 --> 00:22:36,000 a financial advisor or an accountant to 555 00:22:36,000 --> 00:22:38,840 verify that so yeah that's usually the 556 00:22:38,840 --> 00:22:41,120 type of other Investments you can put it 557 00:22:41,120 --> 00:22:43,679 into in saying that you know doesn't 558 00:22:43,679 --> 00:22:44,960 have to be income 559 00:22:44,960 --> 00:22:47,440 producing um you can obviously use it to 560 00:22:47,440 --> 00:22:51,400 buy a car right um things like that or 561 00:22:51,400 --> 00:22:53,840 even a holiday I wouldn't suggest it 562 00:22:53,840 --> 00:22:58,000 right but but but ultimately once you 563 00:22:58,000 --> 00:22:59,760 have access to it you can use it for 564 00:22:59,760 --> 00:23:01,600 whatever you like um it's only if the 565 00:23:01,600 --> 00:23:04,720 bank controls it and and they ask for 566 00:23:04,720 --> 00:23:06,919 evidence that they'll have to pay it to 567 00:23:06,919 --> 00:23:09,919 whatever you've decided to invest 568 00:23:09,919 --> 00:23:12,600 in yeah it's it's interesting how like 569 00:23:12,600 --> 00:23:14,320 you've just got to kind of keep it a bit 570 00:23:14,320 --> 00:23:16,520 dark on what you you know ultimately 571 00:23:16,520 --> 00:23:20,120 intend to use it for um because you can 572 00:23:20,120 --> 00:23:21,480 use it for like Renovations on your 573 00:23:21,480 --> 00:23:23,120 house which would you know the bank 574 00:23:23,120 --> 00:23:25,960 actually um in some cases will encourage 575 00:23:25,960 --> 00:23:27,720 that um because it's obviously going 576 00:23:27,720 --> 00:23:29,440 back into the property the asset that 577 00:23:29,440 --> 00:23:32,320 they're you know securitizing um but I 578 00:23:32,320 --> 00:23:33,600 thought it was funny when I was talking 579 00:23:33,600 --> 00:23:36,000 to a bank one time they wouldn't allow 580 00:23:36,000 --> 00:23:38,679 me to refinance to buy commercial 581 00:23:38,679 --> 00:23:40,600 property but they said yeah we're happy 582 00:23:40,600 --> 00:23:43,039 for you to buy a car um that'd be cool 583 00:23:43,039 --> 00:23:45,640 you know like why would you try and like 584 00:23:45,640 --> 00:23:47,799 why would you want me to buy a terrible 585 00:23:47,799 --> 00:23:49,559 asset like that but you wouldn't want me 586 00:23:49,559 --> 00:23:51,600 to buy a real asset that produces cash 587 00:23:51,600 --> 00:23:53,880 flow that I could definitely like easily 588 00:23:53,880 --> 00:23:55,799 pay you back with like it's just those 589 00:23:55,799 --> 00:23:59,200 things that are like nuances it's just 590 00:23:59,200 --> 00:24:00,760 you know banking's a big business they 591 00:24:00,760 --> 00:24:02,200 just want you to go further and further 592 00:24:02,200 --> 00:24:04,200 in debt and keep on paying interest 593 00:24:04,200 --> 00:24:08,000 that's all they want you to do well I 594 00:24:08,000 --> 00:24:11,080 can also tell you the reasoning why they 595 00:24:11,080 --> 00:24:13,279 couldn't help you release cash for 596 00:24:13,279 --> 00:24:16,520 commercial property it's because it's uh 597 00:24:16,520 --> 00:24:19,760 the regulations you've got consumer 598 00:24:19,760 --> 00:24:21,120 lending and you've got commercial 599 00:24:21,120 --> 00:24:22,799 lending and they fall under two 600 00:24:22,799 --> 00:24:26,480 different Umbrellas of Regulation um 601 00:24:26,480 --> 00:24:29,320 consumer is you know Home Loans 602 00:24:29,320 --> 00:24:32,480 residential investment loans uh personal 603 00:24:32,480 --> 00:24:37,000 loans personal car loans credit cards um 604 00:24:37,000 --> 00:24:40,399 and and even buy now pay later um 605 00:24:40,399 --> 00:24:44,720 whereas commercial is unregulated 606 00:24:44,720 --> 00:24:47,640 lending it's because unregulated means 607 00:24:47,640 --> 00:24:48,919 it's still regulated but it's 608 00:24:48,919 --> 00:24:51,159 unregulated outside of the outside of 609 00:24:51,159 --> 00:24:54,279 the credit protection code nccp National 610 00:24:54,279 --> 00:24:57,919 Consumer Credit protection and it's a a 611 00:24:57,919 --> 00:25:01,080 fine line that Banks don't want to risk 612 00:25:01,080 --> 00:25:03,720 Crossing because they're at they get in 613 00:25:03,720 --> 00:25:06,440 trouble if they if they um cross that 614 00:25:06,440 --> 00:25:09,559 line so therefore if they become aware 615 00:25:09,559 --> 00:25:10,960 that you intend on using it for 616 00:25:10,960 --> 00:25:12,799 commercial purposes they'll just 617 00:25:12,799 --> 00:25:15,679 typically just say no they they can 618 00:25:15,679 --> 00:25:17,840 actually do it but there's a lot more 619 00:25:17,840 --> 00:25:20,000 more red tape and a lot more paperwork 620 00:25:20,000 --> 00:25:21,520 required where you have to sign off your 621 00:25:21,520 --> 00:25:24,320 rights and you know you have to prove 622 00:25:24,320 --> 00:25:25,679 that it is going to be used for 623 00:25:25,679 --> 00:25:27,399 commercial reasons under commercial 624 00:25:27,399 --> 00:25:30,760 entity like a company or a trust um and 625 00:25:30,760 --> 00:25:34,240 a lot of banks just don't have the uh I 626 00:25:34,240 --> 00:25:36,000 guess the the other thing is they don't 627 00:25:36,000 --> 00:25:39,279 have the the teams talking to each other 628 00:25:39,279 --> 00:25:41,679 so like you have the retail side which 629 00:25:41,679 --> 00:25:43,880 is your personal consumer lending then 630 00:25:43,880 --> 00:25:45,600 you have the commercial side which is 631 00:25:45,600 --> 00:25:47,559 the business uh and that's why you deal 632 00:25:47,559 --> 00:25:49,159 with business bankers and I deal a lot 633 00:25:49,159 --> 00:25:50,880 with them and they don't usually talk to 634 00:25:50,880 --> 00:25:53,919 each other and that's why when you tell 635 00:25:53,919 --> 00:25:55,000 them you're going to use a commercial 636 00:25:55,000 --> 00:25:57,640 they just say no we can't do it and it's 637 00:25:57,640 --> 00:25:58,640 it's actually the same way with 638 00:25:58,640 --> 00:26:00,320 commercial lending pay in the ass if you 639 00:26:00,320 --> 00:26:02,240 went to a commercial so how does like 640 00:26:02,240 --> 00:26:05,480 refinancing impact the overall cost of 641 00:26:05,480 --> 00:26:07,440 the loan long 642 00:26:07,440 --> 00:26:11,080 term so it depends on the loan term you 643 00:26:11,080 --> 00:26:11,880 take 644 00:26:11,880 --> 00:26:15,200 out so if you consider your you know 645 00:26:15,200 --> 00:26:20,159 your existing loan say it has 25 years 646 00:26:20,159 --> 00:26:23,320 remaining and you approach the bank and 647 00:26:23,320 --> 00:26:25,919 you say I want to access equity and 648 00:26:25,919 --> 00:26:28,880 refinance well 649 00:26:28,880 --> 00:26:31,880 if you keep the loan term at 25 years 650 00:26:31,880 --> 00:26:34,640 then that's actually going to be similar 651 00:26:34,640 --> 00:26:36,320 in terms of the amount of interest that 652 00:26:36,320 --> 00:26:38,720 you pay it might even be better off 653 00:26:38,720 --> 00:26:40,600 because you're usually going to 654 00:26:40,600 --> 00:26:42,480 refinance to a lower 655 00:26:42,480 --> 00:26:45,919 rate however what you're doing if you do 656 00:26:45,919 --> 00:26:47,360 that way is you're reducing your 657 00:26:47,360 --> 00:26:49,720 borrowing capacity because the longer 658 00:26:49,720 --> 00:26:50,760 the loan 659 00:26:50,760 --> 00:26:53,840 term the lower the repayments higher 660 00:26:53,840 --> 00:26:57,200 more interest you pay over time and so 661 00:26:57,200 --> 00:26:58,880 therefore if you wanting to keep growing 662 00:26:58,880 --> 00:27:01,960 the portfolio it may not make sense to 663 00:27:01,960 --> 00:27:06,480 keep your loan term 25 years 22 years 664 00:27:06,480 --> 00:27:08,600 you know constantly paying it shorter 665 00:27:08,600 --> 00:27:11,240 and shorter that's Obviously good if 666 00:27:11,240 --> 00:27:12,799 you're wanted to reduce your interest 667 00:27:12,799 --> 00:27:15,080 