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Speaker 1: My name is Tatasha Bamblet. I'm a proud First Nations

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Speaker 1: woman and I'm here to acknowledge country t Glenn Young

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Speaker 1: Ganya Niana, Kaka yah Ya bin Ahaka nian ar gay

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Speaker 1: In Mbina yakarum jar dominyamiga Umagahawakawaman damon imlan Wumba bang

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Speaker 1: Gadabomba in and now in wakah ghana on yakraum jar Watnadaa. Hello,

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Speaker 1: beautiful friends, we gather on the lands of the Aboriginal people.

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Speaker 1: We thank acknowledge and respect the Aberiginal people's land that

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Speaker 1: we're gathering on today. Take pleasure in all the land

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Speaker 1: and respect all that you see. She's on the Money

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Speaker 1: podcast acknowledges culture, country, community and connections, bringing you the tools,

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Speaker 1: knowledge and resources for you to thrive.

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Speaker 2: She's on the Money. She's on the Money.

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Speaker 3: Hello and welcome to She's on the Money, where we

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Speaker 3: unpack money stuff so you don't have to pretend to

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Speaker 3: already get it. Have you ever heard the phrase you

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Speaker 3: could use your equity said like it's some kind of

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Speaker 3: magical wealth building strategy, and wondered whether it's actually smart

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Speaker 3: or just sounds impressive Because that sentence seems to get

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Speaker 3: thrown around a lot, and today we are unpacking what

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Speaker 3: it really means before anyone does anything too expensive. I'm

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Speaker 3: Victoria Devine and not only was i a financial advisor,

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Speaker 3: I actually currently own a mortgage an asset finance broken

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Speaker 3: company and with me is one of the best brokers

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Speaker 3: in my business. Ms. Jacqueline Walsh. I mean, you're all good,

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Speaker 3: but like, how else do you explain that?

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Speaker 2: Thank you, welcome back.

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Speaker 3: To the show we've had you on before. Are you

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Speaker 3: excited to dive in and talk about equity always? I

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Speaker 3: feel like everyone throws it around, but not many people

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Speaker 3: actually know what it is. So if you're listening to

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Speaker 3: this and you're like, yeah, of course, I do for

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Speaker 3: every person who says, yeah, of course, I do this

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Speaker 3: like ten little like what equity? So we had you

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Speaker 3: in for an episode at the start of the year

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Speaker 3: to fill us in on all of the things that

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Speaker 3: changed when it comes to mortgages over the last year,

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Speaker 3: and I asked the community for their questions too, and

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Speaker 3: one thing that just kept coming up, and we promised

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Speaker 3: a whole episode on was equity. And what really stood

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Speaker 3: out was how many people thought that they had equity,

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Speaker 3: but had no idea what to do with it, how

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Speaker 3: to access it, whether they should So I knew that

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Speaker 3: we had to probably do a bit of a deeper

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Speaker 3: dive on a specific topic, not just a broker Q

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Speaker 3: and A. So now that we've discovered in our last

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Speaker 3: episode together that, in very simple terms, equity is the

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Speaker 3: difference between what your property is worth today and what

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Speaker 3: you still owe the bank, yep, I think it is

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Speaker 3: time to dive a little bit deeper. So Jacqueline first,

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Speaker 3: cab off the rank. We're not doing any fluffy stuff here.

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Speaker 3: I just want to do equity content. Okay, say I

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Speaker 3: have a property it's worth nine hundred thousand dollars. Yes,

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Speaker 3: I've got eight hundred thousand dollars left on the table

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Speaker 3: to pay off on this loan. Can I go to

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Speaker 3: the bank and say, can I have one hundred grand

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Speaker 3: for whatever I want to do?

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Speaker 1: No?

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Speaker 3: Ah, So it's not just free money? No, okay, what

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Speaker 3: is it?

