WEBVTT - Hannah McQueen: How to split your mortgage 0:00:05.761 --> 0:00:09.441 You're listening to the Weekend Collective podcast from News Talks 0:00:09.441 --> 0:00:09.881 at Bay. 0:00:11.281 --> 0:00:11.321 S. 0:00:13.241 --> 0:00:18.321 Moveing to the just spend Somebody. 0:00:29.601 --> 0:01:06.001 News Least it wasn't easy. 0:01:06.641 --> 0:01:10.801 And welcome back to the show. Play that funky music, 0:01:10.801 --> 0:01:12.321 white Boy. I'm not sure if that's a reference to 0:01:12.361 --> 0:01:14.121 me or something, but it is quite a grievy little 0:01:14.161 --> 0:01:17.961 number to get down to. Anyway, if you have missed 0:01:17.961 --> 0:01:20.081 any of the previous hours, had a fun chat there 0:01:20.121 --> 0:01:23.121 with Dr John Cameron about float tanks and then just 0:01:23.201 --> 0:01:25.041 on to general health questions. But if you've missed any 0:01:25.041 --> 0:01:26.361 of the hours you want to catch up on it, 0:01:26.521 --> 0:01:29.201 then go to the Weekend Collective on iHeartRadio, look for 0:01:29.241 --> 0:01:32.081 the podcast and away you go. But right now it 0:01:32.201 --> 0:01:34.361 is time for the final hour of the show, which 0:01:34.401 --> 0:01:37.281 is Smart Money. And my guest is she's a financial 0:01:37.321 --> 0:01:40.721 advisor and coach and she's well known to all of 0:01:40.721 --> 0:01:42.441 you because she's been on the show a few times 0:01:42.441 --> 0:01:44.641 a half of times. Hannah McQueen, good afternoon. 0:01:44.721 --> 0:01:47.121 Hi are you well, Yeah, I'm great. 0:01:47.041 --> 0:01:50.441 Looks great summary today that it's a summary down now 0:01:50.521 --> 0:01:53.801 rocking the polo shirt. The sun is shining into the 0:01:53.841 --> 0:01:57.201 studio and it does feel a little bit just like 0:01:57.241 --> 0:01:59.001 we're heading towards the warmer weather for once. 0:01:59.121 --> 0:02:00.841 Yeah, we're going in the right direction. 0:02:01.121 --> 0:02:02.561 What's been keeping you out of mischief? 0:02:05.401 --> 0:02:07.521 Just generally, but actually having seen that it just got 0:02:07.521 --> 0:02:11.521 back from holiday busy parenting. 0:02:11.841 --> 0:02:15.121 Actually you have the post holiday sort of relaxed, sort 0:02:15.121 --> 0:02:16.961 of because. 0:02:16.761 --> 0:02:20.401 Normally it goes after the first week. I went over 0:02:20.441 --> 0:02:25.921 to Europe jealous Berlin, did a little marathon there, and 0:02:25.961 --> 0:02:29.041 then you did okay, I did that, yes, And then 0:02:29.241 --> 0:02:33.281 to France and then home by Dubai. We had the 0:02:33.401 --> 0:02:38.161 kids and they were less annoying than the previous holiday. 0:02:38.201 --> 0:02:39.561 So I was saying to my husband, I feel this 0:02:39.601 --> 0:02:42.201 is trending in the right direction. They were, It was good. 0:02:42.521 --> 0:02:43.401 How old are your kids? 0:02:43.561 --> 0:02:44.641 Eleven and sixteen? 0:02:45.041 --> 0:02:47.281 Okay? And where where did you go in France? Did 0:02:47.361 --> 0:02:49.241 you go around or just a couple of two or 0:02:49.281 --> 0:02:50.201 three locations or. 0:02:50.121 --> 0:02:53.281 While we were at Disneyland for a couple of days, 0:02:54.241 --> 0:02:58.241 and then into Paris and then to Versailles, which was amazing. 0:02:59.001 --> 0:03:01.681 I've heard about Versailles. Some people sat it's fantastic, other 0:03:01.721 --> 0:03:05.561 people say that it's not necessary sort of thing. 0:03:05.601 --> 0:03:09.761 But the palace, the palace, that's right, Yeah, the town 0:03:09.801 --> 0:03:12.121 of as. I don't know about that, but the palace 0:03:12.281 --> 0:03:16.201 and the gardens just incredible. 