Speaker 1: You're listening to the Weekend Collective podcast from News Talks.
Speaker 2: I'd be.
Speaker 3: As welcome back to the Weekend Collective. I'm Tim Beverage. Now,
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Speaker 3: you can jump on that anyway. Now it's onto the
Speaker 3: One Roof radio show and we're going to have a
Speaker 3: chat about now that the interest rates the cash rates
Speaker 3: dropped another twenty five points and things seem to be
Speaker 3: getting to that feeling where maybe this is sort of
Speaker 3: roughly where we're going to. And so the question around
Speaker 3: making commitments, but also how should you actually structure your
Speaker 3: mortgage if you're looking to refix your mortgage or you wait,
Speaker 3: you're going to float for a while while you wait
Speaker 3: for another announcement, or and at what point isn't worth
Speaker 3: breaking your mortgage at the lower rate, But just the
Speaker 3: whole question around restructuring. And I mentioned this partly because
Speaker 3: I've just recently restructured my mortgage and there was a
Speaker 3: bit of a miscommunication with the bank which did cause
Speaker 3: a fair wack of stress. But to be fair to
Speaker 3: the bank, they actually have said, look, if that's what
Speaker 3: you understood, we're going to sort that out. Somebody might say, well,
Speaker 3: you should have talked to mortgage broke about I guess
Speaker 3: there wasn't enough money at stake really, But anyway, we're
Speaker 3: going to talk about fixing your mortgage in the ways
Speaker 3: you should restructure your mortgage as well. But also if
Speaker 3: now is the time when things are getting to a
Speaker 3: point where the interest rates are sort of settled, we're
Speaker 3: not going to We don't think we're going to see
Speaker 3: too much of a shift because we've seen some certainly
Speaker 3: seen a roller coaster lately. I want to know what
Speaker 3: it takes to go from being on the sidelines looking
Speaker 3: at things thinking I'd love to do that, love to
Speaker 3: buy a house, maybe we should do it someday. What
Speaker 3: did it take or does it take to change your
Speaker 3: mindset and what clinches it for you or has clinched
Speaker 3: it for you to take your first step into property
Speaker 3: now somebody who's talking about that stuff all the time
Speaker 3: because she's from Property Apprentice, she's an investment coach and
Speaker 3: her name is Debbie Robertson. She's with me. Now get
Speaker 3: a Debby. How you going good?
Speaker 4: How are you good?
Speaker 3: Do you find I mean, do you get the feeling
Speaker 3: that it does be on what we weekend into that
Speaker 3: time with interest rates that it's sort of you know,
Speaker 3: you've got nothing else to wait for. We're not going
Speaker 3: to really see a hell of a lot more movement,
Speaker 3: are we, Or do you sort of think, well, don't
Speaker 3: make those predictions, beverage. Who knows what's going to happen.
Speaker 4: Honestly, this is where you wish she had a crystal ball,
Speaker 4: because there's so much volatility going on in the US
Speaker 4: at the moment that literally anything could happen. The New
Speaker 4: Zealand Reserve Bank has indicated that the next now and
Speaker 4: next announcement is going to be another cut of zero
Speaker 4: point twenty five, so you know there is room for
Speaker 4: things to move. The longer term interest rates are the
Speaker 4: ones that are affected by overseas, so you know, if
Speaker 4: we get inflation in the US, then we could get
Speaker 4: more drops in the long term interest rates. If we
Speaker 4: don't get inflation in the US and the economy stalls
Speaker 4: over there, then we might see we might see further cuts.
Speaker 4: It literally could go either way. So who knows.
Speaker 3: Okay, Yeah, because I had, for some reason assumed that
Speaker 3: this was sort of getting to. Maybe the reason I'm
Speaker 3: thinking that is because we've got to what we might
Speaker 3: anticipate to be a fair, manageable sort of rate of mortgages.
Speaker 4: Now, yeah, we're definitely below the long term average. I
Speaker 4: mean I worked out the ten year or twenty year
Speaker 4: average up to the start of COVID when the Reserve
Speaker 4: Bank slashed the OCA, and it works out to be
Speaker 4: about six point three five percent on average. So everything
Speaker 4: except for the floating rate is now bel the average,
Speaker 4: and floating rates came down almost immediately after the Reserve
Speaker 4: Bank announcement.
Speaker 3: Actually, I noticed with my bank that their one, two,
Speaker 3: three year rates didn't change. But there in fact, when
Speaker 3: I was talking to them about the issue I had,
Speaker 3: they said, I said, by the way, is this going
Speaker 3: to work in My favorite said, no, there's no change.
Speaker 3: You said, You've got a pretty good rate, which I do,
Speaker 3: but he said, the floating rate's going to come down.
Speaker 4: Yeah, the floating rate, and interestingly, the test rates have
Speaker 4: come down as well. So test rates are the interest
Speaker 4: rate that banks test your affordability. Yet so now most
Speaker 4: of them are sitting around the seven percent mark, whereas
Speaker 4: you know at the peak of the market they were
Speaker 4: testing at around nine percent.
Speaker 3: Why well, why say they saw around so much?
Speaker 4: It's a safety imagine. So you know, banks have got
Speaker 4: this responsible lending code, so they need to make sure
Speaker 4: that you're going to be able to afford to pay
Speaker 4: the mortgage if interest rates or when interest rates go
Speaker 4: back up again.
Speaker 3: So there was a time when, you know, when the
Speaker 3: market was going nuts, and there have been a couple
Speaker 3: of times obviously when money was really cheap with the
Speaker 3: FOMO years, and you know, when it seemed that if
Speaker 3: you could get the leverage, you were a dummy not
Speaker 3: to get into the market, although were plenty of people
Speaker 3: who didn't, but nobody really considered the safety margin themselves.
Speaker 3: All they wanted to do is can I get the
Speaker 3: mortgage away we go. I had some advice from a
Speaker 3: friend saying, look, you, when you do get a mortgage,
Speaker 3: you should always make sure that if interest rates, if
Speaker 3: your mortgage rate gets to eight percent, that's a number
Speaker 3: he packed. He said, you should always become confident you
Speaker 3: could hang on. How important do you think it is
Speaker 3: that we consider safety margins absolutely well. I don't know
Speaker 3: how many people do. How many people do I don't
Speaker 3: think anyone does. They just go what's moment mortgage rate?