and you're wanting to get out of debt 668 00:27:15,080 --> 00:27:17,480 but if you're still in that growth stage 669 00:27:17,480 --> 00:27:19,679 well it makes more sense to actually 670 00:27:19,679 --> 00:27:23,399 reset the loan term over 30 years and do 671 00:27:23,399 --> 00:27:25,120 the same with the equity sorry yeah do 672 00:27:25,120 --> 00:27:26,480 the same with equity and do the same 673 00:27:26,480 --> 00:27:28,399 with the next purchase 674 00:27:28,399 --> 00:27:31,159 um so that's that's sort of the the main 675 00:27:31,159 --> 00:27:33,559 impact the overall interest that you pay 676 00:27:33,559 --> 00:27:37,840 over the time um and the other thing 677 00:27:37,840 --> 00:27:39,919 that I wanted to mention was more around 678 00:27:39,919 --> 00:27:42,600 the interest only structure but but 679 00:27:42,600 --> 00:27:45,159 actually sorry the fees so each time you 680 00:27:45,159 --> 00:27:48,200 refinance you have to pay fees right 681 00:27:48,200 --> 00:27:51,200 there's going to be uh discharge fees so 682 00:27:51,200 --> 00:27:52,600 the bank that you're currently with or 683 00:27:52,600 --> 00:27:53,720 the lender you're with are going to 684 00:27:53,720 --> 00:27:55,640 charge a discharge fee if it's 685 00:27:55,640 --> 00:27:59,519 residential lending it's typically about 686 00:27:59,519 --> 00:28:03,039 you know 250 up to 400 bucks uh that can 687 00:28:03,039 --> 00:28:05,559 be per property sometimes uh then 688 00:28:05,559 --> 00:28:08,039 there's also government fees that's 689 00:28:08,039 --> 00:28:11,519 around 300 bucks thereabouts and then uh 690 00:28:11,519 --> 00:28:13,919 the new bank or lender may also charge 691 00:28:13,919 --> 00:28:16,480 an application fee or establishment fee 692 00:28:16,480 --> 00:28:18,480 so I usually estimate around 1,000 to 693 00:28:18,480 --> 00:28:21,559 1,200 bucks just to switch a residential 694 00:28:21,559 --> 00:28:24,480 to residential but commercial there's 695 00:28:24,480 --> 00:28:25,200 more 696 00:28:25,200 --> 00:28:28,360 fees um establishment fees 697 00:28:28,360 --> 00:28:31,840 exit fees uh valuation fees so it may 698 00:28:31,840 --> 00:28:33,600 not be that feasible to constantly 699 00:28:33,600 --> 00:28:35,519 refinance commercial loans because it's 700 00:28:35,519 --> 00:28:37,720 just 701 00:28:38,559 --> 00:28:42,120 expensive and and in your view when 702 00:28:42,120 --> 00:28:44,200 should you actually like look at your 703 00:28:44,200 --> 00:28:46,559 loan like how many how how frequently 704 00:28:46,559 --> 00:28:48,679 should you be looking at your loan to 705 00:28:48,679 --> 00:28:51,679 potentially 706 00:28:53,679 --> 00:28:58,519 refinance so it depends on 707 00:28:58,519 --> 00:29:02,799 how on top you are of how competitive 708 00:29:02,799 --> 00:29:06,039 your Rate rates are at any given time so 709 00:29:06,039 --> 00:29:09,120 if if you sit back and just assume that 710 00:29:09,120 --> 00:29:10,600 the bank is always going to give you a 711 00:29:10,600 --> 00:29:13,919 competitive rate it's highly likely that 712 00:29:13,919 --> 00:29:15,480 you know especially in the last 18 713 00:29:15,480 --> 00:29:19,080 months that your rates have gone above 714 00:29:19,080 --> 00:29:21,720 what new customers new to bank customers 715 00:29:21,720 --> 00:29:24,000 are getting so it's worthwhile just 716 00:29:24,000 --> 00:29:26,840 checking with your broker um to see if 717 00:29:26,840 --> 00:29:30,080 your rate is still competitive um 718 00:29:30,080 --> 00:29:31,640 there's a misconception out there that 719 00:29:31,640 --> 00:29:34,039 your broker knows what your rates are 720 00:29:34,039 --> 00:29:36,960 and will always uh get you a better rate 721 00:29:36,960 --> 00:29:40,440 at any given time because before the 722 00:29:40,440 --> 00:29:41,399 loan 723 00:29:41,399 --> 00:29:44,080 settles we the broker are the customer 724 00:29:44,080 --> 00:29:45,080 to the 725 00:29:45,080 --> 00:29:48,000 bank once it settles you're the customer 726 00:29:48,000 --> 00:29:50,960 to the bank so that means that we don't 727 00:29:50,960 --> 00:29:52,880 have the same level of authority that we 728 00:29:52,880 --> 00:29:55,720 had at the beginning once it settles so 729 00:29:55,720 --> 00:29:58,240 we can't always just call up the bank on 730 00:29:58,240 --> 00:30:01,000 your behalf and get information to know 731 00:30:01,000 --> 00:30:03,960 what your interest rate is um and what 732 00:30:03,960 --> 00:30:05,360 your new repayments are and what your 733 00:30:05,360 --> 00:30:07,679 balancer some banks will give us access 734 00:30:07,679 --> 00:30:11,159 but the majority don't so therefore you 735 00:30:11,159 --> 00:30:13,200 need to stay on top of that more than 736 00:30:13,200 --> 00:30:15,960 more than the broker there are some 737 00:30:15,960 --> 00:30:17,399 technology and I'll talk more about that 738 00:30:17,399 --> 00:30:21,279 later but but at the moment if if you 739 00:30:21,279 --> 00:30:23,200 log in and you see your interest rate 740 00:30:23,200 --> 00:30:25,200 and you check with your broker to see if 741 00:30:25,200 --> 00:30:27,600 there's a better deal out there that the 742 00:30:27,600 --> 00:30:30,480 time to refinance but it all depends on 743 00:30:30,480 --> 00:30:34,000 how long you've had the loan as well so 744 00:30:34,000 --> 00:30:37,240 you want to at least have a year or two 745 00:30:37,240 --> 00:30:38,760 with your existing loan before you 746 00:30:38,760 --> 00:30:43,720 switch it um few reasons for that um 747 00:30:43,720 --> 00:30:45,679 what you could do is actually call your 748 00:30:45,679 --> 00:30:48,840 existing bank or your broker can do it 749 00:30:48,840 --> 00:30:51,440 and request that they review your rate 750 00:30:51,440 --> 00:30:54,159 uh for retention purposes so that means 751 00:30:54,159 --> 00:30:56,240 if as long as you've been on top of your 752 00:30:56,240 --> 00:30:58,519 repayments and you're a good 753 00:30:58,519 --> 00:31:01,440 customer that bank should be able to 754 00:31:01,440 --> 00:31:04,760 reduce your rate at least slightly it 755 00:31:04,760 --> 00:31:06,840 may not be exactly what the bank what 756 00:31:06,840 --> 00:31:08,240 they offer new clients but they should 757 00:31:08,240 --> 00:31:10,440 give you some sort of reduction to keep 758 00:31:10,440 --> 00:31:12,440 it competitive and then once you get to 759 00:31:12,440 --> 00:31:15,240 sort of 12 months or two years then at 760 00:31:15,240 --> 00:31:17,000 that point it's probably time to 761 00:31:17,000 --> 00:31:19,720 refinance um but the other time you'd 762 00:31:19,720 --> 00:31:23,600 want to look into it would be when 763 00:31:23,600 --> 00:31:27,519 you're wanting to access Equity so we 764 00:31:27,519 --> 00:31:29,200 talked about different types of assets 765 00:31:29,200 --> 00:31:31,559 you can invest in but if you're growing 766 00:31:31,559 --> 00:31:34,760 your portfolio then that's the time when 767 00:31:34,760 --> 00:31:36,880 you need to know who's going to give you 768 00:31:36,880 --> 00:31:39,120 the most equity and that all depends on 769 00:31:39,120 --> 00:31:41,760 the valuations so you might not stick 770 00:31:41,760 --> 00:31:44,200 with the same bank you might actually 771 00:31:44,200 --> 00:31:46,360 have to switch to another bank that 772 00:31:46,360 --> 00:31:48,200 gives you a higher valuation to allow 773 00:31:48,200 --> 00:31:50,159 you to access more Equity than the other 774 00:31:50,159 --> 00:31:51,960 than the one that you're already with so 775 00:31:51,960 --> 00:31:53,679 that's another time to review it the 776 00:31:53,679 --> 00:31:54,919 time that you're actually looking at 777 00:31:54,919 --> 00:31:56,399 pulling the trigger and actually buying 778 00:31:56,399 --> 00:31:59,159 something else 779 00:31:59,320 --> 00:32:01,600 yeah fair enough it'd be really good if 780 00:32:01,600 --> 00:32:03,720 um you know you had being the