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Speaker 2: So you're right in saying that the way that you

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Speaker 2: look at equity is what your property value is worth

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Speaker 2: today less what your current loan is. So if you

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Speaker 2: said that your property value was nine hundred thousand and

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Speaker 2: your loan is five hundred thousand. People might look at

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Speaker 2: it and say, well, that's four hundred thousand inequity that

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Speaker 2: I've got that.

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Speaker 3: Well, it is true, like because if you sold your property.

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Speaker 2: Correct, But doesn't mean that you can access four hundred

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Speaker 2: thousand dollars.

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Speaker 3: Without selling your property. Correct? Okay, what could I access?

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Speaker 2: In most cases, you can access up to eighty percent. Yeah,

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Speaker 2: some other cases you can go over that, but there

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Speaker 2: would be potential alumi, so let us more insurance charged

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Speaker 2: to that. But let's just say you were to access

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Speaker 2: up to eighty percent, you're looking at around taking out

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Speaker 2: an additional two hundred and twenty thousand dollars in equity

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Speaker 2: once you've got your five hundred thousand dollars loan plus

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Speaker 2: the two hundred and twenty thousand dollars equity release. Cool.

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Speaker 3: So what are the most common things that you see

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Speaker 3: people wanting to use their equity for? Because you can

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Speaker 3: basically pull it out for whatever.

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Speaker 2: True, Yeah and false at the same correct. Some banks

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Speaker 2: are going to really care about what it is that

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Speaker 2: you say that you're using the equity for. So in

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Speaker 2: some cases you can't use it for business purposes. Other

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Speaker 2: cases where you might say that you're doing a renovation,

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Speaker 2: but you're trying to take out, say four hundred thousand dollars,

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Speaker 2: that's probably not going to be a cosmetic renovation, more

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Speaker 2: of a structural. They'll allow you to take it out,

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Speaker 2: but they're going to want to see you structure it differently,

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Speaker 2: so it could be a building loan rather than just

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Speaker 2: eight cash outs now.

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Speaker 3: Yeah, Yeah, and that's just their managing their risk and

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Speaker 3: making sure that everything is hunky doory. Not necessarily, you know,

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Speaker 3: because you can't do that thing. They're just like, that's

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Speaker 3: a lot of risk for us to take on.

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Speaker 2: Yeah, So if you're going to take out four hundred

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Speaker 2: thousand dollars for a renovation, they want to see that. Obviously,

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Speaker 2: the changes that you're saying are going to be made

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Speaker 2: to the property are getting made because they're opening themselves

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Speaker 2: up for more risk. So they're going to want to,

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Speaker 2: like you said, manage those funds to the builder. Yeah.

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Speaker 3: And I would say the most common equity cash out

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Speaker 3: that we do as a business is people taking their

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Speaker 3: equity out to buy another house. Yes, would you agree

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Speaker 3: with that? So you're using that equity as the deposit

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Speaker 3: on the next property, so you don't actually have to

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Speaker 3: save up again. Anything else. Any other reasons why you

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Speaker 3: might get equity out.

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Speaker 2: Yeah, purchasing a new car, purchasing a boat, investment, things

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Speaker 2: like that.

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Speaker 3: So if I go to my bank, can say can

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Speaker 3: I use my equity to buy a boat? Are they

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Speaker 3: just going to say yes?

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Speaker 2: If your ALVIR loan to value ratio allows it, you

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Speaker 2: can service that debt, then yes.

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Speaker 3: I could have a boat.

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Speaker 2: You can have a boat.

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Speaker 3: I love the idea. I don't know how to drive

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Speaker 3: a boat. As someone who deals with mortgages every day,

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Speaker 3: I mean both of us. But you specifically, what are

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Speaker 3: your personal feelings about people using their equity if.

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Speaker 2: It's for the right reasons. And I say that if

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Speaker 2: you're looking to, say, leverage off equity to purchase a

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Speaker 2: new property and another investment property and build your portfolio,

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Speaker 2: that to me is for the right reasons. Obviously you

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Speaker 2: need to speak to the bank or a broker and

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Speaker 2: make sure that what you're doing and trying to achieve

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Speaker 2: is right for you and it's going to be beneficial. YEA.