Speaker 3: Lock it in for four years, happy days.
Speaker 4: Yeah, And it's one of the things that we always
Speaker 4: talk to our clients about is testing your own affordability,
Speaker 4: because just because the banks is you can borrow a
Speaker 4: certain amount of money doesn't mean that you can actually
Speaker 4: afford it. So always test. I'd suggest testing at interest
Speaker 4: rates of around seven and a half or seven percent,
Speaker 4: because what we've seen over the past few decades is
Speaker 4: the interest rates have been coming down over the you know,
Speaker 4: but they have been trending lower and lower. The COVID
Speaker 4: rates were way abnormal that I certainly wouldn't expect them
Speaker 4: to get that low again.
Speaker 3: But I wonder if there's anyone who's still smugly just
Speaker 3: coming to the end of that two point nine nine percent,
Speaker 3: what did you get down to? Was it two point
Speaker 3: nine or was it.
Speaker 4: There were a couple at two point five and two
Speaker 4: point nine yees, So we've still got one of those.
Speaker 3: I'm sure you have personally. Oh, just scouting right now.
Speaker 4: I know.
Speaker 3: Actually, we'd love to hear from you when you come
Speaker 3: to about this. When you're when you're organizing your mortgage,
Speaker 3: what do you test yourself out on, because that's a
Speaker 3: part of the that's the whole part of the equation.
Speaker 3: Maybe the bank's testing your your ability to service a debt.
Speaker 3: But I think I've found that what the bank thinks
Speaker 3: I can afford as a hell of a lot more
Speaker 3: than I'd ever want to pay. Absolutely, so we love
Speaker 3: your calls. I know what undred eighty ten to eighty
Speaker 3: tixt nine two nine two. And the other thing about
Speaker 3: structuring mortgage is how many people actually would go initially
Speaker 3: onto a floating rate simply just because they're like, well,
Speaker 3: I'll wait and see what happens the next little while.
Speaker 4: I think at the moment, more and more people are
Speaker 4: looking at fixing. You know, we went through a period
Speaker 4: where there were a huge number of mortgages that were
Speaker 4: on floating rates or just six month mortgage rates, and
Speaker 4: now people are starting to look at the longer term
Speaker 4: rates as well. I think my opinion has always been
Speaker 4: even before I became a mortgage advisor. Why do it
Speaker 4: yourself if you can get someone who's in the industry
Speaker 4: to do it for you. Tom Wow.
Speaker 3: Actually the reason I didn't because mine's got down a
Speaker 3: bit and I just assumed. In fact, I did speak
Speaker 3: to a mortgage broker a couple of fixes ago, maybe
Speaker 3: a couple of years ago, and he just he said,
Speaker 3: what are you What are you being offered by the bank?
Speaker 3: And I said X And he said, just go with
Speaker 3: the bank. You know that's as good as I'll get you. Must,
Speaker 3: well just do that, mind you. I wasn't looking at
Speaker 3: restructuring anything.
Speaker 4: No, And I think that's the thing, like, if you've
Speaker 4: got a good mortgage advisor, they're there for you for
Speaker 4: the entire duration your mortgage. Whereas you know, often if
Speaker 4: you're dealing with the bank, you see a different person
Speaker 4: every single time you go there, or you might not
Speaker 4: even see someone these days, you just talk to them.
Speaker 3: How does that work out from a mortgage broker's point
Speaker 3: of view? If you've you've had your own mortgage, you've
Speaker 3: managed it yourself, and you decide you want to go
Speaker 3: to a broker, how does how do they end up
Speaker 3: getting paid because you've got an existing you know, been
Speaker 3: doing things with the bank. You're not changing much, but
Speaker 3: you're going to get a mortgage broker to help you
Speaker 3: do They just how does that work?
Speaker 4: There's a couple of different there's a couple of different methods. Basically,
Speaker 4: if it's something like an interest rate review, the banks
Speaker 4: either pay you a little bit to do that to
Speaker 4: service the client for them, or you get you know,
Speaker 4: I mean sometimes that happens. Other times the banks have
Speaker 4: what they call a trail commission, so you get paid
Speaker 4: a little bit each month in order to continue looking
Speaker 4: after that client.
Speaker 3: Okay, we love your callse We one hundred and eighty
Speaker 3: ten eighty around. How do you approach restructuring your mortgage?
Speaker 3: And I mean you might have learned a few lessons
Speaker 3: like I did the day about making sure I clearly
Speaker 3: understood what the bank was talking about until there's a misunderstanding,
Speaker 3: because that can be quite stressful, and not going to
Speaker 3: talk about that too much because they have sorted it out. Debbie.
Speaker 3: So what is the when people come to see you
Speaker 3: property apprentice? I mean, actually how I think? Just out
Speaker 3: of curiosity, how are you getting busier these days? What's
Speaker 3: going on?
Speaker 2: Yeah?
Speaker 4: Last year definitely started to pick up for us, you know,
Speaker 4: I mean, we went through a couple of years where
Speaker 4: it was a bit lean, so we were just looking
Speaker 4: after our existing clients and the odd new ones that
Speaker 4: were seeing the opportunities out there. So last year definitely
Speaker 4: started to pick up. This year has been a little
Speaker 4: bit slower to start, but certainly starting to pick up
Speaker 4: now as well. So I think one of the things
Speaker 4: that we've always seen in the property market, because I mean,
Speaker 4: Paul and I have been in the industry for a
Speaker 4: quarter of a century, but you know, we've been running
Speaker 4: Property Apprentice for about fifteen years now, and one of
Speaker 4: the things that we've always seen is that the gen
Speaker 4: all public start getting really interested in property investing when
Speaker 4: we're in a booming market, and yet most property investors
Speaker 4: would far prefer to be investing in the current property
Speaker 4: market when there's less competition from other buyers. You can
Speaker 4: negotiate good deals without feeling like you've got to make
Speaker 4: a decision in a hurry. But you know, we're a
Speaker 4: nation of sheep.
