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CPS with Andrew Bean Ep 6: Refinancing Strategies for More Cashflowing Property Investment

CPS with Andrew Bean Ep 6: Refinancing Strategies for More Cashflowing Property Investment

Are you looking to boost your property investment cash flow? Discover key refinancing strategies in this insightful episode of CPS with Andrew Bean from Palise Property and Victor Lagos of Lagos Financial.

This episode dives deep into practical methods to enhance your investment returns through smart refinancing. Whether you’re a seasoned investor or just starting out, Andrew and Victor provide valuable insights and tips that can help you leverage your property’s equity to its fullest potential.

Tune in to learn how refinancing can lead to more cash-flowing property investments and help you achieve financial freedom sooner. Don’t miss out on expert advice that could transform your real estate portfolio.

Click play now to start maximizing your investment returns with top-notch refinancing strategies!

Transcript
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

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