broker 781 00:32:03,720 --> 00:32:05,600 every single loan that you wrote you'd 782 00:32:05,600 --> 00:32:07,519 have it in a portal and you could see it 783 00:32:07,519 --> 00:32:09,679 like in real time what interest rate 784 00:32:09,679 --> 00:32:11,039 they were charging you so you could 785 00:32:11,039 --> 00:32:14,000 basically just go yep yep okay let's uh 786 00:32:14,000 --> 00:32:15,760 um fix that one change that one let's 787 00:32:15,760 --> 00:32:17,200 call the customer here like bang bang 788 00:32:17,200 --> 00:32:18,799 bang and you could stay on top of it and 789 00:32:18,799 --> 00:32:21,960 really like you basically managing a uh 790 00:32:21,960 --> 00:32:25,279 a book of um you know Investments then 791 00:32:25,279 --> 00:32:27,320 um which would be really cool but like 792 00:32:27,320 --> 00:32:30,000 so like yeah nowadays what would you 793 00:32:30,000 --> 00:32:32,240 consider a good interest rate what's a 794 00:32:32,240 --> 00:32:36,159 good interest rate for a residential 795 00:32:37,279 --> 00:32:40,960 house um a good interest rate would 796 00:32:40,960 --> 00:32:44,039 be low Sixers so 797 00:32:44,039 --> 00:32:46,519 between 798 00:32:46,519 --> 00:32:50,440 6.09 to 799 00:32:50,480 --> 00:32:54,200 6.3 even 6.4 okay if you got the rate at 800 00:32:54,200 --> 00:32:56,039 that you you're pretty 801 00:32:56,039 --> 00:32:58,120 good 802 00:32:58,120 --> 00:33:01,200 yeah okay so what's uh what's your uh 803 00:33:01,200 --> 00:33:02,799 commercial wise as well what what would 804 00:33:02,799 --> 00:33:04,320 be a good interest rate for commercial 805 00:33:04,320 --> 00:33:06,480 right 806 00:33:07,399 --> 00:33:09,080 now 807 00:33:09,080 --> 00:33:11,559 um mid to high 808 00:33:11,559 --> 00:33:16,480 sixes so between 6 and a half to sort of 809 00:33:16,480 --> 00:33:18,039 68 810 00:33:18,039 --> 00:33:20,880 6.9 that's a pretty good commercial 811 00:33:20,880 --> 00:33:23,880 rate anything above that it's usually 812 00:33:23,880 --> 00:33:27,679 the higher lvr stuff and the non-bank 813 00:33:27,679 --> 00:33:30,519 stuff but if it's typical yeah right you 814 00:33:30,519 --> 00:33:33,240 know 60 815 00:33:33,240 --> 00:33:36,399 65% mid to high 816 00:33:36,399 --> 00:33:39,760 6 I'm just going to log into um one of 817 00:33:39,760 --> 00:33:41,840 my loan accounts and this is the the 818 00:33:41,840 --> 00:33:44,440 loan that um that you moveed for me 819 00:33:44,440 --> 00:33:47,279 Victor the one that um we got a line of 820 00:33:47,279 --> 00:33:49,600 credit out against I'm just opening up 821 00:33:49,600 --> 00:33:53,440 the account now um for the offset 822 00:33:53,440 --> 00:33:57,159 account oh yeah so it's actually uh 6.0 823 00:33:57,159 --> 00:34:00,519 4 um% um that it's up to variable so 824 00:34:00,519 --> 00:34:01,919 it's right on bang with a good interest 825 00:34:01,919 --> 00:34:04,519 rate right now 826 00:34:05,320 --> 00:34:07,839 lucky that was a close 827 00:34:07,839 --> 00:34:10,079 one me 828 00:34:10,079 --> 00:34:12,280 there what about I'll check the line of 829 00:34:12,280 --> 00:34:14,440 credit what's the line of credit at hang 830 00:34:14,440 --> 00:34:16,879 on a second this on my phone oh the line 831 00:34:16,879 --> 00:34:19,040 of credit obviously what would what 832 00:34:19,040 --> 00:34:20,800 would a good interest rate be for a line 833 00:34:20,800 --> 00:34:23,040 of 834 00:34:23,480 --> 00:34:26,320 credit so probably around 6 and a half 835 00:34:26,320 --> 00:34:28,520 6.6 836 00:34:28,520 --> 00:34:30,199 all right so we're doing not very good 837 00:34:30,199 --> 00:34:33,719 for our line of credit then it's at 838 00:34:34,359 --> 00:34:37,879 7.14 okay uh after this uh recording I'm 839 00:34:37,879 --> 00:34:40,919 going to see if I can get you a 840 00:34:41,040 --> 00:34:43,560 discount that's so 841 00:34:43,560 --> 00:34:46,159 good it's not changing my life much but 842 00:34:46,159 --> 00:34:47,719 yeah it'd be good to try and fix it up 843 00:34:47,719 --> 00:34:50,599 but that's okay anyway that's good um 844 00:34:50,599 --> 00:34:53,079 I'm glad we did that that's fun um so 845 00:34:53,079 --> 00:34:57,000 mate in terms of like um like hang on we 846 00:34:57,000 --> 00:35:00,920 going to go to um okay in terms of like 847 00:35:00,920 --> 00:35:03,640 implications between like interest only 848 00:35:03,640 --> 00:35:07,480 and p& um would you ever take out Equity 849 00:35:07,480 --> 00:35:10,720 a line of credit and have a p&i uh loan 850 00:35:10,720 --> 00:35:12,760 against that like using it as a p&i loan 851 00:35:12,760 --> 00:35:15,440 instead of interest 852 00:35:17,359 --> 00:35:21,359 only it's not common uh it depends on 853 00:35:21,359 --> 00:35:26,400 your personal circumstances so if you're 854 00:35:26,400 --> 00:35:28,119 if you're at a point where you're 855 00:35:28,119 --> 00:35:30,240 wanting to pay back 856 00:35:30,240 --> 00:35:33,520 debt and you don't really have much you 857 00:35:33,520 --> 00:35:37,800 can claim against your personal taxes 858 00:35:37,800 --> 00:35:40,320 anymore um it would make sense to 859 00:35:40,320 --> 00:35:44,119 actually just do p&i on the equity as 860 00:35:44,119 --> 00:35:46,880 well as the main loan 861 00:35:46,880 --> 00:35:49,440 um I think that's probably the only 862 00:35:49,440 --> 00:35:52,640 circumstances interest only makes more 863 00:35:52,640 --> 00:35:55,000 sense because if you're carrying 864 00:35:55,000 --> 00:35:58,440 personal debt like a like a home 865 00:35:58,440 --> 00:36:01,240 loan um it make you'd actually want to 866 00:36:01,240 --> 00:36:03,319 direct all your principal payments to 867 00:36:03,319 --> 00:36:07,160 that first because that's not tax 868 00:36:07,160 --> 00:36:10,119 deductible so if you're doing p&i on 869 00:36:10,119 --> 00:36:12,760 your home loan and you're doing p&i on 870 00:36:12,760 --> 00:36:15,720 your investment loan at the same time 871 00:36:15,720 --> 00:36:17,440 you're actually shooting yourself in the 872 00:36:17,440 --> 00:36:19,920 foot because the principal payments that 873 00:36:19,920 --> 00:36:22,720 you're making on the investment loan are 874 00:36:22,720 --> 00:36:25,280 reducing your interest and the interest 875 00:36:25,280 --> 00:36:26,720 is what's deductible not the princip 876 00:36:26,720 --> 00:36:29,480 princial payments so whereas the 877 00:36:29,480 --> 00:36:32,560 principal on your owner occupied it's 878 00:36:32,560 --> 00:36:34,760 not deductible so therefore that 879 00:36:34,760 --> 00:36:36,760 principle that you've been paying the 880 00:36:36,760 --> 00:36:38,200 investment should you could have 881 00:36:38,200 --> 00:36:39,760 directed that to the owner 882 00:36:39,760 --> 00:36:43,680 occupi that extra repayment so that's 883 00:36:43,680 --> 00:36:46,079 why it's only if you've you're out of 884 00:36:46,079 --> 00:36:48,720 own occupi debt your home's paid off you 885 00:36:48,720 --> 00:36:51,440 haven't taken out any equity on it um or 886 00:36:51,440 --> 00:36:53,440 even if you have it's all investment 887 00:36:53,440 --> 00:36:56,280 debt well there's no point in keep 888 00:36:56,280 --> 00:36:57,480 carrying debt is going to have to be 889 00:36:57,480 --> 00:37:00,560 paid off eventually right so you should 890 00:37:00,560 --> 00:37:02,800 then pay principle and interest for it 891 00:37:02,800 --> 00:37:05,480 um but it also helps your borrowing 892 00:37:05,480 --> 00:37:09,319 capacity um with bigger Banks to have 893 00:37:09,319 --> 00:37:11,640 p&i and not interest 894 00:37:11,640 --> 00:37:14,960 only so I'm I want to just you know 895 00:37:14,960 --> 00:37:17,839 reemphasize that it's for big 896 00:37:17,839 --> 00:37:20,640 Banks and when I say big Banks I'm 897 00:37:20,640 --> 00:37:23,119 talking about uh the big four plus you 898 00:37:23,119 --> 00:37:25,520 know this um you know your ings your sun 899 00:37:25,520 --> 00:37:27,880 Corps your