0:03:16.681 --> 0:03:18.881 Just I think we have to stick that on the 0:03:18.881 --> 0:03:21.041 next the list next time we go, even though I 0:03:21.041 --> 0:03:22.521 thought the last time would be the last time, but 0:03:22.561 --> 0:03:23.921 now I want to go every year, which is a 0:03:23.921 --> 0:03:25.921 bit of a bummer, which is why we need ours 0:03:25.961 --> 0:03:26.681 like smart money. 0:03:27.001 --> 0:03:29.961 That's right? Do you speak a little bit of French 0:03:30.041 --> 0:03:34.321 or German or I was gonna say some pigeon German 0:03:34.441 --> 0:03:34.841 or French? 0:03:34.921 --> 0:03:39.681 But I know a vision? What about it? So the 0:03:40.081 --> 0:03:42.561 and so you did the Berlin marathon? Come on? How 0:03:42.721 --> 0:03:46.281 was that? Doesn't sound like it's quite the holiday as 0:03:46.361 --> 0:03:48.241 most of us want to understand a holiday. 0:03:47.921 --> 0:03:50.401 When you break down what makes for a good holiday. 0:03:51.521 --> 0:03:53.921 I always think being able to eat a lot of 0:03:53.961 --> 0:03:57.401 food and do nothing makes for a good holiday, but 0:03:57.441 --> 0:03:59.881 then you feel bad for it, whereas in this situation, 0:04:00.041 --> 0:04:03.281 we did the marathon first week, so I was sanc 0:04:03.321 --> 0:04:07.401 demonious for the next three weeks. Yeah, stop in my face. 0:04:08.721 --> 0:04:10.561 We did it, did you? You and your husband? 0:04:10.881 --> 0:04:11.161 Yes? 0:04:11.241 --> 0:04:13.561 Yes, well done you what time? 0:04:14.081 --> 0:04:17.361 I did four forty he did three fifty something. 0:04:17.521 --> 0:04:19.481 Oh how selfish not to run next to you? 0:04:19.481 --> 0:04:21.561 In soide I don't blame him, but yeah, three what 0:04:22.201 --> 0:04:22.881 three fifty? 0:04:23.481 --> 0:04:25.681 I actually don't really know too much about marathon times, 0:04:25.681 --> 0:04:27.921 but I imagine that three fifty anything under four for 0:04:27.961 --> 0:04:29.561 a guy's pretty, isn't it? 0:04:29.761 --> 0:04:29.921 Was it? 0:04:31.081 --> 0:04:31.161 No? 0:04:31.281 --> 0:04:31.521 For me? 0:04:31.641 --> 0:04:33.561 Well yeah, I think it's incredible. 0:04:33.721 --> 0:04:37.681 Yeah, yeah, Well you ran a marathon in Berlin and 0:04:37.881 --> 0:04:38.641 was weather all right? 0:04:39.681 --> 0:04:42.201 Yeah it was? It was nice, nice and cool. I 0:04:42.201 --> 0:04:45.801 mean I I don't like running in the hot, so 0:04:46.041 --> 0:04:50.161 it was perfect and yeah, excellent, Well well. 0:04:50.001 --> 0:04:52.241 Done, and well done of giving your excuse to gorge 0:04:52.281 --> 0:04:53.601 yourself on food afterwards. 0:04:53.641 --> 0:04:53.881 I know. 0:04:54.801 --> 0:04:56.521 Now Onto more down. 0:04:56.401 --> 0:04:57.521 To worth itship money. 0:04:58.001 --> 0:05:01.441 Yeah, so the first thing I wanted to chat about 0:05:01.441 --> 0:05:04.761 his ideas on on and because you can do all 0:05:04.801 --> 0:05:06.641 sorts of things when it comes to spliting your mortgage, 0:05:06.641 --> 0:05:09.001 and it often seems like it's a newsflash to some people. 0:05:09.041 --> 0:05:10.841 They go, I didn't realize I could split a mortgage. 0:05:10.881 --> 0:05:14.001 Hopefully and more people know that. But with inflation on 0:05:14.041 --> 0:05:18.721 its way down, obviously the cash rate, obviously the cash 0:05:18.801 --> 0:05:20.881 rate's going to fall, of course it is. But I've 0:05:20.921 --> 0:05:23.401 seen some I think heatherdo for Cellen might have wrote 0:05:23.401 --> 0:05:26.241 it was written a piece saying that she doesn't think 0:05:26.281 --> 0:05:29.601 it'll fall as far as it should, because that would 0:05:29.601 --> 0:05:32.441 be a mission by Adrian or that they've got it wrong, 0:05:32.721 --> 0:05:37.761 which very very cylical, cynical. So because I've heard people 0:05:37.801 --> 0:05:39.961 say it could for one or one point two, you know, 0:05:40.161 --> 0:05:43.121 one hundred and twenty five basis points. So she sort 0:05:43.161 --> 0:05:44.961 of was like, maybe at only four seventy five, because 0:05:44.961 --> 0:05:46.561 then it's like, I didn't get it that wrong. 