Speaker 3: Are people who come to you are they coming as
Speaker 3: investors you've ordered or first home buyers? How does that?
Speaker 4: It's really interesting because that's something that we've definitely seen
Speaker 4: a change in over the past few years. You know,
Speaker 4: when we first started Property Apprentice, it was mostly investors.
Speaker 4: Now where we get a mix of first home buyers
Speaker 4: who want to invest further down the track and experienced
Speaker 4: investors as well as brand new investors. And I guess
Speaker 4: part of that could be because we've kind of changed
Speaker 4: the way that we do things over time as well,
Speaker 4: so now we incorporate the full financial plans and you know,
Speaker 4: time planning and all that sort of stuff as well.
Speaker 4: So I guess our clients get a bigger base rather
Speaker 4: than just coaching.
Speaker 3: So you're not really dealing with first time buyers so much.
Speaker 4: Yeah, we're dealing with more first home buyers now than
Speaker 4: we did when we first started. So yeah, it's quite
Speaker 4: interesting because we're seeing the younger people that are looking
Speaker 4: to purchase their first time they want to make sure
Speaker 4: that they do it well so that they've got a good,
Speaker 4: solid foundation to move forward from there.
Speaker 3: I guess with you with your business, when people come
Speaker 3: to you, they've already made a decision. They want to
Speaker 3: get into the property investing, don't they. Yeah, So it's
Speaker 3: not so much a question because one of the things
Speaker 3: I wanted to explore along the lines of the restructuring
Speaker 3: mortgages is what does it take for people to go
Speaker 3: from the mindset of watching or maybe having a casual
Speaker 3: curiosity and something to actually going I'm actually going to
Speaker 3: do it. Because I mean, even with me, it hadn't
Speaker 3: been for my wife saying to me, look, we're starting
Speaker 3: a family, we need to let's look at buying asean.
Speaker 3: That extra impetus for me was what made the difference.
Speaker 3: Probably whereas I'd been sitting you know, you'd think I
Speaker 3: should do this, I should do it, I should do it,
Speaker 3: and I think we whether it be property, people have
Speaker 3: those moments in their lives with all sorts of things. Yeah,
Speaker 3: about making it because it's a commitment.
Speaker 4: Absolutely. One of the things that we've always noticed is
Speaker 4: for the clients of ours that are first home buyers,
Speaker 4: Oftentimes they start looking at purchasing a home either because
Speaker 4: they're looking at having a family and they want to
Speaker 4: make sure that you know, they can set down routes
Speaker 4: in a house that they can stay in for a
Speaker 4: while without having to worry about the landlord selling it
Speaker 4: or whatever. Sometimes it's because market rents get to a
Speaker 4: point where they're like, heck, you know, we may as
Speaker 4: well just buy ourselves a home and start paying towards
Speaker 4: our own mortgage rather than helping the landlord pay theirs,
Speaker 4: which is fair enough as well. So yeah, there's a
Speaker 4: real mix in the first home buyer market for property investors.
Speaker 4: It tends to. I mean, property always does well when
Speaker 4: there's lots of uncertainty like we're seeing at the moment
Speaker 4: in the US, because share market starts looking a little
Speaker 4: bit wobbly, so people look at things that are a
Speaker 4: bit more stable, like the property market or gold or
Speaker 4: you know, precious metals, all that sort of stuff. So yeah,
Speaker 4: property is a much more stable, Like we don't get
Speaker 4: the daily ups and downs like the share market does.
Speaker 3: I guess it probably doesn't. Emotionally, people don't feel like
Speaker 3: it's been that stable lately because we've seen all those
Speaker 3: interest rates things. So how does the global situation time
Speaker 3: to a sense of stability when we don't know? I mean,
Speaker 3: job stabilities, job stabilities, you know, recessions, global recessions. Those
Speaker 3: are things that feed instability for people's towards.
Speaker 4: Any definitely, and I think that's potentially the biggest reason
Speaker 4: that we don't have a lot more buyers in the
Speaker 4: market at the moment. I saw a survey recently that said,
Speaker 4: I can't remember the figure off the top of my head,
Speaker 4: but it was huge. It was like sixty five or
Speaker 4: seventy percent of New Zealanders are actually worried about job
Speaker 4: loss at the moment. Yeah, it was huge. So if
Speaker 4: anyone remembers what the figure is, let us know. But
Speaker 4: it was it was high. And I remember thinking at
Speaker 4: the time, that's you know, when when we're looking at
Speaker 4: public perception like that, it's no wonder we don't have
Speaker 4: more buyers in the market at the moment, because who's
Speaker 4: going to go out and buy a home if they're
Speaker 4: worried about losing.
Speaker 3: Their job, I guess, except the only other thing is
Speaker 3: you are paying for accommodations somehow anyway. But of course
Speaker 3: these days, generally your mortgage is going to be more
Speaker 3: than your share of.
Speaker 4: The rent in most situations.
Speaker 3: Yes, look, we'd love to have your cause on. There's
Speaker 3: a couple of things we're looking at about. It's about
Speaker 3: restructuring the mortgages and you know, have you I mean,
Speaker 3: for a lot of people it's something where they might go, well,
Speaker 3: I'm on this interest rate. Interest rates have dropped through
Speaker 3: the floor. I want to talk to the bank about
Speaker 3: about restructuring and maybe breaking my mortgage in fact, on
Speaker 3: that just before we go to the break. How often
Speaker 3: do people actually make that calculation and how ba does
Speaker 3: it go for them with the banks when it comes
Speaker 3: to breaking an existing mortgage rate.
Speaker 4: People don't often do that calculation themselves, but it's certainly
Speaker 4: something that mortgage advisors will do for you, and the
Speaker 4: banks will tell you how much a break feel cost you.
Speaker 4: So if you if you weren't wondering what it's going
Speaker 4: to look like, phone your bank up and say, hey,
Speaker 4: if I break this fixed rate now, how much is
Speaker 4: that going to cost? And then you can work it
Speaker 4: out yourself if you're that way inclined.