macquaries as as well soon as 900 00:37:27,880 --> 00:37:31,880 you start going to non-bank land they 901 00:37:31,880 --> 00:37:35,640 actually penalize you for p&i what I 902 00:37:35,640 --> 00:37:37,359 mean by penalizes and they let you 903 00:37:37,359 --> 00:37:40,119 borrow less so if you did a principal 904 00:37:40,119 --> 00:37:41,680 interest over 30 years or you did 905 00:37:41,680 --> 00:37:44,880 interest only for say 5 years and then 906 00:37:44,880 --> 00:37:49,119 25 years remaining that can actually um 907 00:37:49,119 --> 00:37:51,560 hinder your borrowing capacity with a 908 00:37:51,560 --> 00:37:53,280 non-bank because they look at the 909 00:37:53,280 --> 00:37:54,880 interest only repayment when they 910 00:37:54,880 --> 00:37:56,560 calculate their serviceability or their 911 00:37:56,560 --> 00:38:01,520 borrowing capacity whereas big Banks um 912 00:38:01,520 --> 00:38:03,560 what they're also called is Adis 913 00:38:03,560 --> 00:38:05,240 authorize deposit take 914 00:38:05,240 --> 00:38:08,400 institutions um what they do is they'll 915 00:38:08,400 --> 00:38:11,319 look at the remaining p&i term so if you 916 00:38:11,319 --> 00:38:13,960 did say five years interest only 25 917 00:38:13,960 --> 00:38:16,920 years left they'll stress test 25 years 918 00:38:16,920 --> 00:38:20,560 p&i rather than 30 so having a 5year 919 00:38:20,560 --> 00:38:22,520 interest only can be detrimental to your 920 00:38:22,520 --> 00:38:25,599 borrowing capacity for bigger Bank 921 00:38:25,599 --> 00:38:27,680 Lending so that's what I mean it all 922 00:38:27,680 --> 00:38:29,880 depends this is where I come in because 923 00:38:29,880 --> 00:38:32,200 obviously I need to look at things 924 00:38:32,200 --> 00:38:34,359 strategically and consider what where 925 00:38:34,359 --> 00:38:36,880 they're at now uh and what impact it 926 00:38:36,880 --> 00:38:38,880 will have for the next move because 927 00:38:38,880 --> 00:38:40,359 usually they don't want to stop with the 928 00:38:40,359 --> 00:38:43,119 next transaction so having a great 929 00:38:43,119 --> 00:38:46,760 interest rate long-term interest only 930 00:38:46,760 --> 00:38:48,480 may not be the right move for you right 931 00:38:48,480 --> 00:38:50,079 now because it might stop you from 932 00:38:50,079 --> 00:38:53,000 getting into the next 933 00:38:53,040 --> 00:38:56,560 property yeah interesting so what what 934 00:38:56,560 --> 00:38:58,000 are some of the misconceptions or the 935 00:38:58,000 --> 00:38:58,839 common 936 00:38:58,839 --> 00:39:01,440 misconceptions about like transferring a 937 00:39:01,440 --> 00:39:03,680 loan to a different lender is there like 938 00:39:03,680 --> 00:39:05,240 anything that you always come across 939 00:39:05,240 --> 00:39:07,359 where it's like that's you know just 940 00:39:07,359 --> 00:39:08,760 wrong like that doesn't work that's 941 00:39:08,760 --> 00:39:11,359 doesn't how it 942 00:39:12,599 --> 00:39:15,960 is yeah well I think probably the 943 00:39:15,960 --> 00:39:17,560 misconception is is probably that it's 944 00:39:17,560 --> 00:39:19,000 too 945 00:39:19,000 --> 00:39:21,440 hard uh they think that it's a lot of 946 00:39:21,440 --> 00:39:23,760 effort and because remember when you buy 947 00:39:23,760 --> 00:39:25,839 a property for the first time there's a 948 00:39:25,839 --> 00:39:28,000 lot of moving parts right you're signing 949 00:39:28,000 --> 00:39:29,440 contracts you're meeting agents you're 950 00:39:29,440 --> 00:39:31,040 doing inspections you're talking to 951 00:39:31,040 --> 00:39:32,880 conveyances you're doing contract 952 00:39:32,880 --> 00:39:34,560 reviews Building 953 00:39:34,560 --> 00:39:37,240 Inspections so they people remember that 954 00:39:37,240 --> 00:39:38,640 they had to do all that when they got 955 00:39:38,640 --> 00:39:40,960 the loan so then sometimes they think 956 00:39:40,960 --> 00:39:43,440 they have to do a lot of that again but 957 00:39:43,440 --> 00:39:45,119 they don't all of that's done they 958 00:39:45,119 --> 00:39:47,560 already own the property so refinance is 959 00:39:47,560 --> 00:39:50,200 actually much simpler they just have the 960 00:39:50,200 --> 00:39:52,720 same property and one lender now pays 961 00:39:52,720 --> 00:39:55,680 out the other one um it's just a so then 962 00:39:55,680 --> 00:39:57,240 when I explain that to them they're like 963 00:39:57,240 --> 00:39:59,200 okay that makes sense it's actually not 964 00:39:59,200 --> 00:40:02,119 that complicated and and then the other 965 00:40:02,119 --> 00:40:04,960 misconception is is that it's 966 00:40:04,960 --> 00:40:07,640 expensive so when people think oh if I 967 00:40:07,640 --> 00:40:09,280 have to pay 968 00:40:09,280 --> 00:40:11,640 $1,000 and new 969 00:40:11,640 --> 00:40:14,640 fees then they think that that's 970 00:40:14,640 --> 00:40:16,920 actually not worth refinancing but when 971 00:40:16,920 --> 00:40:18,760 you weigh up the difference between the 972 00:40:18,760 --> 00:40:20,960 interest on the new 973 00:40:20,960 --> 00:40:25,640 loan um the interest on the new loan and 974 00:40:25,640 --> 00:40:28,400 what the fees would be uh and add the 975 00:40:28,400 --> 00:40:31,240 fees versus the interest on the old loan 976 00:40:31,240 --> 00:40:33,240 they're actually better off the payments 977 00:40:33,240 --> 00:40:36,000 are less interest is less so it makes 978 00:40:36,000 --> 00:40:38,960 more sense to actually 979 00:40:39,680 --> 00:40:42,079 refinance yeah you could imagine like 980 00:40:42,079 --> 00:40:44,000 the the life of that loan what it would 981 00:40:44,000 --> 00:40:47,040 cost to stay in the original um product 982 00:40:47,040 --> 00:40:49,079 that's at a higher interest rate it 983 00:40:49,079 --> 00:40:50,839 could be like tens of thousands of 984 00:40:50,839 --> 00:40:52,800 dollars difference uh even even hundreds 985 00:40:52,800 --> 00:40:54,640 of thousands of dollars difference and 986 00:40:54,640 --> 00:40:56,480 then people are like okay um I don't 987 00:40:56,480 --> 00:40:58,240 want to move over because it's a $1,000 988 00:40:58,240 --> 00:41:01,480 cost like it's just like really just 989 00:41:01,480 --> 00:41:04,720 shortterm like short minded thinking um 990 00:41:04,720 --> 00:41:07,240 not not understanding the full picture 991 00:41:07,240 --> 00:41:09,000 uh that's really 992 00:41:09,000 --> 00:41:11,960 interesting yeah oh actually there's one 993 00:41:11,960 --> 00:41:16,960 more um and that is it's too hard to 994 00:41:16,960 --> 00:41:21,000 switch up switch all my direct debits um 995 00:41:21,000 --> 00:41:23,800 and have new cards and have new BSB and 996 00:41:23,800 --> 00:41:26,880 account numbers and all all that stuff 997 00:41:26,880 --> 00:41:28,680 transfers they think oh I don't want to 998 00:41:28,680 --> 00:41:30,960 do it that's too much of a headache well 999 00:41:30,960 --> 00:41:34,760 if you spent an hour doing it and it 1000 00:41:34,760 --> 00:41:36,800 saves you 10 grand a 1001 00:41:36,800 --> 00:41:40,760 year what would you rather right and I 1002 00:41:40,760 --> 00:41:42,880 think that's that's another thing that 1003 00:41:42,880 --> 00:41:44,680 people also convince themselves that 1004 00:41:44,680 --> 00:41:46,400 it's too hard it's not difficult to 1005 00:41:46,400 --> 00:41:48,960 change a direct abits I had my my my 1006 00:41:48,960 --> 00:41:52,040 card recently that someone you know 1007 00:41:52,040 --> 00:41:53,720 nearly accessed my money but then the 1008 00:41:53,720 --> 00:41:56,480 bank blocked it and I had to you know 1009 00:41:56,480 --> 00:41:59,040 set them all up again like it didn't 1010 00:41:59,040 --> 00:42:00,720 take me long you know I just jumped 1011 00:42:00,720 --> 00:42:03,319 online and I checked one by one updated 1012 00:42:03,319 --> 00:42:07,640 the card done like took me a few 1013 00:42:07,640 --> 00:42:09,520 minutes and I think this is what the 1014 00:42:09,520 --> 00:42:12,280 banks actually want um people to feel 1015 00:42:12,280 --> 00:42:14,880 like they they make it as hard as 1016 00:42:14,880 --> 00:42:18,240 possible to move um or give you the the 1017 00:42:18,240 --> 00:42:20,119 misconception that it is hard to move 1018 00:42:20,119 --> 00:42:22,640 because they obviously want you to stay 1019 00:42:22,640 --> 00:42:25,040 um and um yeah I definitely think that 1020 00:42:25,040 --> 00:42:28,680 that's a bit of a itic um you know or 1021 00:42:28,680 --> 00:42:31,200 like uh you know what they actually want 1022 00:42:31,200 --> 00:42:33,800 so can you just walk us through exactly 1023 00:42:33,800 --> 00:42:37,760 um the the process of moving a loan to 1024 00:42:37,760 --> 00:42:40,440 another lender and and how it might and 1025 00:42:40,440 --> 00:42:41,880 how it is simplier than you think 1026 00:42:41,880 --> 00:42:44,000 because for me when you helped me out 1027 00:42:44,000 --> 00:42:46,520 with one of my loans um you pretty much 1028 00:42:46,520 --> 00:42:48,480 did everything like I you know didn't 1029 00:42:48,480 --> 00:42:49,760 really do too much I mean I did 1030 00:42:49,760 --> 00:42:52,000 obviously put fill out all the documents 1031 00:42:52,000 --> 00:42:53,839 um put everything together which you 1032 00:42:53,839 --> 00:42:55,319 know probably did take me about an hour 1033 00:42:55,319 --> 00:42:57,640 and a half 2 hours was one one uh 1034 00:42:57,640 --> 00:42:59,559 evening to get everything loaded into 1035 00:42:59,559 --> 00:43:02,559 your portal um but after that I was 1036 00:43:02,559 --> 00:43:04,119 pretty much out of the picture and just 1037 00:43:04,119 --> 00:43:05,720 getting emails saying this is happening 1038 00:43:05,720 --> 00:43:07,280 this is done this is you know bang B 1039 00:43:07,280 --> 00:43:09,359 bang you know so can you just explain 1040 00:43:09,359 --> 00:43:13,559 the whole process of moving to another 1041 00:43:14,119 --> 00:43:17,480 lender yeah well I mean you you sort of 1042 00:43:17,480 --> 00:43:19,359 hit the nail on the head right it's only 1043 00:43:19,359 --> 00:43:21,280 at the beginning that you had to do the 1044 00:43:21,280 --> 00:43:24,920 work and the rest of it I handled so if 1045 00:43:24,920 --> 00:43:26,680 you consider 1046 00:43:26,680 --> 00:43:30,160 um the borrower all they're really doing 1047 00:43:30,160 --> 00:43:32,839 is filling out their details and I do 1048 00:43:32,839 --> 00:43:35,119 have a portal electronic portal rather 1049 00:43:35,119 --> 00:43:36,960 than an old form that you have to fill 1050 00:43:36,960 --> 00:43:40,480 out and print and sign and all that you 1051 00:43:40,480 --> 00:43:42,440 fill out in your own time and this is 1052 00:43:42,440 --> 00:43:45,480 your address history uh employment 1053 00:43:45,480 --> 00:43:48,400 history your assets liabilities your 1054 00:43:48,400 --> 00:43:51,359 expenses and then I have a custom 1055 00:43:51,359 --> 00:43:54,240 document list that you need to upload 1056 00:43:54,240 --> 00:43:56,359 and I only ask for the minimum so 1057 00:43:56,359 --> 00:43:58,640 depending on which lender we're going to 1058 00:43:58,640 --> 00:44:01,640 many times we don't even need that much 1059 00:44:01,640 --> 00:44:06,480 we just need pay slips tax return ID and 1060 00:44:06,480 --> 00:44:09,119 uh the loan statements for your debts so 1061 00:44:09,119 --> 00:44:12,480 if you can get all that then I gather it 1062 00:44:12,480 --> 00:44:14,599 all I check it all I make sure that it 1063 00:44:14,599 --> 00:44:17,119 all meets the criteria of the bank and 1064 00:44:17,119 --> 00:44:20,240 you know I'm doing my due diligence um 1065 00:44:20,240 --> 00:44:23,520 as a broker and then I package all that 1066 00:44:23,520 --> 00:44:27,520 up and send it to you to sign customer 1067 00:44:27,520 --> 00:44:30,359 would sign it um electronically as well 1068 00:44:30,359 --> 00:44:33,559 so eign docy sign and then I submit that 1069 00:44:33,559 --> 00:44:36,440 to the bank whoever that bank is and 1070 00:44:36,440 --> 00:44:38,920 then that bank checks it 1071 00:44:38,920 --> 00:44:41,640 all um if it Al oh sorry there's also 1072 00:44:41,640 --> 00:44:43,760 valuation required at some point or 1073 00:44:43,760 --> 00:44:45,680 another the good news is that a lot of 1074 00:44:45,680 --> 00:44:48,079 the time it's desktop valuations so you 1075 00:44:48,079 --> 00:44:49,440 don't even need to send out in 1076 00:44:49,440 --> 00:44:52,079 independent value to your house and the 1077 00:44:52,079 --> 00:44:54,920 bank accepts that they tick it all off 1078 00:44:54,920 --> 00:44:56,720 they approve it 1079 00:44:56,720 --> 00:44:58,559 and then at that point you sign a 1080 00:44:58,559 --> 00:45:01,119 discharge form uh so you as a borrower 1081 00:45:01,119 --> 00:45:02,880 or customer you sign a discharge form 1082 00:45:02,880 --> 00:45:05,440 with your current bank to notify them 1083 00:45:05,440 --> 00:45:07,359 that you're switching and you give 1084 00:45:07,359 --> 00:45:10,200 Authority for that new bank to 1085 00:45:10,200 --> 00:45:12,800 communicate with the old bank and allow 1086 00:45:12,800 --> 00:45:16,079 them to you know pay out the other and 1087 00:45:16,079 --> 00:45:18,640 allow them to transfer the mortgage and 1088 00:45:18,640 --> 00:45:21,599 the title to the next uh next bank so 1089 00:45:21,599 --> 00:45:23,359 that's why you didn't really have to do 1090 00:45:23,359 --> 00:45:26,200 anything until you heard back later and 1091 00:45:26,200 --> 00:45:27,640 said okay it's been approved now you 1092 00:45:27,640 --> 00:45:29,720 need to sign these documents so then you 1093 00:45:29,720 --> 00:45:31,960 sign a letter of offer which is a loan 1094 00:45:31,960 --> 00:45:33,960 agreement sign the discharge form get 1095 00:45:33,960 --> 00:45:37,119 sent to the bank they check it you might 1096 00:45:37,119 --> 00:45:39,480 need to update your insurance so if you 1097 00:45:39,480 --> 00:45:42,760 have a stand um you know detached house 1098 00:45:42,760 --> 00:45:44,839 not strata then you'll need to call your 1099 00:45:44,839 --> 00:45:47,760 insurance company to make sure that the 1100 00:45:47,760 --> 00:45:51,200 um you know insurance policy shows the 1101 00:45:51,200 --> 00:45:53,920 new bank as the interested party and 1102 00:45:53,920 --> 00:45:56,559 then you just have to allow that bank to 1103 00:45:56,559 --> 00:45:58,359 pay out the other one that's pretty much 1104 00:45:58,359 --> 00:46:00,599 it and then it settles you have access 1105 00:46:00,599 --> 00:46:03,119 to new net banking new cards and then 1106 00:46:03,119 --> 00:46:04,680 you start setting up all your direct 1107 00:46:04,680 --> 00:46:07,400 debits uh and pay your of your salaries 1108 00:46:07,400 --> 00:46:09,280 into your new bank accounts and that's 1109 00:46:09,280 --> 00:46:11,760 it nice and easy and if you access 1110 00:46:11,760 --> 00:46:15,599 Equity you'd also see that available on 1111 00:46:15,599 --> 00:46:17,160 net 1112 00:46:17,160 --> 00:46:20,040 banking yeah 100% I mean at the end of 1113 00:46:20,040 --> 00:46:24,319 the day is a pain in the ass to have to 1114 00:46:24,319 --> 00:46:26,599 set up all like the new bank accounts 1115 00:46:26,599 --> 00:46:29,599 and change all direct debits from a new 1116 00:46:29,599 --> 00:46:32,960 like uh expense account or whatever but 1117 00:46:32,960 --> 00:46:34,920 you know in that instance we were 1118 00:46:34,920 --> 00:46:37,280 drawing out 100K that I was using for 1119 00:46:37,280 --> 00:46:39,680 another investment um you know so it was 1120 00:46:39,680 --> 00:46:43,200 well worth it you know what I mean like 1121 00:46:43,200 --> 00:46:46,359 um you know for for a little bit of time 1122 00:46:46,359 --> 00:46:49,400 um I'll I'll take 100K for you know to 1123 00:46:49,400 --> 00:46:51,760 say let's just like accely like three 1124 00:46:51,760 --> 00:46:54,800 