0:05:47.401 --> 0:05:50.441 No, Well, I guess the risk there is that we 0:05:50.561 --> 0:05:55.721 go into stagflation and that would be a fail. Well, 0:05:55.721 --> 0:05:58.161 when it's the opposite of inflation. 0:05:57.841 --> 0:06:00.481 Where it goes backwards, it goes. 0:06:00.361 --> 0:06:05.081 Backwards, and he certainly doesn't want that. No, So I 0:06:05.081 --> 0:06:09.721 I would respectfully disagree with this's comment. He may be 0:06:09.761 --> 0:06:12.001 late to the party because he has it's certainly a 0:06:12.201 --> 0:06:15.401 habit of doing that. And the banks also are particularly 0:06:15.521 --> 0:06:18.641 late to any party that involves dropping interest rates. I mean, 0:06:18.681 --> 0:06:21.521 they are at their own little club somewhere. But I 0:06:21.561 --> 0:06:23.241 do think rates will drop, and I think they'll drop 0:06:23.361 --> 0:06:25.801 by at least one percent of the next year, possibly 0:06:25.801 --> 0:06:27.641 as much as one point five because and that's just 0:06:27.681 --> 0:06:28.641 to get to a neutral. 0:06:28.841 --> 0:06:31.881 So let's just remind usself, where are what is the cash. 0:06:31.761 --> 0:06:34.201 Five point oh, I can't remem what the cash rate is, 0:06:34.201 --> 0:06:37.281 but the interest rates are about five point five for 0:06:37.361 --> 0:06:40.721 twelve months, so we should be in the late fours, 0:06:40.721 --> 0:06:42.001 I would say with thee in. 0:06:41.961 --> 0:06:46.321 My mind, I think it's four point four points. It's 0:06:46.361 --> 0:06:49.441 four point seven, so that would be taking it down 0:06:49.521 --> 0:06:51.441 to sort of like we could get it down to 0:06:51.481 --> 0:06:53.401 maybe three and a half in the next I mean, 0:06:53.521 --> 0:06:54.001 they could. 0:06:53.801 --> 0:06:56.441 Eat and that's not neutral. That's still them trying to 0:06:56.441 --> 0:06:59.921 control slow the economy down. So when they were trying 0:06:59.961 --> 0:07:03.441 to increase the economy, that's when we go lower again. 0:07:03.841 --> 0:07:07.161 But everyone will know, Oh, the banks are slow to 0:07:07.281 --> 0:07:11.761 kick in to gear these interest rate cuts, so I 0:07:11.801 --> 0:07:14.801 don't know what you do about them, but I would 0:07:14.801 --> 0:07:17.881 be expecting interest rates to come down. So then the 0:07:17.961 --> 0:07:20.441 question really is do you fix for six months or 0:07:20.441 --> 0:07:23.921 twelve months? And the answer to that depends on what 0:07:24.121 --> 0:07:26.241 is the gap between the six months and the twelve 0:07:26.241 --> 0:07:28.961 month rate. And if that gap is more than point 0:07:29.041 --> 0:07:31.721 six percent point six of a percent, then you probably 0:07:31.761 --> 0:07:35.001 should be fixing for twelve months. If it's less than 0:07:35.161 --> 0:07:37.281 point six, then I'd be going for six months and 0:07:37.321 --> 0:07:38.801 then refixing in six months time. 0:07:39.121 --> 0:07:41.161 I've just brought up the interest rates on interest stock, 0:07:41.241 --> 0:07:45.241 Court and Z, and it looks, unless my memory is 0:07:45.401 --> 0:07:50.041 betraying me, not long ago the long term interest rates 0:07:50.081 --> 0:07:53.121 were really favorable. They were really trying to entice you 0:07:53.161 --> 0:07:55.361 to a longer interest rate, which tells you the bank 0:07:55.401 --> 0:07:57.601 thinks that the cash rate's going to come down. But 0:07:57.641 --> 0:07:59.401 I'm just looking