Speaker 3: Actually, I did my calculations on our mortgage on what
Speaker 3: these scenarios were with using AI because I've I've got
Speaker 3: a conversational chat GPT excellent, and I said, this is
Speaker 3: my mortgage, this is what I've got to pay off it.
Speaker 3: How much will I save if I pay it off
Speaker 3: in this fashion and such and such, And I've got
Speaker 3: a very conversation. It's an English English woman's voice that
Speaker 3: comes up. Good question, Tim, I'll tell and actually ais certainly,
Speaker 3: of course it does say double check everything. But yeah, actually,
Speaker 3: before we got to the break, let's take a text here. Hi, Tim,
Speaker 3: can you ask Debbie if there is an age limit
Speaker 3: on mortgage to buy an investment property. We're in our sixties,
Speaker 3: no mortgage, but we want to move to another province
Speaker 3: in a year or so. Could we get a loan
Speaker 3: and rent the property out our age?
Speaker 4: Yeah, as long as you've got enough provable income. So
Speaker 4: when you already own a property, banks are still often
Speaker 4: quite happy to lend you money as long as you've
Speaker 4: still got provable income, so they don't have to worry
Speaker 4: about how you're going to pay the mortgage, you know,
Speaker 4: and they'll take a percentage of the rent. If you're
Speaker 4: buying an investment property, they'll take a percentage of the
Speaker 4: weekly rent and add it to your personal income. But
Speaker 4: if you don't already own a home, if you're in
Speaker 4: your sixties, you might be lucky to get a fifteen
Speaker 4: year loan term, whereas if you already own your own home,
Speaker 4: you could still potentially get a thirty year loan term
Speaker 4: on an investment property.
Speaker 3: Right, we'd love your cause eight hundred eighty, eight hundred
Speaker 3: and eighty ten eight. If you've got any questions for
Speaker 3: Debi Roberts from property from sorry proper apprentice, then give
Speaker 3: us called eight hundred eighty ten eighty. But also what
Speaker 3: clinched it for you to take your first step into property?
Speaker 3: Because it feels to me that we are at a
Speaker 3: time when there might be a few people saying In fact,
Speaker 3: I'm not just saying that because I reckon this. I
Speaker 3: have had a conversation conversation with some younger people, a
Speaker 3: couple of whom have said, you know, I'm getting my
Speaker 3: money together. I'm thinking actually that we're going to find
Speaker 3: out what we can borrow, and we're going to start
Speaker 3: making a decision. And the reason for them is simply
Speaker 3: that they think this is the time to buy. I guess,
Speaker 3: but what was it? What was it for you that
Speaker 3: clinched your decision to make the biggest of commitments. Some
Speaker 3: might argue eight hundred eighty ten eighty text nineteen nine
Speaker 3: two back in just a moment, news talks, he'd be
Speaker 3: it's welcome back to the weekend collective. This is one
Speaker 3: roof Riddy Issha. My guest is Debbie Roberts from Property Apprentice.
Speaker 3: We're talking about ways to structure your mortgage, so maybe
Speaker 3: you don't even need to break it for a lower
Speaker 3: interest rate, because they're all sorts of ways to skin
Speaker 3: a cat, as they say, because a lot of people.
Speaker 3: I have this idea in my head that a lot
Speaker 3: of people, when they get their first mortgage, Debbie as
Speaker 3: they just go right and borrowing god knows what. Let's
Speaker 3: say four hundred thousand dollars just for fun, which would
Speaker 3: be quite a low mortgage for a first time buyer.
Speaker 4: Depends on what you're buying.
Speaker 3: But yeah, yes, I'm thinking Auckland. But I would imagine
Speaker 3: most people just go, well, what's the lowest interest rate
Speaker 3: four hundred grand, let's slap it on that and take
Speaker 3: the best rate we can get. But is that quite
Speaker 3: common form?
Speaker 4: I think that's probably quite common with people that go
Speaker 4: directly to their bank. Someone who's getting a bit of
Speaker 4: good financial support behind them or financial advice behind them
Speaker 4: would generally look at splitting your mortgage so that you
Speaker 4: could have some of it on short term interest rates
Speaker 4: in the hope that interest rates keep coming down, and
Speaker 4: then maybe look at fixing some of it for a
Speaker 4: longer term for long term security.
Speaker 3: Okay, we might have dig into this bit more about
Speaker 3: how you constructure it, because there are suggestions from people
Speaker 3: that if you structure your mortgage the right way, maybe
Speaker 3: you don't feel the urgent need to break it to
Speaker 3: refix it at a lower rate, but of course, depending
Speaker 3: on how much that's dropped. But let's take some calls Ray.
Speaker 2: Hello, Oh, no, good.
Speaker 5: Afternoon, Debbie. We're coming up to sixty five and we've
Speaker 5: got a mortgage that comes off principal and interest only
Speaker 5: next year with the five years in June, we need
Speaker 5: to refix again. I'm tossing up whether I'll do half
Speaker 5: a six months and half at a year, but I'm
Speaker 5: just I still want to stay interested only after next year.
Speaker 5: What is the likelihood of the banks allowing you to
Speaker 5: continue to do that.
Speaker 4: That's a really bad chank. Yeah, it's really good.
Speaker 3: Yeah, because I was. We're in the same situation we
Speaker 3: didn't interest only in the bank said times up.
Speaker 4: I mean, like, that's that's exactly it. So eventually the
Speaker 4: banks will say no, that's enough, you've had enough. Prior
Speaker 4: to the global financial crisis, you could just roll over
Speaker 4: interest only loans for as long as you wanted, you know,
Speaker 4: as long as you still meet their lending criteria. But
Speaker 4: now things are a little bit different, so it will
Speaker 4: depend on your ability to service the loan and whether
Speaker 4: you're able to refund to another bank. So yeah, I
Speaker 4: think go talk to a mortgage advisor and just have
Speaker 4: a chat about what your options are.
Speaker 5: Yeah, because I'm thinking that I don't want to fix
Speaker 5: the loan more than past the interest only period, because
Speaker 5: if I do decide, you know that we can't get
Speaker 5: principal and interest, then I'll pay a lump some of
Speaker 5: it and make it affordable. Is principal and interest?