hours of work I'll take 100K every 1125 00:46:54,800 --> 00:46:59,960 day exactly that's right you know I 1126 00:46:59,960 --> 00:47:01,880 don't know people are like H I'd rather 1127 00:47:01,880 --> 00:47:03,880 not spend the 3 hours and not keep 1128 00:47:03,880 --> 00:47:05,960 growing my portfolio and not have access 1129 00:47:05,960 --> 00:47:08,480 to cash yeah that's it like 1130 00:47:08,480 --> 00:47:12,440 why yeah funny where are we going to now 1131 00:47:12,440 --> 00:47:14,000 hang let me just find a good question 1132 00:47:14,000 --> 00:47:16,599 for do you know you I'm sure you realize 1133 00:47:16,599 --> 00:47:18,599 that it's a little bit laggy can I 1134 00:47:18,599 --> 00:47:20,079 sometimes can't hear you talk and then 1135 00:47:20,079 --> 00:47:21,240 it comes back to you and I'm just 1136 00:47:21,240 --> 00:47:22,720 waiting for you to 1137 00:47:22,720 --> 00:47:24,440 finish 1138 00:47:24,440 --> 00:47:28,960 yeah so you're aware of that yeah 1139 00:47:33,839 --> 00:47:36,960 cool all right so here we go all right 1140 00:47:36,960 --> 00:47:38,920 mate so what are the some of what are 1141 00:47:38,920 --> 00:47:41,839 some of the the risks and pitfalls uh 1142 00:47:41,839 --> 00:47:44,920 associated with um refinancing and and 1143 00:47:44,920 --> 00:47:47,640 how can they be 1144 00:47:48,520 --> 00:47:50,119 mitigated 1145 00:47:50,119 --> 00:47:52,040 okay 1146 00:47:52,040 --> 00:47:55,750 so I guess the risks would be 1147 00:47:55,750 --> 00:47:58,040 [Music] 1148 00:47:58,040 --> 00:48:01,800 um I guess the real risk is not if you 1149 00:48:01,800 --> 00:48:03,960 execute and if you follow through and 1150 00:48:03,960 --> 00:48:05,800 then realize that you it wasn't it 1151 00:48:05,800 --> 00:48:07,400 wasn't the most competitive product or 1152 00:48:07,400 --> 00:48:09,680 it wasn't the right product for you or 1153 00:48:09,680 --> 00:48:13,319 the structure wasn't correct so like but 1154 00:48:13,319 --> 00:48:14,599 I don't know how often that actually 1155 00:48:14,599 --> 00:48:16,680 happens it's probably more often if if 1156 00:48:16,680 --> 00:48:20,359 somebody goes directly to the bank and 1157 00:48:20,359 --> 00:48:22,280 and not through a broker especially one 1158 00:48:22,280 --> 00:48:23,000 that 1159 00:48:23,000 --> 00:48:24,960 specializes uh with with property 1160 00:48:24,960 --> 00:48:26,240 investors 1161 00:48:26,240 --> 00:48:29,520 uh but say for example interest only if 1162 00:48:29,520 --> 00:48:32,720 somebody you know was accessing Equity 1163 00:48:32,720 --> 00:48:34,599 but they didn't do it as interest 1164 00:48:34,599 --> 00:48:36,880 only they can't just change it over 1165 00:48:36,880 --> 00:48:38,680 later once it settles they have to apply 1166 00:48:38,680 --> 00:48:41,359 for a new loan again so they have to 1167 00:48:41,359 --> 00:48:44,079 actually do that at the beginning so 1168 00:48:44,079 --> 00:48:47,200 that's why I would say it's worthwhile 1169 00:48:47,200 --> 00:48:50,359 understanding the structure educating 1170 00:48:50,359 --> 00:48:52,960 yourself and also talking to your broker 1171 00:48:52,960 --> 00:48:56,480 about it before you you know you hit go 1172 00:48:56,480 --> 00:48:59,000 um so that you're 100% certain on the 1173 00:48:59,000 --> 00:49:02,119 structure before you you submit anything 1174 00:49:02,119 --> 00:49:05,160 um and then the the cost 1175 00:49:05,160 --> 00:49:08,720 Factor look many times people refinance 1176 00:49:08,720 --> 00:49:11,200 because they want a better deal and the 1177 00:49:11,200 --> 00:49:13,400 broker sends them a comparison and says 1178 00:49:13,400 --> 00:49:15,480 this is you know these are the rates you 1179 00:49:15,480 --> 00:49:17,319 can get 1180 00:49:17,319 --> 00:49:20,920 well that may not be the only product 1181 00:49:20,920 --> 00:49:22,880 you can get that's just the one that 1182 00:49:22,880 --> 00:49:26,160 broker is recommending due to you know 1183 00:49:26,160 --> 00:49:29,160 your objectives and also due to them 1184 00:49:29,160 --> 00:49:32,480 being comfortable using those lenders so 1185 00:49:32,480 --> 00:49:34,880 if you want to also do your own research 1186 00:49:34,880 --> 00:49:36,640 if it's all about price well it's 1187 00:49:36,640 --> 00:49:39,400 worthwhile telling that broker is this 1188 00:49:39,400 --> 00:49:40,720 actually the most competitive on the 1189 00:49:40,720 --> 00:49:43,599 market because otherwise I will probably 1190 00:49:43,599 --> 00:49:45,440 want to look into it further so then 1191 00:49:45,440 --> 00:49:47,640 they might present to you options that 1192 00:49:47,640 --> 00:49:50,240 they're not necessarily used to using 1193 00:49:50,240 --> 00:49:52,319 they might go to a bank that it's not 1194 00:49:52,319 --> 00:49:53,760 someone that they're comfortable using 1195 00:49:53,760 --> 00:49:56,520 but because you've made that clear that 1196 00:49:56,520 --> 00:49:58,280 you're all about the rate and the lower 1197 00:49:58,280 --> 00:50:00,799 fees then they have to consider using a 1198 00:50:00,799 --> 00:50:03,040 lender that they they you know more 1199 00:50:03,040 --> 00:50:05,119 often than not don't use or maybe 1200 00:50:05,119 --> 00:50:08,359 they've never used them um so there's 1201 00:50:08,359 --> 00:50:10,240 that 1202 00:50:10,240 --> 00:50:13,680 and I guess the other risk is saying too 1203 00:50:13,680 --> 00:50:15,839 much you know when we're talking about 1204 00:50:15,839 --> 00:50:18,760 earlier you can't unsay certain things 1205 00:50:18,760 --> 00:50:21,160 so you want to have the communication 1206 00:50:21,160 --> 00:50:22,240 with your 1207 00:50:22,240 --> 00:50:25,240 broker uh and be clear about what's 1208 00:50:25,240 --> 00:50:27,520 going to be presented to the bank that's 1209 00:50:27,520 --> 00:50:29,319 going to you know allow you to get the 1210 00:50:29,319 --> 00:50:32,200 outcome so when you sit down at a branch 1211 00:50:32,200 --> 00:50:33,920 and you start opening up about all your 1212 00:50:33,920 --> 00:50:36,720 plans that may not be the best thing for 1213 00:50:36,720 --> 00:50:39,960 you in case you're doing uh something 1214 00:50:39,960 --> 00:50:42,160 that you know the bank won't lend you 1215 00:50:42,160 --> 00:50:46,160 money for um but of course you want to 1216 00:50:46,160 --> 00:50:47,880 use your Equity to benefit your own 1217 00:50:47,880 --> 00:50:49,839 financial future so you need to work 1218 00:50:49,839 --> 00:50:53,079 with with lenders that will support 1219 00:50:53,079 --> 00:50:57,119 that yeah that's probably it 1220 00:50:57,119 --> 00:50:59,920 yeah I reckon that for me one of the 1221 00:50:59,920 --> 00:51:01,799 biggest risks that I would would think 1222 00:51:01,799 --> 00:51:03,839 that this is probably the biggest risk 1223 00:51:03,839 --> 00:51:07,079 is the misuse of the funds if you are 1224 00:51:07,079 --> 00:51:09,680 refinancing taking out a line of credit 1225 00:51:09,680 --> 00:51:12,640 and it's the misuse of those funds for 1226 00:51:12,640 --> 00:51:14,520 things that aren't actually building 1227 00:51:14,520 --> 00:51:17,200 your wealth like buying more real estate 1228 00:51:17,200 --> 00:51:20,160 um and if you use that um those funds 1229 00:51:20,160 --> 00:51:23,000 for like you know just to spend on you 1230 00:51:23,000 --> 00:51:24,880 know things like that are material 1231 00:51:24,880 --> 00:51:27,280 possessions that are just liabilities 1232 00:51:27,280 --> 00:51:29,000 they don't actually you know help your 1233 00:51:29,000 --> 00:51:31,720 life and you can't resell them and you 1234 00:51:31,720 --> 00:51:33,760 just end up frittering all of that money 1235 00:51:33,760 --> 00:51:36,119 away um that you've drawn out as a line 1236 00:51:36,119 --> 00:51:37,400 of credit and now you've just got a 1237 00:51:37,400 --> 00:51:40,559 bigger loan um that you're paying down 1238 00:51:40,559 --> 00:51:42,160 without any