at A and Z right now and 0:07:59.441 --> 0:08:04.801 this is and their long term rates just on A 0:08:05.081 --> 0:08:08.041 you know, not with the special LVRD or they've got. 0:08:08.081 --> 0:08:11.801 They're six months rates seven point one and their five 0:08:12.081 --> 0:08:14.601 year rate I would have thought would be in the fives, 0:08:14.641 --> 0:08:17.841 but it's six point one nine, which is seems strange 0:08:17.841 --> 0:08:19.121 to me. Is I'm not sure what? 0:08:19.321 --> 0:08:19.481 Yeah? 0:08:20.201 --> 0:08:21.761 Do it with twenty percent? 0:08:22.001 --> 0:08:24.281 Oh okay, yes, well it doesn't show a five yr rate, 0:08:24.321 --> 0:08:27.481 but it says five point six nine percent for three years? Yeah, 0:08:27.521 --> 0:08:30.401 which is is that reasonably enticing? 0:08:30.761 --> 0:08:32.561 Well, I think you would get if you went to 0:08:32.601 --> 0:08:36.041 the bank and said give me your best rate, not 0:08:36.161 --> 0:08:38.561 these kind of interest stock cod or n Z rates. 0:08:38.601 --> 0:08:41.401 Like the best rate, I think you'd get it into 0:08:41.401 --> 0:08:44.201 early fives. And for some people just fixing that for 0:08:44.241 --> 0:08:46.201 three years and giving them certainty for three years at 0:08:46.241 --> 0:08:50.641 that rates, Happy days. I mean, it was I remember 0:08:50.641 --> 0:08:53.401 ten years ago where or fifteen years ago before the 0:08:53.441 --> 0:08:56.281 GFC right where. I mean, everyone talks about eighty seven 0:08:56.281 --> 0:08:57.961 crash and rates going up to twenty two percent, but 0:08:58.001 --> 0:09:00.161 most of us can't remember that. But what we can 0:09:00.241 --> 0:09:02.441 remember is just before the GFC rates got up to 0:09:02.601 --> 0:09:03.401 thirteen percent. 0:09:03.761 --> 0:09:05.761 It's funny we were just talking about than the property 0:09:05.761 --> 0:09:06.481 are yesterday. 0:09:07.161 --> 0:09:08.761 I just upset the eff caut No. 0:09:08.601 --> 0:09:10.841 No, you haven't upset anyone. It's just one of those 0:09:10.841 --> 0:09:14.001 conversations that, during the course of talking about property and 0:09:14.041 --> 0:09:16.321 its affordability, that. 0:09:16.321 --> 0:09:18.441 We take a trip down memory lane to eighty seven. 0:09:18.641 --> 0:09:20.881 We always do. I can't tell you a number in full. 0:09:23.801 --> 0:09:28.041 I mean, it was pretty horrendial, of. 0:09:28.121 --> 0:09:29.761 Course, and I don't want to make laugh of that, 0:09:29.801 --> 0:09:35.841 but the mortgages were like one hundred dollars joking, I'm joking. No, 0:09:36.081 --> 0:09:40.121 of course, that would have been horrible that period, without 0:09:40.161 --> 0:09:42.001 a doubt, and you do have to be able to 0:09:42.041 --> 0:09:45.321 weather that. It was just the extreme weather conditions. 0:09:45.721 --> 0:09:49.281 So I think probably the thing is, are there are 0:09:49.281 --> 0:09:51.681 there different strategies for splitting your mortgage and let's just 0:09:51.761 --> 0:09:54.201 go okay, So when we're talking about splitting your mortgage. 0:09:54.241 --> 0:09:57.441 We might have a portion that you've done for five years, 0:09:57.841 --> 0:10:00.081 you might have another portion for a year, and then 0:10:00.121 --> 0:10:02.041 you might have some revolving Yeah. 0:10:01.841 --> 0:10:04.161 So I'll tell you what I would do with my clients. 0:10:04.241 --> 0:10:06.761 And it doesn' oh, well, I let you explain it. 0:10:06.761 --> 0:10:09.441 And then so this is on the assumption that it's 0:10:09.601 --> 0:10:13.241 your the mortgage on your home, right because that's unproductive debt. 0:10:13.321 --> 0:10:15.041 You want to get that paid off as quickly as 0:10:15.081 --> 0:10:19.081 possible for investment property debt or investment debt, which could 0:10:19.121 --> 0:10:24.121 be investment, for borrowings, for investments, or for your business. 