Speaker 4: Yeah?
Speaker 3: Have you got a lump sum to pay off it? Yeah?
Speaker 2: Yeah I have.
Speaker 5: Yeah.
Speaker 4: So I mean you're you're right if you're coming up
Speaker 4: to an only expiry period and you fix for longer
Speaker 4: than that on a fixed interest rate for long some
Speaker 4: banks won't even let you fix for a longer term
Speaker 4: than your interest only expiry date. Some banks will, But
Speaker 4: if you fix for longer than your interest only expiry date,
Speaker 4: you can get yourself into a little bit of trouble
Speaker 4: because the bank haven't force you on onto principal. Yes,
Speaker 4: So yeah, I think it worth while you talking to someone.
Speaker 5: Yeah, I want to hold that bit over us, because
Speaker 5: we could pay it off if we had to by
Speaker 5: selling another property or you know, paying a fairly decent
Speaker 5: lump off. But I prefer it to be honest as
Speaker 5: a stay interest only, because I've always gone of the
Speaker 5: thing that it's just interest only. And when I've got
Speaker 5: a lump some, I pay a lump some off it.
Speaker 5: Then generally I pay them off within you know, seven
Speaker 5: or eight years.
Speaker 3: That's an interesting one. So if you are paying off
Speaker 3: lump sums in the bank as you can, I think
Speaker 3: Ray's probably not a bad situation because it's not like
Speaker 3: she's interest only and that's all she's got. If she's
Speaker 3: got other assets and things. I mean, is that a
Speaker 3: hard sell to the bank.
Speaker 2: No?
Speaker 4: No, And this is why this is why I love
Speaker 4: doing what I do, you know, because literally every single
Speaker 4: person I talk to is in a different situation. So
Speaker 4: it keeps the gray matter ticking.
Speaker 3: So what's your ideal world as you'll continue with interest only?
Speaker 5: And yeah, you're probably prior to you know, all the
Speaker 5: fuffle that's happened in the last few years. When we
Speaker 5: first bought this property, it was making thirty thousand dollars
Speaker 5: a year profit. It's gone to making thirty thousand dollars
Speaker 5: a year lost now because of the change in the
Speaker 5: interest rates. But with the interest rates coming down, it
Speaker 5: will almost be break even, could be break even. So
Speaker 5: to me, where I'm working on is that it's an
Speaker 5: assets for my children in the years to come. If
Speaker 5: I can keep it just ticking along and I'm not
Speaker 5: having to add to it and we're just relying on
Speaker 5: capital gain to eventually become part of their inheritance, then
Speaker 5: that's the way to all that. It's not anything.
Speaker 4: And have you crunched the numbers to see how much
Speaker 4: the mortgage would be if you did make a lump
Speaker 4: sum off it.
Speaker 5: I've done it. I've done it at a few different levels.
Speaker 5: I don't need to pay that much of it. It
Speaker 5: is a big mortgage, but the property does return sixty
Speaker 5: three thousand a year itself, so it's doing.
Speaker 2: Pretty well good.
Speaker 3: So you I guess by not paying anything off, you're
Speaker 3: just banking on the capital gain being worth it rather
Speaker 3: than paying money off it and saving that interest.
Speaker 5: Well, yeah, there could be capital gain, they may not be,
Speaker 5: but it's just looking after itself, you know. And it'll
Speaker 5: just be an assets that sits there dog looking after
Speaker 5: itself in morebetuity that someday, some day my kids could
Speaker 5: cash in, okay, and you know, there could be a
Speaker 5: capital profit. It could be a little lost, but I
Speaker 5: would think I would hope that I'm going to leave
Speaker 5: at least another teen years and there'd be a little
Speaker 5: bit of profit in it.
Speaker 3: Yeah, okay.
Speaker 4: I mean we've certainly found in our experience that property
Speaker 4: investing has given us a lot more choices than anything else.
Speaker 4: You know, with that ability to ability to have long
Speaker 4: term capital growth as well as long term rental increases
Speaker 4: over time as well, your purchase price doesn't increase, does it.
Speaker 5: I'm one of those terrible ones that I don't incrustate much.
Speaker 5: You don't believe we just don't increase the.
Speaker 3: Well you plas on a lot of bit of love.
Speaker 5: You know.
Speaker 3: That's that's good.
Speaker 5: You know.
Speaker 4: We're not all awful hardly.
Speaker 3: Well that's what that.
Speaker 5: Well that touches me out in my pocket.
Speaker 3: Yeah, thanks, Ray, thanks for your call. That touches on
Speaker 3: something else that actually if you've got a good tenant
Speaker 3: that actually actually is worth something, if you've got a
Speaker 3: tenant who's going to be absolutely reliable. You're going to know,
Speaker 3: you know, they're going to be sticking around for a
Speaker 3: long time. I mean that is there is a reason
Speaker 3: why landlords would not want to be good to a
Speaker 3: good tenant like that.
Speaker 4: Absolutely, and a lot of landlords that manage the properties themselves,
Speaker 4: they do get quite a bit behind and market rent,
Speaker 4: you know, so the tenants are paying pretty cheap rent
Speaker 4: compared to what they would be if they were renting
Speaker 4: anywhere else.
Speaker 3: See the emotional journey I went on just before we
Speaker 3: take our next caller is because I liked having I
Speaker 3: paid a lump off my because of some other things
Speaker 3: I'd done. I had a bit of money sit in
Speaker 3: my business account and I thought, well, I wouldn't mind
Speaker 3: using that at some stage, but it's no point having
Speaker 3: it sitting there on some pathetic interest rate when it's
Speaker 3: actually worth a lot for every week that it's paid
Speaker 3: off on the mortgage. And it was a difficult thing
Speaker 3: to get my head around though, because and psychologically I
Speaker 3: don't feel I've got that money there anymore to draw on,
Speaker 3: even though I've arranged it with the bank where I
Speaker 3: can draw on it. It's just that, you know what
Speaker 3: I mean, it was just nice seeing it sitting in
Speaker 3: that separate accountant and the chat GPT even said, you're
Speaker 3: going to save so many thousand dollars a year if
Speaker 3: you stick it on your mortgage Chat GPT.