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Speaker 2: But yes, if you're asking me, I think that I'm

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Speaker 2: well for it.

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Speaker 3: Yeah, some am, I just not for the wrong things,

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Speaker 3: Like I wouldn't. I'm very apprehensive when people say they

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Speaker 3: want to take out their equity for a holiday. I'm like, oh,

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Speaker 3: you're not going to have anything to show at the

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Speaker 3: end of that. Like, you could technically take out equity

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Speaker 3: for a holiday, but from my perspective, I think we

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Speaker 3: should only be using it to build wealth. So whether

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Speaker 3: that is purchasing assets that increase in value, or you're

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Speaker 3: using your equity to invest in shares, or you're using

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Speaker 3: your equity to get into another investment property. That's probably

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Speaker 3: where my personal values lie, and I think yours are

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Speaker 3: kind of similar.

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Speaker 2: Yeah, there's definitely been times where I've told people that

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Speaker 2: I don't think that they should be Yeah, not decline them,

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Speaker 2: but just sort of But.

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Speaker 3: As a good broker, you kind of are that sound

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Speaker 3: board of like, hey, that sounds really great in theory. Personally,

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Speaker 3: I don't know if this is the best idea given

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Speaker 3: I've looked at your holistic financial situation. But like, that's

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Speaker 3: just putting the client first, and then if they decide

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Speaker 3: to go through with it, great, I can probably get

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Speaker 3: you in the best deal, but we're just flagging that

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Speaker 3: this might not be the best financial decision. But it's

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Speaker 3: also yours to make.

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Speaker 2: Yeah, you've got to weigh it all up. You're going

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Speaker 2: to weigh up rate LVR. Is there any lender's Morgan

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Speaker 2: insurance getting added? Is your rate increasing because of this?

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Speaker 2: It really needs to be beneficial to you at the

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Speaker 2: end of the day to follow through with it.

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Speaker 3: Yeah. And in your experience, what do you think is

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Speaker 3: the number one thing that people misunderstand about equity?

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Speaker 2: I would just say how much they haven't And I

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Speaker 2: guess the misconception is that you know you might have

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Speaker 2: four hundred thousand dollars in equity and therefore access Ye.

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Speaker 2: I can access it. Yes, and no, you can access

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Speaker 2: it if you were to sell your property. That's going

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Speaker 2: to be cold, hard cash. Yes, Because now.

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Speaker 3: You've got a nine hundred thousand dollar property and you

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Speaker 3: think you have four hundred thousand dollars equity, and you

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Speaker 3: sell it for nine hundred thousand, you're gonna have four

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Speaker 3: hundred grand in your hand less the agent fees. Yes,

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Speaker 3: but like being really clean about it, But that's not

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Speaker 3: how it works when you're asking the bank to have

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Speaker 3: that money back, because they still require security over your

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Speaker 3: property and security that you're going to pay back the loan,

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Speaker 3: so they need the deposits still kind of hiding in there.

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Speaker 2: Yeah. So people would assume that if I've got it there,

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Speaker 2: I can use it. But there's sort of two I

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Speaker 2: guess areas that need to be ticked off, which is

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Speaker 2: A do we have the equity there? Yes? And B

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Speaker 2: can we service what we're trying to take out. If

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Speaker 2: you can't service that loan for the additional equity amount

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Speaker 2: that you're trying to release, you can't. You can't access it.

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Speaker 3: Yeah. Yeah, And so there's a lot of things or

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Speaker 3: hoops that you need to jump through that are not

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Speaker 3: really hoops. It's like, technically you're borrowing the money, you

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Speaker 3: need to be able to pay for it.

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Speaker 2: Surely you actually need to make the repayments back on that.