0:10:24.401 --> 0:10:26.801 We're not prioritizing paying that off. It's just the home 0:10:26.841 --> 0:10:27.721 mortgage to start with. 0:10:28.161 --> 0:10:28.481 Okay. 0:10:28.721 --> 0:10:33.081 Typically I want to have a revolving credit that you 0:10:33.121 --> 0:10:35.001 don't have f poss access to. So it's not a 0:10:35.001 --> 0:10:37.681 transactional account that's just a fast way to go backwards. 0:10:37.721 --> 0:10:40.561 So we're not interested in that, but a revolving credit 0:10:40.761 --> 0:10:45.521 facility that equals the size of your annual surplus. So 0:10:45.521 --> 0:10:47.201 if you make if you've got a surplus, so that's 0:10:47.241 --> 0:10:49.681 the amount of money you have left over. A lot 0:10:49.681 --> 0:10:52.161 of families don't actually have any money left over because 0:10:52.201 --> 0:10:53.801 that's one of the first questions I asked, I say, 0:10:53.801 --> 0:10:55.121 how much did you save last year? 0:10:55.121 --> 0:10:57.281 And they're what are you talking about? 0:10:58.921 --> 0:11:02.601 But if it was twenty thousand dollars, then that would 0:11:02.641 --> 0:11:05.401 be the size of your revolving credit facility, and your 0:11:05.481 --> 0:11:08.441 job is to pay that off over the course of 0:11:08.441 --> 0:11:11.321 the year. That should naturally happen. And the thing with 0:11:11.361 --> 0:11:14.121 a revolving credit is that it's on a higher interest rate, 0:11:14.401 --> 0:11:17.121 So it only works to your advantage if you are 0:11:17.201 --> 0:11:20.961 paying off the principle. Otherwise walk away. It is not 0:11:21.241 --> 0:11:23.201 working for you. You're actually just paying more money to 0:11:23.201 --> 0:11:23.601 the bank. 0:11:23.841 --> 0:11:26.521 But if you so, if you're disciplined and you know 0:11:26.601 --> 0:11:29.361 that you can stick to that saving that you've predicted. 0:11:29.041 --> 0:11:33.001 Yes, then that will pay half the floating interest rate. 0:11:33.121 --> 0:11:35.521 So a revolving credit is a floating interest rate, so 0:11:35.561 --> 0:11:37.441 it's normally one and a half percent higher than a 0:11:37.441 --> 0:11:40.281 fixed rate. So you should stay away from that if 0:11:40.321 --> 0:11:43.041 you don't have any surplus, like why would you expose 0:11:43.041 --> 0:11:45.961 yourself to a higher interest cost, or you do that 0:11:46.121 --> 0:11:48.881 if you've actually got the capacity and the discipline to 0:11:48.881 --> 0:11:51.001 pay off a chunk of it. But the amount you 0:11:51.041 --> 0:11:54.161 have on your revolving credit is linked to what you 0:11:54.241 --> 0:11:57.681 can actually pay. And when I'm working with clients, as 0:11:57.721 --> 0:11:59.641 I say, they might have a natural saving rate of 0:11:59.681 --> 0:12:02.161 twenty thousand dollars a year, my job is to get 0:12:02.161 --> 0:12:04.601 them to fifty thousand, so I would have a fift 0:12:05.161 --> 0:12:08.401 A revolving credit. In that situation, then you say, okay, 0:12:08.561 --> 0:12:10.681 we want to have a chunk fixed for one year. 0:12:11.161 --> 0:12:13.601 This is typically if interest rates were normalized and we 0:12:13.601 --> 0:12:16.401 weren't going to an interest rate dropping environment, you'd have 0:12:16.441 --> 0:12:18.881 a chunk fixed for one year, two year, and maybe 0:12:19.001 --> 0:12:20.681 up to three years. So back in the day, we 0:12:20.761 --> 0:12:22.761 used to fix quite comfortably for so. 0:12:22.681 --> 0:12:25.281 You have you'd have three or four splits in your mortgage. 