Speaker 4: Jeepers, are we really going to trust chat GPT to
Speaker 4: give you the best financial advice?
Speaker 3: No, just pointed out the numbers. I just said, if
Speaker 3: you pay it off, this is what you're going to
Speaker 3: say per yeah, and interest rates, and if you pay
Speaker 3: it off your mortgage, you'll pay off your mortgage this
Speaker 3: much quicker.
Speaker 4: Did it tell you what your break fees would be if.
Speaker 3: You well, well, I don't think I probably.
Speaker 4: Shouldn't have this conversation.
Speaker 3: No, no, no, no, no no, because the break feeds
Speaker 3: weren't relevant. It's a year and I've got a floating
Speaker 3: sort of Oh it was floating.
Speaker 4: Okay, Yeah, I mean, like you know, talking about loan structure,
Speaker 4: if you've got lump sums of cash, there's lots of
Speaker 4: different ways that you can help use that to your
Speaker 4: best advantage when it comes to having a mortgage. It
Speaker 4: could be a revolving credit facility, or in your situation,
Speaker 4: if you liked having the money sitting in a bank
Speaker 4: account and so that you could see it at any
Speaker 4: given time. Well, but you've got set mortgages. Offset mortgages
Speaker 4: can work really well in that scenario as well.
Speaker 3: And you've explained that to me on the break. We'll
Speaker 3: be back in just a moment. I actually know. I
Speaker 3: went back in just a moment. We go to Bell
Speaker 3: good A, Yeah, good mate, how are you good? Thanks?
Speaker 2: Yeah, good. Look. I'm seventy two, my wife sixty seven,
Speaker 2: and we own our home outright, probably worth about between
Speaker 2: five fifty and six hundred. We have about thirty odd thousand,
Speaker 2: you know, fucked away for emergencies. But my wife may
Speaker 2: have to have an operation and you go private, it's
Speaker 2: going to cost about twenty grand, and so we won't
Speaker 2: have much left for having the odd holiday. What's what's
Speaker 2: the best way to, you know, to maybe get forty
Speaker 2: or fifty grand? Is it re mortgage or reverse mortgage?
Speaker 2: What would you suggest?
Speaker 4: Well, I'd be yeah, I feel like a bit of
Speaker 4: a broken record saying get in touch with the mortgage
Speaker 4: advisor because they can go through all those different options
Speaker 4: with you. I can't give anyone individual financial advice in
Speaker 4: this sort of format because I'd need to know.
Speaker 3: People in a similar situation.
Speaker 4: Generically speaking, Yeah, I don't have any problems with reverse mortgages.
Speaker 4: I think there's definitely a place for them. It basically
Speaker 4: it depends on whether you've got the ability to repay
Speaker 4: the mortgage now or if you don't. So if you've
Speaker 4: got the capacity with your cash flow to pay off
Speaker 4: a mortgage, you know, a thirty thousand dollars mortgage isn't huge,
Speaker 4: so you know, you might be able to pay that
Speaker 4: down without impacting your lifestyle. Otherwise a reverse a reverse
Speaker 4: mortgage might suit you right down to the ground these
Speaker 4: pros and cons.
Speaker 2: Yeah, Yeah, that's I was leaning towards the reverse mortgage
Speaker 2: because then then there's no payments till you sell your house. Yeah, exactly,
Speaker 2: And if you work out the you gain maybe over
Speaker 2: ten or fifteen years whatever you take the loan out for.
Speaker 2: You know, I was sort of thought, well, even at
Speaker 2: the end of that term, would still have the same
Speaker 2: equity as we have now. Yeah, yep.
Speaker 4: And I mean I think that the way that reverse
Speaker 4: mortgages are done in New Zealand are pretty pretty well
Speaker 4: looked after. You know, they're a pretty good facility.
Speaker 3: Okay, good luck with that belt Chiers. Thanks for your call.
Speaker 3: We're back just a moment. It's twenty one minutes to five.
Speaker 1: You love me.
Speaker 3: You can see understand these devils, you can see what
Speaker 3: about you stalk said be this is the one Roof
Speaker 3: radio show. We're talking about how you structure your mortgage,
Speaker 3: and as we've dug into it, this has got a
Speaker 3: lot more complex than I anticipated. With Debbie Roberts from
Speaker 3: Property Apprentice, First thing, Debbie, Actually I want to ask
Speaker 3: you just for people who are setting out. So most
Speaker 3: people think, you know what you You've got your deposit,
Speaker 3: you've managed to get approval from the bank, you're going
Speaker 3: to borrow. Let's say you're borrowing four hundred thousand bucks
Speaker 3: and you shove that all on one mortgage? Is that
Speaker 3: the right thing to As I asked this, I know
Speaker 3: and not one size fits all, but most people just
Speaker 3: do that. I've got a good interest, right, It's I
Speaker 3: can pay off something when I come off the fixed term,
Speaker 3: and so that'll do me. Is that generally an okay
Speaker 3: thing to do? Or what other options should they explore?
Speaker 3: So should they structure their mortgage from day one differently
Speaker 3: to give themselves more flexibility?
Speaker 4: I would say so yeah, So it depends on what
Speaker 4: your situation is like. If you're someone that earns bonuses
Speaker 4: or commissions, you know, lump some amounts as part of
Speaker 4: your salary, then that could lead itself towards a different
Speaker 4: type of structure. You might leave some of it on
Speaker 4: a floating rate, or you might have a revolving credit
Speaker 4: facility or an offset loan, or you know, there's lots
Speaker 4: of different options out there, and it is one of
Speaker 4: the things that a mortgage advisor can look at and
Speaker 4: see which banks the best suited for you. Something that
Speaker 4: I actually heard recently which shocked me was that about
Speaker 4: sixty percent of New Zealanders thought that you had to
Speaker 4: pay to work with a mortgage advisor. And you don't
Speaker 4: if any of the listeners out there are going, yeah,
Speaker 4: but why would I pay a mortgage but you don't
Speaker 4: have to. I get paid by the lenders.