you know nothing nothing to 1239 00:51:42,160 --> 00:51:45,200 show for it I reckon the misuse of funds 1240 00:51:45,200 --> 00:51:47,359 um would be a massive thing because not 1241 00:51:47,359 --> 00:51:50,440 everyone um is uh you know uh really 1242 00:51:50,440 --> 00:51:53,240 really highly financially educated um on 1243 00:51:53,240 --> 00:51:54,960 the types of assets they could be using 1244 00:51:54,960 --> 00:51:57,240 so they could be using it for for shares 1245 00:51:57,240 --> 00:51:59,359 and things like that and you know shares 1246 00:51:59,359 --> 00:52:02,440 can go to zero um unfortunately so it's 1247 00:52:02,440 --> 00:52:05,400 a bit more of a a risky game um that 1248 00:52:05,400 --> 00:52:07,079 you're playing so I think misuse of 1249 00:52:07,079 --> 00:52:08,359 funds would be one of the ones that I 1250 00:52:08,359 --> 00:52:10,240 would think 1251 00:52:10,240 --> 00:52:15,000 of yeah yeah I agree with that I think 1252 00:52:15,000 --> 00:52:16,799 you know the types of clients that I 1253 00:52:16,799 --> 00:52:19,480 talk to are typically a bit more um 1254 00:52:19,480 --> 00:52:22,400 Savvy and they're a bit more educated 1255 00:52:22,400 --> 00:52:25,559 before they take on that risk um but 1256 00:52:25,559 --> 00:52:29,119 also I have to filter that too right cuz 1257 00:52:29,119 --> 00:52:30,640 I have the right to say no I don't want 1258 00:52:30,640 --> 00:52:32,839 to work with certain people too right 1259 00:52:32,839 --> 00:52:36,040 and if I get the feel that they're not 1260 00:52:36,040 --> 00:52:39,359 you know the right type of customer to 1261 00:52:39,359 --> 00:52:41,520 to access hundreds of thousands of 1262 00:52:41,520 --> 00:52:43,920 dollars of cash well then I won't 1263 00:52:43,920 --> 00:52:47,359 support that application so it's like I 1264 00:52:47,359 --> 00:52:51,640 have to then decide as well um so but 1265 00:52:51,640 --> 00:52:53,960 typically you know if someone does want 1266 00:52:53,960 --> 00:52:56,520 to access a lot of equity and they've 1267 00:52:56,520 --> 00:52:59,280 got a lot of personal debt well I would 1268 00:52:59,280 --> 00:53:01,280 say it makes sense to consolidate that 1269 00:53:01,280 --> 00:53:04,520 first so consolidation doesn't give them 1270 00:53:04,520 --> 00:53:07,319 access to the cash so what I mean by 1271 00:53:07,319 --> 00:53:09,200 that is if they're going to pay off a 1272 00:53:09,200 --> 00:53:13,680 $50,000 car loan um or credit cards well 1273 00:53:13,680 --> 00:53:16,400 the bank will want to control that so 1274 00:53:16,400 --> 00:53:18,160 then they'll release the money and 1275 00:53:18,160 --> 00:53:20,520 actually pay out those debts 1276 00:53:20,520 --> 00:53:23,200 directly and if they don't and they do 1277 00:53:23,200 --> 00:53:25,400 give them access that's when I asked the 1278 00:53:25,400 --> 00:53:27,040 client to make sure they send me a 1279 00:53:27,040 --> 00:53:29,520 letter to confirm it's been paid in 1280 00:53:29,520 --> 00:53:31,960 full because that's part of my due 1281 00:53:31,960 --> 00:53:33,280 diligence to make sure that they're 1282 00:53:33,280 --> 00:53:35,440 going to be in a better position and 1283 00:53:35,440 --> 00:53:37,040 then whatever's left then they can 1284 00:53:37,040 --> 00:53:39,280 invest it but if they've just freed up a 1285 00:53:39,280 --> 00:53:41,640 whole bunch of cash flow by clearing all 1286 00:53:41,640 --> 00:53:44,040 these personal debts and loans and stuff 1287 00:53:44,040 --> 00:53:45,319 well they're in a better position 1288 00:53:45,319 --> 00:53:47,520 because they outgoings have reduced 1289 00:53:47,520 --> 00:53:49,079 right so now they actually can think 1290 00:53:49,079 --> 00:53:50,480 clearer and actually make some more 1291 00:53:50,480 --> 00:53:52,440 investment decisions because they're not 1292 00:53:52,440 --> 00:53:55,160 constantly you know maxed out and PID 1293 00:53:55,160 --> 00:53:57,280 paying you know all their disposable 1294 00:53:57,280 --> 00:54:00,319 income to paying off personal debt High 1295 00:54:00,319 --> 00:54:05,280 rates so yeah that comes into effect as 1296 00:54:05,280 --> 00:54:09,119 well and how do you see like um you know 1297 00:54:09,119 --> 00:54:11,119 refinancing property changing in the 1298 00:54:11,119 --> 00:54:13,240 future are there any like emerging 1299 00:54:13,240 --> 00:54:16,799 Technologies or Trends or like AI that 1300 00:54:16,799 --> 00:54:19,680 um you know banks are using now to to 1301 00:54:19,680 --> 00:54:21,599 submit these applications to review 1302 00:54:21,599 --> 00:54:23,760 these applications is there anything 1303 00:54:23,760 --> 00:54:25,400 like futuristic coming through through 1304 00:54:25,400 --> 00:54:26,760 the the woodwork that we're going to 1305 00:54:26,760 --> 00:54:28,280 it's going to change the landscape of 1306 00:54:28,280 --> 00:54:32,319 how we refinance property in 1307 00:54:32,359 --> 00:54:35,720 future yeah it's um it's an interesting 1308 00:54:35,720 --> 00:54:37,400 time we're in at the moment right we've 1309 00:54:37,400 --> 00:54:40,480 got a lot of emerging 1310 00:54:40,480 --> 00:54:44,200 technology um you know we've got AI 1311 00:54:44,200 --> 00:54:47,079 that's coming up we've got um open 1312 00:54:47,079 --> 00:54:49,440 Banking and open banking I think will 1313 00:54:49,440 --> 00:54:51,599 probably be the thing that's uh when it 1314 00:54:51,599 --> 00:54:53,960 starts to work well it will make it 1315 00:54:53,960 --> 00:54:57,680 easier and faster for for for um clients 1316 00:54:57,680 --> 00:55:00,559 to refinance because it just means that 1317 00:55:00,559 --> 00:55:03,480 the transparency of their transactions 1318 00:55:03,480 --> 00:55:06,160 and their repayment history will be you 1319 00:55:06,160 --> 00:55:08,640 know they just electronically consent 1320 00:55:08,640 --> 00:55:10,200 and they don't have to log into net 1321 00:55:10,200 --> 00:55:13,040 banking download statements try to get 1322 00:55:13,040 --> 00:55:15,400 the exact dates transaction histories 1323 00:55:15,400 --> 00:55:16,960 and send that and get the bank to 1324 00:55:16,960 --> 00:55:19,559 manually check everything it's the you 1325 00:55:19,559 --> 00:55:22,839 know when that is integrated well with 1326 00:55:22,839 --> 00:55:27,079 um with the credit bureaus so Equifax 1327 00:55:27,079 --> 00:55:30,960 and um what happens is they can see 1328 00:55:30,960 --> 00:55:33,720 automatically that you've been on time 1329 00:55:33,720 --> 00:55:37,000 for the last 12 months or low or more so 1330 00:55:37,000 --> 00:55:39,520 then they'll happily just pay that bank 1331 00:55:39,520 --> 00:55:41,359 out and if they've got your open banking 1332 00:55:41,359 --> 00:55:43,400 consent well they can see the bsbn 1333 00:55:43,400 --> 00:55:46,400 account number and they can just pay it 1334 00:55:46,400 --> 00:55:49,319 directly and there's already electronic 1335 00:55:49,319 --> 00:55:52,160 title systems not in all states but the 1336 00:55:52,160 --> 00:55:56,000 majority of all states called pexa P XA 1337 00:55:56,000 --> 00:55:57,520 and this is where you don't have a 1338 00:55:57,520 --> 00:55:59,720 physical title of your of title deed 1339 00:55:59,720 --> 00:56:01,960 anymore it's just an electronic transfer 1340 00:56:01,960 --> 00:56:04,319 that happens through this system and the 1341 00:56:04,319 --> 00:56:06,160 banks share it and the state governments 1342 00:56:06,160 --> 00:56:08,480 share it and the Titles office share it 1343 00:56:08,480 --> 00:56:09,880 and that's why you have seamless 1344 00:56:09,880 --> 00:56:11,760 transactions already happening 1345 00:56:11,760 --> 00:56:13,280 electronically uh when you're when 1346 00:56:13,280 --> 00:56:14,520 you're refinancing and when you're 1347 00:56:14,520 --> 00:56:16,960 purchasing but once you sort of you know 1348 00:56:16,960 --> 00:56:19,319 put open Banking and you know integrate 