0:12:25.321 --> 0:12:27.561 That's right, but that's on the assumption interest rates aren't 0:12:27.561 --> 0:12:30.041 coming down. When interest rates are coming down, there's no 0:12:30.121 --> 0:12:34.441 point fixing for long unless the balance the costpity and 0:12:34.481 --> 0:12:34.881 the reason. 0:12:35.041 --> 0:12:37.641 So if they're stable, you're going you're having a long chunk, 0:12:37.681 --> 0:12:40.601 which is cheaper because that's right, and then you're having 0:12:40.641 --> 0:12:43.401 a shorter chunk because you may actually be paying something 0:12:43.401 --> 0:12:45.081 off on that. I guess in a year or two. 0:12:45.241 --> 0:12:46.721 That's right. So you think, well, if you had that 0:12:46.761 --> 0:12:49.121 revolving credit, and let's say it's sort of like a 0:12:49.201 --> 0:12:51.761 yo yo at the bottom of the yo yo curve, 0:12:52.281 --> 0:12:54.721 and it's your negative twenty thousand dollars. So your job 0:12:54.801 --> 0:12:57.481 is to get that up to zero over the twelve months, 0:12:57.521 --> 0:13:00.321 and then the chunk that was fixed for twelve months 0:13:00.361 --> 0:13:05.001 comes up, and that then pushes you back into revolving credits, 0:13:05.041 --> 0:13:08.161 So that one year chunk might be for thirty thousand dollars. 0:13:08.241 --> 0:13:10.881 It's linked to what you're capable of paying off the 0:13:10.921 --> 0:13:13.921 next year. In theory, you're supposed to be getting fitter 0:13:14.001 --> 0:13:16.601 and fitter, so you're supposed to be getting better at saving, 0:13:17.081 --> 0:13:19.881 and in addition to that, your debt is coming down faster, 0:13:20.121 --> 0:13:22.881 so you can propel that forward. 0:13:24.081 --> 0:13:27.081 So what about in the environment we've got now in 0:13:27.161 --> 0:13:29.801 terms of the way people might want to structure their mortgages, 0:13:29.881 --> 0:13:34.281 Because let's just assume that there could be another whole 0:13:34.561 --> 0:13:37.401 one hundred points come off with the cash rate, which 0:13:37.401 --> 0:13:40.881 would mean instead of a which means a six month 0:13:41.001 --> 0:13:43.081 term might be instead of I'm just looking at ASB 0:13:43.201 --> 0:13:45.801 here six point thirty nine, it might be five point 0:13:45.801 --> 0:13:48.281 three nine or five point four or whatever. 0:13:48.681 --> 0:13:51.961 So whether you should fix for six months or twelve 0:13:51.961 --> 0:13:55.641 months comes down to the difference between the six month 0:13:55.721 --> 0:13:58.961 rate and the twelve month rate. If the gap the 0:13:59.001 --> 0:14:02.241 difference between them is more than point six of a percent, 0:14:02.841 --> 0:14:05.561 I would be recommending you fixed for twelve months, because 0:14:05.601 --> 0:14:08.921 it's unlikely even if the rate drop, the rate would 0:14:08.961 --> 0:14:11.521 have to drop by one point two percent in the 0:14:11.561 --> 0:14:15.441 next six months in order to be cash neutral with 0:14:15.521 --> 0:14:19.241 fixing for twelve months. The probability of that is low. 0:14:19.681 --> 0:14:21.721 I would say, I would say that the rates will 0:14:21.721 --> 0:14:23.961 come down, maybe up to one point five percent. I 0:14:23.961 --> 0:14:26.121 think it'll be in the next six months, probably over 0:14:26.161 --> 0:14:28.961 the next twelve or so months. So whether you fix 0:14:29.041 --> 0:14:32.161 for six or twelve months comes down to the relativity 0:14:32.201 --> 0:14:35.321 of those two interest rates, which differs depending on the banks. 0:14:35.681 --> 0:14:38.121 Some banks have the rates really close between a six 0:14:38.161 --> 0:14:40.601 month and a twelve month and so then you're saying 0:14:40.641 --> 0:14:43.481 fix for six months. It's greater chance you'll make more 0:14:43.521 --> 0:14:45.241 gain in the next six months than what you will 0:14:45.281 --> 0:14:46.801 in the first six months, but it will be enough 0:14:46.801 --> 0:14:48.601 to offset you fixing for twelve months. 