Speaker 3: My understandings, mortgage advisors are a lot more commonly used
Speaker 3: these days. I think the perceptions of them have changed
Speaker 3: over the last ten or fifteen twenty years, haven't they.
Speaker 4: Yes, they have. So it's you know, my preference has
Speaker 4: always been to work with a mortgage advisor because they've
Speaker 4: got access to over twenty different lenders.
Speaker 3: So an example might be if you've got a four
Speaker 3: hundred thousand dollars mortgage, you might decide, well, to me,
Speaker 3: I can only talk for myself, and that's this is
Speaker 3: not what my mortgages. I'm not giving anyway family secrets here.
Speaker 3: But say if I had a mortgage of four hundred
Speaker 3: thousand dollars, I might fix, say for a year or two,
Speaker 3: the three hundred and fifty thousand, and I'd have fifty
Speaker 3: grand on a floating facility, and I would make sure
Speaker 3: I put it. I just ran every bit of money
Speaker 3: that I had coming in into that account. So maybe
Speaker 3: that would reduce quicker. And if it didn't reduce quicker,
Speaker 3: then in a couple of years, I've still got the
Speaker 3: option of refixing that other one and consolidating them all
Speaker 3: or doing whatever.
Speaker 4: Yeah. Absolutely, And I think at the moment there are
Speaker 4: some longer term rates which are starting to look a
Speaker 4: bit more attractive. So yeah, I think a mix of
Speaker 4: splitting your mortgage up can be quite a smart decision,
Speaker 4: depending on what you're looking to do long term.
Speaker 3: So a way of looking at it would be, say,
Speaker 3: for instance, if there was a really cheap rate for
Speaker 3: five years. Oh, I would look at what I'm what,
Speaker 3: I don't think i'll ever pay off within five years?
Speaker 3: What's my mortgage going to be in five years time?
Speaker 3: Minimum principle? And I'd fix that amount on five years
Speaker 3: and then play around with the other stuff.
Speaker 4: Yeah, I think that sounds like a good idea. That's
Speaker 4: certainly a good strategy.
Speaker 3: How complex can you go with this stuff?
Speaker 4: Oh man, we can have some serious fun with this.
Speaker 2: Yeah.
Speaker 4: I mean, obviously not everyone loves talking about mortgages, But
Speaker 4: find me a mortgage advisor that doesn't.
Speaker 3: Actually, no, No, I think the reason they'd be fun
Speaker 3: to talk about is that when you have a conversation,
Speaker 3: you realize the flexibility it gives you for your life
Speaker 3: choices as well having a floating facility, perhaps because you're thinking, okay,
Speaker 3: we might not quite have saved everything for that family
Speaker 3: holiday we've promised ourselves in four years time or something,
Speaker 3: or just how much you're going to save if you restructure,
Speaker 3: if your structure your mortgage in this way, how much
Speaker 3: you might potentially pay a few mortgage using offsets or
Speaker 3: flexi and all that sort of stuff.
Speaker 4: Absolutely, And it's like you know, with We've got a
Speaker 4: huge percentage of New Zealanders that are coming off a
Speaker 4: fixed rate or they're still on a floating rate at
Speaker 4: the moment and looking to refix within the next twelve months.
Speaker 4: And you know, one of the things that you can
Speaker 4: think about is if you're coming off a higher rate
Speaker 4: and refixing at a lower rate, if you keep your
Speaker 4: mortgage payment the same, that smashes your mortgage much faster,
Speaker 4: So you're not everyone can afford to do that. Some
Speaker 4: people have been struggling with the higher interest rates, so
Speaker 4: they can't wait to get on to a lower rate.
Speaker 4: But yeah, if you're comfortably paying a higher rate and
Speaker 4: you refix for a lower one, why not keep your
Speaker 4: mortgage payments up there.
Speaker 3: I think the thing is a lot of how many
Speaker 3: people really do the numbers on this stuff?
Speaker 4: I don't know. I don't know.
Speaker 3: When you're talking to the people that you are often
Speaker 3: presenting them with ideas that go on or got and
Speaker 3: thought of that.
Speaker 4: Yeah, just about every day when I talk to people
Speaker 4: about their financial position, I go, why haven't you done this?
Speaker 4: And they, oh, I wouldn't have thought about that. It's like,
Speaker 4: I mean, I guess you know, we're in the industry,
Speaker 4: so you know that this is the stuff that we
Speaker 4: live and breathe, and mortgage advisors, you know, they're in
Speaker 4: the industry, they live and breathe this stuff as well.
Speaker 4: So yeah, it's certainly when you start looking at investing
Speaker 4: in property, you know, outside of the home, that's where
Speaker 4: I think it becomes even more important to have access
Speaker 4: to more than one bank.
Speaker 3: It's a text here that's a bit concerning that I
Speaker 3: think we might need to have a quick look at it.
Speaker 3: Says I heard mention of a reverse mortgage. We took
Speaker 3: one out seventy dollars in twenty eighteen that sadly we
Speaker 3: didn't pay any back on a regular basis. Now we
Speaker 3: owe over two hundred and thirty thousand, and I mean
Speaker 3: to sell our house urgently. That doesn't sound like how
Speaker 3: a reverse mortgage works. Is I thought on reverse.
Speaker 4: Mortgages they do capitalize the interest. So yeah, the banks
Speaker 4: do capitalize the interest. But yeah, I mean that sounds
Speaker 4: that sounds harsh.
Speaker 3: But I thought that reverse mortgage was something where you
Speaker 3: took the money out and you didn't pay anything back.
Speaker 4: That's usually how they are set.
Speaker 3: So that doesn't sound like a normal reverse mortgage normally
Speaker 3: it's something you use for retirement. It's like, and if
Speaker 3: it ends up sucking up all the value of our house,
Speaker 3: then so be it.
Speaker 4: Yeah, it'll never suck up all of the value of
Speaker 4: the house unless your house drops in value significantly, because
Speaker 4: the way that reverse mortgages work is that generally there'll
Speaker 4: be a limit as far as the percentage of the
Speaker 4: property value that they can lend up to.