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Speaker 3: Damn it. I thought it was free money. So when

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Speaker 3: you're looking up properties values on like domain or real

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Speaker 3: estate dot com, dot au, you get a low, mid

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Speaker 3: and a high value range, and some times I feel

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Speaker 3: like that varies a lot, Like I've been looking in

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Speaker 3: our area a lot recently and it's like low nine hundred,

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Speaker 3: mid one point three, high six billion dollars and you're like, wait,

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Speaker 3: what what's going on? How can someone get a rough

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Speaker 3: sense or a rough idea of whether they may or

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Speaker 3: may not have equity before talking to a broker, because

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Speaker 3: like I could google my address and then it says low, medium, high,

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Speaker 3: yeah the range no, especially if you haven't bought the

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Speaker 3: property recently.

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Speaker 2: Yeah. I mean, if you speak to a bank or broker,

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Speaker 2: they do have the tools. I guess to there's tools

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Speaker 2: that we can jump online and have a better indication,

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Speaker 2: like more of a you know, within a one hundred

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Speaker 2: thousand dollars range, I guess, or we can actually do

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Speaker 2: a valuation, which is either an online valuation depending on

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Speaker 2: how much data we have to say that there's been

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Speaker 2: recent sales in the area, or if we need to

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Speaker 2: get someone out there and actually value the property in

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Speaker 2: person because there's been works completed recently, we need a

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Speaker 2: true and correct value, then we can do that too.

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Speaker 3: That's what we did, so we knew that we didn't

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Speaker 3: want It's called it desktop evaluation. And when I was

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Speaker 3: going back and refinancing our mortgages and thinking about, Okay,

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Speaker 3: what do we want to do in the future. I

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Speaker 3: want to know my house value. I specifically requested an

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Speaker 3: in person valuation because if you google the house that

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Speaker 3: we had, so everybody knows we've just sold it or

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Speaker 3: sold it last year. I knew that the information online

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Speaker 3: was not reflective of the property that we'd created. So

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Speaker 3: I was like, we've done this really cool renovation, Like

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Speaker 3: we've actually tipped a couple of hundred grand into this,

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Speaker 3: and like, I think it looks slick. I need someone

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Speaker 3: to come and look at all of this so that

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Speaker 3: we can get an accurate reflection. Yeah, and in some

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Speaker 3: cases it might cost you money, but in most cases,

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Speaker 3: if you're thinking about going through that process of getting equity, yes, Jack,

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Speaker 3: if you order that, that's free, correct, So like through

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Speaker 3: the you're broker, they can organize it most of the

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Speaker 3: time free. It will depend on your circumstances and like

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Speaker 3: sometimes location and whatnot. But I'd say ninety nine percent

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Speaker 3: of our clients get that valuation done for free. Yes,

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Speaker 3: What things actually we influence a lender valuation? So obviously,

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Speaker 3: like if you've renovated your house significantly like I did,

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Speaker 3: and by the way, we got a better valuation that

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Speaker 3: I was stoked.

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Speaker 2: I was like, that was worth it, Yeah, exactly.

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Speaker 3: But what other things actually influence that things.

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Speaker 2: Will that will influence is obviously how many comparatible sales

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Speaker 2: that the bank has got in the area versus, you know,

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Speaker 2: a more rural property, is there less on the market

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Speaker 2: when was last one sold. That type of thing is

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Speaker 2: going to have a big influence on if they can

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Speaker 2: just do a straightforward, like you said, online valuation or

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Speaker 2: a desktop valuation versus if they actually need to go

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Speaker 2: out in person. So that can have a pull on

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Speaker 2: what the bank sort of, like I say, spits back

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Speaker 2: as a first valuation of the property. But we can

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Speaker 2: always sort of push back on that if we don't

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Speaker 2: think that that's accurate enough, And like you said, if

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Speaker 2: we need to get someone out there, we will.

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Speaker 3: Yeah, and we've done it before, and like I don't

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Speaker 3: want to set this expectation to hybrid for clarity's sake.