0:14:48.641 --> 0:14:52.201 It was interesting you said about the revolving credit not 0:14:52.281 --> 0:14:56.601 having access to it, because we did have acs. We 0:14:56.681 --> 0:14:59.841 did use the revolving credit as our living account, but 0:15:00.081 --> 0:15:03.241 we shoved everything into it, so we would only be 0:15:03.321 --> 0:15:06.361 withdraw We weren't spending it using to spend for just 0:15:06.401 --> 0:15:10.761 you know, frivolities, but we did. I think that's right. 0:15:10.761 --> 0:15:12.601 We were using it because we knew where we're going 0:15:12.641 --> 0:15:14.641 to have. I think we're got an eighty thousand dollars 0:15:15.481 --> 0:15:18.081 revolving credit, but it was because we were doing a renovation, 0:15:18.761 --> 0:15:21.601 and say, we would be borrowing that as we spent money, 0:15:21.601 --> 0:15:24.281 but then we would everything we went went into that 0:15:24.281 --> 0:15:27.481 account until we hopefully got it back up to zero. Yeah, 0:15:27.481 --> 0:15:29.761 that's it, And so that that felt like a legitimate 0:15:29.761 --> 0:15:31.001 way of doing a revolving credit. 0:15:31.121 --> 0:15:31.281 Yeah. 0:15:31.321 --> 0:15:33.321 I think that that's a one off use of a 0:15:33.361 --> 0:15:36.001 revolving credit, I think, and that's smart, Like it's an 0:15:36.041 --> 0:15:40.841 efficient one maneuver for most of my clients. We are 0:15:40.841 --> 0:15:43.441 committed to paying the mortgage off in five or six years, right, 0:15:43.521 --> 0:15:47.281 so we need more than one maneuver. We need clarity, 0:15:47.441 --> 0:15:53.401 we need clinical execution, and kind of lumping money into 0:15:53.481 --> 0:15:57.001 an account actually kind of slows things down because when 0:15:57.041 --> 0:16:01.161 you pull that money out invariably, although it literally of course, 0:16:01.201 --> 0:16:03.521 it made sense to have the money and the revolving 0:16:03.521 --> 0:16:06.801 credit that literally will save you more interest but the 0:16:06.841 --> 0:16:10.001 psychology of starting to go backwards has more of an 0:16:10.001 --> 0:16:12.041 impact on your day to day spending when you draw 0:16:12.081 --> 0:16:15.281 that money out. So we're trying to balance the reality 0:16:15.561 --> 0:16:16.841 of people's situations. 0:16:17.161 --> 0:16:18.881 Isn't there something as well? I don't know, maybe this 0:16:19.001 --> 0:16:21.841 is just stay in z where I can't remember if 0:16:21.921 --> 0:16:23.641 it's at the end of each term or at the 0:16:23.761 --> 0:16:25.681 end of each year. You had the option of paying 0:16:25.681 --> 0:16:27.881 off a five percent lump some. 0:16:28.521 --> 0:16:31.881 Yes, but you can't reaccess that. So most banks give 0:16:31.881 --> 0:16:32.761 you that opportunity. 0:16:33.041 --> 0:16:36.361 So what I mean is that something useful for I mean, 0:16:36.441 --> 0:16:38.921 if you've got a long term mortgage, is that you 0:16:39.001 --> 0:16:41.281 could instead of having revolve and credit, if you can 0:16:41.321 --> 0:16:43.041 save that up, you just whack it off that long 0:16:43.121 --> 0:16:43.961 term But. 0:16:43.961 --> 0:16:48.001 That but you can't reaccess it. And the most important 0:16:48.041 --> 0:16:50.521 thing I think when you're trying to make financial progress 0:16:50.721 --> 0:16:54.441 is to have flexibility, because opportunities come usually at the 0:16:54.441 --> 0:16:57.481 most inopportune time. And you make a lump some payment 0:16:57.521 --> 0:17:00.521 on your mortgage, sure as eggs, you will regret that 0:17:00.601 --> 0:17:02.881 about forty eight hours later when you needed that money 0:17:02.881 --> 0:17:05.601 for something else that you just didn't even know about then. 0:17:06.041 --> 0:17:08.601 So I'm a believer that you don't pay anything off 0:17:08.641 --> 0:17:13.441 your mortgage voluntarily unless you can reaccess that money. 