Speaker 3: Somebody says, here, by the way or the other thing,
Speaker 3: just pay the lump summits of wasteholding cash. You can
Speaker 3: always draw back down off your loan.
Speaker 4: Well, if you'd still qualify Belinda, Well.
Speaker 3: Yeah, it's not that straightforward. I mean, some might say,
Speaker 3: we had someone last week about it, just talking about
Speaker 3: how if you invested your money in the s and
Speaker 3: ps over the last five years, you'd made one hundred
Speaker 3: percent over five years. And somebody might say, don't pay
Speaker 3: off your all your mortgage. But that's a separate money discussion,
Speaker 3: I guess, isn't it.
Speaker 4: Yeah, it depends on what you're looking at doing.
Speaker 3: Not such a predictable gamble at the moment, though, was
Speaker 3: it right? We're going to be back with the one
Speaker 3: roof property of the weekend. Just a moment. It's eleven
Speaker 3: minutes to five.
Speaker 6: If you're feeling down to swallow, make you happy, Babe
Speaker 6: around Artisalom make you happy.
Speaker 7: Ab We've been doing all this leaner talking about anything
Speaker 7: you want till the morning.
Speaker 3: Layer in my life. Yes, welcome back to the One
Speaker 3: Roof radio show. Fascinating talk. If you want to listen
Speaker 3: to any of this discussion around mortgages with Debbie Roberts
Speaker 3: from Property Apprentice, then do go and listen to the podcast.
Speaker 3: But I think the longest short of it is Debbie
Speaker 3: that you can probably you should get a mortgage advice
Speaker 3: if you've got any questions around the way to structure mortgage.
Speaker 4: Yeah, I think so.
Speaker 3: Yeah, they work for you, not for the bank exactly.
Speaker 3: I mean I thought you were talking to me personally.
Speaker 3: Then she means that generically to all you out there
Speaker 3: who are listening anyway, Hey, look right now it is
Speaker 3: seven minutes.
Speaker 1: To five, the one roof Property of the week on
Speaker 1: the Weekend Collective.
Speaker 3: Yes, the one roof Property of the week. As I said,
Speaker 3: it's always like taking a little holiday. Have you checked
Speaker 3: this one out? Debbie? Did we flick that one through
Speaker 3: to you? It is eight five to one b Takatu Road,
Speaker 3: tough for a newis Peninsula and Rodney. Three bedrooms, two bathrooms,
Speaker 3: no garage, garage garage. I dot even know how to
Speaker 3: say that it's not entry level? Is it two point
Speaker 3: three nine million expected? How would you describe the property
Speaker 3: when you looked at it?
Speaker 4: Oh, I looked like it's the perfect place if you
Speaker 4: don't like neighbors.
Speaker 3: What she'd said on the say, on the sting. It's
Speaker 3: a gorgeous property in terms of just the look. It's
Speaker 3: got a beautiful I'll always go for the outdoor flow
Speaker 3: and all that sort of things. Next to its own
Speaker 3: little lake, private land across from coveted Christian Bay. It's
Speaker 3: a coastal sanctuary, offering an it's not a lake, should
Speaker 3: I say, offers a tranquil retreat that perfectly blends architectural
Speaker 3: design with the natural beauty of the surrounding landscape. I
Speaker 3: could read the whole blurb on it, which I won't do.
Speaker 3: In an outdoor bath outdoor bath that is selling point. Actually,
Speaker 3: I wonder if it's one of those things, an outdoor
Speaker 3: bath where it sounds scrape, But would you ever use
Speaker 3: the thing? Would you use an outdoor bath.
Speaker 4: I mean not where we live at the moment. No,
Speaker 4: the neighbors would be shocked. And a place like that,
Speaker 4: there's literally no neighbors. You could you could walk around
Speaker 4: start naked the whole time.
Speaker 3: Just about attention. Maybe they need to amend the blurb
Speaker 3: attention nudists and people who don't like neighbors maybe probably
Speaker 3: the same. But you should go and check it out.
Speaker 3: Really is a gorgeous area with great water views and
Speaker 3: fantastic outdoor living and if you want to have a
Speaker 3: little holiday and just get in fact, sometimes I think
Speaker 3: when you look at these open homes, you get some
Speaker 3: pretty good done You get some pretty good design ideas
Speaker 3: as well, don't you. There's a bit of lawnmowing involved.
Speaker 3: Possibly get a ride on. But there's also a bunk
Speaker 3: room which features one, two, three, four, five, six, seven
Speaker 3: eight beds. So got a large family, got lots of friends,
Speaker 3: are going to come and visit check it out. Yeah, anyway,
Speaker 3: that is just again if you want that address, it
Speaker 3: is eight five to one b Tuckatu Road, tap at
Speaker 3: Anui Peninsula and Rodney and it is estimately a two
Speaker 3: point three nine million dollars, which I mean in the
Speaker 3: context of an Auckland price is probably not too bad,
Speaker 3: is it. So what have you got coming up in
Speaker 3: the next little while with Properly Apprentice.
Speaker 4: Well, Paul and I are off to a conference on
Speaker 4: Wednesday through Friday and then we roll into Easter.
Speaker 3: So yeah, but busy holiday plans.
Speaker 4: No, not at the moment that it was a bit
Speaker 4: of a disappointment. Response, Well, I think we need to
Speaker 4: work on that. If my husband's listening, let's plan one.
Speaker 3: Hey, thanks, thanks so much. Nice to see you again, Debbie.
Speaker 3: We'll be back shortly with the Parents Squad. Jenny Hale
Speaker 3: as with us in the studio. We're talking about resilience
Speaker 3: and how do we grow resilient well, not just children,
Speaker 3: but resilient parents. We'll be talking about that shortly on
Speaker 3: the Parents Squad. This is News Talk, said b. It's
Speaker 3: three and a half to five. I don't nster and
Speaker 3: yess you don't.
Speaker 5: Sometimes they're just kidding.
Speaker 4: You haven't.
Speaker 1: For more from the Weekend Collective, listen live to News
Speaker 1: Talks it'd be weekends from three pm, or follow the
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