1349 00:56:19,319 --> 00:56:23,079 the credit history in there as well um 1350 00:56:23,079 --> 00:56:25,640 what what will then inevitably happen 1351 00:56:25,640 --> 00:56:27,400 is that they're going to start to review 1352 00:56:27,400 --> 00:56:29,880 your affordability through these means 1353 00:56:29,880 --> 00:56:32,000 too they haven't done that yet they 1354 00:56:32,000 --> 00:56:35,079 still require pay slips and they still 1355 00:56:35,079 --> 00:56:37,960 um you know require you to declare your 1356 00:56:37,960 --> 00:56:41,079 expenses but at some point or another 1357 00:56:41,079 --> 00:56:43,760 they are most likely going to say give 1358 00:56:43,760 --> 00:56:46,079 us consent so we can see your your 1359 00:56:46,079 --> 00:56:49,480 banking data and your loan history and 1360 00:56:49,480 --> 00:56:51,280 then we'll see how much money you really 1361 00:56:51,280 --> 00:56:53,119 have left over after you spend all your 1362 00:56:53,119 --> 00:56:56,200 money and do you have enough to afford 1363 00:56:56,200 --> 00:56:58,359 the loan and if you do we'll lend you 1364 00:56:58,359 --> 00:57:01,359 the money if you don't we won't you see 1365 00:57:01,359 --> 00:57:02,960 that's where we're probably going to get 1366 00:57:02,960 --> 00:57:05,400 to um a lot of fexs are already using 1367 00:57:05,400 --> 00:57:08,000 that in the car finance and personal 1368 00:57:08,000 --> 00:57:10,680 loan space but in mortgages and 1369 00:57:10,680 --> 00:57:14,720 Commercial loans uh bit 1370 00:57:14,920 --> 00:57:16,799 slower yeah so I guess there's 1371 00:57:16,799 --> 00:57:19,799 absolutely no hiding in future um know 1372 00:57:19,799 --> 00:57:21,480 cooking the numbers a little bit just to 1373 00:57:21,480 --> 00:57:23,280 get that little bit more Finance over 1374 00:57:23,280 --> 00:57:26,839 the line um so so you know what I'm 1375 00:57:26,839 --> 00:57:29,119 hearing you say is get as much Finance 1376 00:57:29,119 --> 00:57:30,760 as you can right now before those 1377 00:57:30,760 --> 00:57:33,359 Technologies come uh you know to 1378 00:57:33,359 --> 00:57:37,480 fruition um because when they do um 1379 00:57:37,480 --> 00:57:38,880 there's no hiding there you're never 1380 00:57:38,880 --> 00:57:40,280 getting away from it you're not going to 1381 00:57:40,280 --> 00:57:41,839 be getting approved for anything that 1382 00:57:41,839 --> 00:57:43,240 you shouldn't be getting approved for 1383 00:57:43,240 --> 00:57:47,440 and um that would be a a horrible thing 1384 00:57:47,440 --> 00:57:50,200 well one of our early episodes we talked 1385 00:57:50,200 --> 00:57:52,720 about how to prepare before you start 1386 00:57:52,720 --> 00:57:55,440 borrowing money right and 1387 00:57:55,440 --> 00:57:57,480 I think that's probably more prevalent 1388 00:57:57,480 --> 00:58:00,319 now because if you can get on the front 1389 00:58:00,319 --> 00:58:02,440 foot and start managing your money so 1390 00:58:02,440 --> 00:58:05,200 that you always spend less than you earn 1391 00:58:05,200 --> 00:58:08,319 and save the difference then when it 1392 00:58:08,319 --> 00:58:11,559 comes time to uh apply for alar with 1393 00:58:11,559 --> 00:58:13,880 these Technologies you'll be like here 1394 00:58:13,880 --> 00:58:16,599 I'll happily just share it with you see 1395 00:58:16,599 --> 00:58:18,240 that I'm good with my money because 1396 00:58:18,240 --> 00:58:19,799 remember it can work in your favor 1397 00:58:19,799 --> 00:58:22,520 because remember the banks use um what's 1398 00:58:22,520 --> 00:58:25,119 called The Hem the household expens 1399 00:58:25,119 --> 00:58:28,000 measure so they're guessing how much you 1400 00:58:28,000 --> 00:58:30,200 spend based on your household income 1401 00:58:30,200 --> 00:58:33,200 based on where you live uh based on how 1402 00:58:33,200 --> 00:58:35,240 many people are in the household 1403 00:58:35,240 --> 00:58:38,000 including kids and even if you spend 1404 00:58:38,000 --> 00:58:39,799 less than that they're still using the 1405 00:58:39,799 --> 00:58:43,119 higher of the two but in the future if 1406 00:58:43,119 --> 00:58:44,760 you can show them you're spending less 1407 00:58:44,760 --> 00:58:47,559 than that cons consistently they'll have 1408 00:58:47,559 --> 00:58:50,160 no reason to use the higher they'll have 1409 00:58:50,160 --> 00:58:51,680 they they'll say well the data tells me 1410 00:58:51,680 --> 00:58:53,640 you're spending three grand even though 1411 00:58:53,640 --> 00:58:56,000 my estimates are four and a half so that 1412 00:58:56,000 --> 00:58:57,839 can work in your favor but if you are 1413 00:58:57,839 --> 00:59:00,559 spending four and a half or five grand 1414 00:59:00,559 --> 00:59:01,960 well forget about it's worked against 1415 00:59:01,960 --> 00:59:05,799 you so that's why get ahead no that's a 1416 00:59:05,799 --> 00:59:07,520 good point get your get your ducks in 1417 00:59:07,520 --> 00:59:09,960 order right now um for when this scary 1418 00:59:09,960 --> 00:59:12,680 technology does uh come online because 1419 00:59:12,680 --> 00:59:15,240 there's no hiding um big brother will 1420 00:59:15,240 --> 00:59:17,559 get you all right mate well this has 1421 00:59:17,559 --> 00:59:20,920 been a fantastic series um really really 1422 00:59:20,920 --> 00:59:23,960 happy we got this um got this done um 1423 00:59:23,960 --> 00:59:25,920 you know it's been there've been like 1424 00:59:25,920 --> 00:59:28,039 few and far between um there's only been 1425 00:59:28,039 --> 00:59:30,000 six episodes but it's been very very fun 1426 00:59:30,000 --> 00:59:33,280 so I uh I thanks for uh uh joining me um 1427 00:59:33,280 --> 00:59:35,839 and doing these series mate um anything 1428 00:59:35,839 --> 00:59:38,440 any final 1429 00:59:39,000 --> 00:59:41,799 words no it's been great um I've had 1430 00:59:41,799 --> 00:59:43,839 some really positive feedback from the 1431 00:59:43,839 --> 00:59:45,920 listeners um you know people have 1432 00:59:45,920 --> 00:59:48,240 connected with yourself and me and we've 1433 00:59:48,240 --> 00:59:49,960 been able to help more and more clients 1434 00:59:49,960 --> 00:59:52,720 get onto the uh commercial property lad 1435 00:59:52,720 --> 00:59:56,119 and um yeah I think you know keep keep 1436 00:59:56,119 --> 00:59:58,119 at it I think at some point I'm going to 1437 00:59:58,119 --> 01:00:00,079 have you on my interview on my podcast 1438 01:00:00,079 --> 01:00:01,359 as well because I really want you to 1439 01:00:01,359 --> 01:00:03,359 share more of your story about self 1440 01:00:03,359 --> 01:00:05,599 storage uh and how we can help more 1441 01:00:05,599 --> 01:00:08,280 people tap into that because it is uh 1442 01:00:08,280 --> 01:00:10,000 yeah there a lot a lot of moving Parts 1443 01:00:10,000 --> 01:00:11,680 it's not as simple as a a regular 1444 01:00:11,680 --> 01:00:13,880 property so I think if we can find a way 1445 01:00:13,880 --> 01:00:16,160 to help more people uh that's what it's 1446 01:00:16,160 --> 01:00:17,359 all 1447 01:00:17,359 --> 01:00:20,079 about nice see man and we we will have 1448 01:00:20,079 --> 01:00:22,920 Victor on back again um I'd imagine um 1449 01:00:22,920 --> 01:00:24,799 you know so don't feel like he's going 1450 01:00:24,799 --> 01:00:26,520 anywhere but just for this particular 1451 01:00:26,520 --> 01:00:29,240 series um we're we're going to close it 1452 01:00:29,240 --> 01:00:30,760 up but uh you know there could be a 1453 01:00:30,760 --> 01:00:34,559 reboot who knows who knows so this has 1454 01:00:34,559 --> 01:00:37,599 been Financial 1455 01:00:37,839 --> 01:00:40,359 expert well this has been Financial 1456 01:00:40,359 --> 01:00:42,599 expert vixel Lagos and Andrew Bean on 1457 01:00:42,599 --> 01:00:46,079 the Financial Freedom series thanks 1458 01:00:46,079 --> 01:00:50,039 guys thanks guys 1459 01:00:53,520 --> 01:00:56,520 cheers 1460 01:01:09,440 --> 01:01:12,440 go