0:17:14.281 --> 0:17:17.641 Okay, I had not thought of that at all, because 0:17:17.641 --> 0:17:20.041 I've considered that five percent payment even though I've never 0:17:20.081 --> 0:17:20.441 made it. 0:17:22.281 --> 0:17:25.481 Well, but I get it. The theory of it makes 0:17:25.481 --> 0:17:27.881 perfect sense, just like the theory of credit cards makes 0:17:27.881 --> 0:17:30.161 perfect sense, you know, like, use the bank's money, save 0:17:30.521 --> 0:17:31.321 what it's. 0:17:31.361 --> 0:17:32.241 Don't miss a payment. 0:17:32.721 --> 0:17:36.321 Yeah. Look, I think the psychology if you told me 0:17:36.361 --> 0:17:39.241 you use your credit card, I will know straight away 0:17:39.281 --> 0:17:42.401 that you are inefficient with your money. Sure as ex we. 0:17:42.321 --> 0:17:44.121 Do everything on our credit card, and we pay it 0:17:44.121 --> 0:17:44.841 off every month. 0:17:45.121 --> 0:17:48.401 We go, yes, inefficient with your money, because the point 0:17:48.441 --> 0:17:50.921 isn't that you can't pay it off. That means that 0:17:51.281 --> 0:17:55.521 you're not going backwards. Right, you've paid it off. There's 0:17:55.641 --> 0:17:58.081 enough money to cover your credit card. For many of us, 0:17:58.241 --> 0:18:00.681 we can pay our credit cards in full. The issue 0:18:00.721 --> 0:18:03.121 is that because you've used a credit card, have you 0:18:03.241 --> 0:18:05.201 spent more than what you would have other worse I 0:18:05.281 --> 0:18:05.841 spent if you do. 0:18:06.361 --> 0:18:09.001 I think that's a very good question. I think we're 0:18:09.041 --> 0:18:13.201 reasonably disciplined on that. But actually, and I'll tell you 0:18:13.361 --> 0:18:14.601 this is you're going to tell me off of this. 0:18:14.681 --> 0:18:16.081 I do it because I just love the points. 0:18:17.481 --> 0:18:19.121 Oh my lord. 0:18:18.841 --> 0:18:22.201 Well, hands up? Who's hands up? If you are out 0:18:22.241 --> 0:18:24.401 there listening, how many of you have got a credit 0:18:24.401 --> 0:18:27.241 card and you know that maybe you should listen to 0:18:27.241 --> 0:18:29.081 Hannah's advice, But you do it because you like that 0:18:29.121 --> 0:18:31.001 little the fact that when you go for your your 0:18:31.041 --> 0:18:33.161 annual holiday, you go, hey, guess what, we've got one 0:18:33.161 --> 0:18:34.401 thousand dollars in airpoints. 0:18:34.481 --> 0:18:36.481 Okay, okay, So I will listen to that. But at 0:18:36.521 --> 0:18:38.441 the same time, you are not allowed to complain that 0:18:38.481 --> 0:18:42.241 the banks make billion dollar profits. They go hand in hand. 0:18:42.241 --> 0:18:43.521 Oh I never do. 0:18:44.001 --> 0:18:47.041 Really, No, I'm not a complainer about I think everyone's 0:18:47.081 --> 0:18:48.721 in it to make money and if it's up to 0:18:48.841 --> 0:18:51.001 us to make the decisions we want to make, and 0:18:51.041 --> 0:18:55.801 don't bitch about the profits. Okay, very surprised. I thought 0:18:55.801 --> 0:18:57.361 you were going to say, surprisingly reasonable? 0:18:58.561 --> 0:19:00.401 Are they go hand in hand? 0:19:00.561 --> 0:19:07.801 Mentioned Republicans? Ready, Hey, so how do you structure your mortgage? 0:19:08.841 --> 0:19:10.401 What are your rules of thumb that you use when 0:19:10.401 --> 0:19:13.041 it comes to spliting your mortgage? Revolving credit? But actually, 0:19:13.041 --> 0:19:14.761 while we've thrown it out there, it's just become the 0:19:14.801 --> 0:19:17.481