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Speaker 3: We've gotten a bank valuation back from a property that

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Speaker 3: we weren't happy with, and yeah, we could get them

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Speaker 3: to go back out and revalue it. But we've also

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Speaker 3: gone to other banks before to be like, don't really

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Speaker 3: like your valuation, don't believe it. Our neighbors literally sold

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Speaker 3: for two hundred and fifty thousand dollars more, and we

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Speaker 3: have the same townhouse wide that feels like you didn't

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Speaker 3: take that into consideration. We're just going to go get

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Speaker 3: a different bank valuation.

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Speaker 2: We do see that quite often. So just because you

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Speaker 2: get fun valuation back with one bank, that's not the

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Speaker 2: end of it. I guess. We've definitely had where we've

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Speaker 2: gone to another bank or two, two to three other banks,

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Speaker 2: I guess, and completed valuations and we have seen valuations

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Speaker 2: come in even one hundred and fifty thousand dollars more

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Speaker 2: than the other one.

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Speaker 3: So it get a good broker who's actually going to

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Speaker 3: put the effort in as well, because some brokers will

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Speaker 3: be like, well, sorry, Jacqueline, that's just what your vowl

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Speaker 3: came back as because they're not willing to not shop

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Speaker 3: it around but get a second opinion, And like, you

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Speaker 3: want a broker like and this is obviously I'm so biased,

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Speaker 3: because I obviously love Zella and I love the team,

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Speaker 3: and I think that we do a really good job.

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Speaker 3: But you want a broker that is on your team.

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Speaker 3: Like if you've said to your broker, look, I really

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Speaker 3: want to do this right now, and it's two hundred

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Speaker 3: and fifty grand, and then you know the vowels come

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Speaker 3: back and told you that you probably can borrow one

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Speaker 3: point eighty. Like a lot of brokers will be like, well,

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Speaker 3: that's just what you can borrow, whereas we'll be like, nah,

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Speaker 3: I reckon. We could get another valuation that would tip

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Speaker 3: it over and like work out what goes on here

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Speaker 3: and here, Like it becomes like a game twice like

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Speaker 3: and I don't I mean that in the most professional sense,

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Speaker 3: but sorry, there's a like there's it's like a game.

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Speaker 3: You've just told me that it's worth this, and like,

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Speaker 3: you know, if I genuinely believe it's more or I've done.

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Speaker 3: We're not silly. We work with property every day. Like again,

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Speaker 3: if you saw your neighbor sell for more, or like

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Speaker 3: three townhouses that you think have similar specs have gone

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Speaker 3: fifty grand over that, I want a second opinion. Yeah,

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Speaker 3: it's like a doctor.

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Speaker 2: Make it work, but it's going to get us the

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Speaker 2: outcome that we want.

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Speaker 3: And I want my clients to be like, yeah, Jack

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Speaker 3: was the best, or working at Zella was the best. Yeah,

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Speaker 3: because we tried really hard for that reputation. Not gonna lie.

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Speaker 3: So Jack, let's go back to that nine hundred thousand

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Speaker 3: dollar example. Let's say I have a house and I

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Speaker 3: reckon it's worth about nine hundred grand and on my

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Speaker 3: loan there's five hundred thousand dollars still sitting there. If

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Speaker 3: I came to you, ad Zella, what other things that

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Speaker 3: you were going to look at to see if I

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Speaker 3: can actually borrow the equity? Like, what are you going

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Speaker 3: to go through? How's that conversation going to go?

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Speaker 2: Yes, So we're going to obviously look at what the

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Speaker 2: property value roughly is, and like you said, we can

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Speaker 2: We're not stuck with one lender. We can look at

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Speaker 2: multiple lenders and see what they come back with. But

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Speaker 2: we're going to see as a rough amount how much

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Speaker 2: equity you do have.

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Speaker 3: If you're one of our bdms and you're listening to

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Speaker 3: this episode because you're like, wow, Zella is on an episode,

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Speaker 3: just turn it off and pretend that you never heard

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Speaker 3: that we would shop it around. We would not do

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Speaker 3: that too, you guys. We are layer our one and only,

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Speaker 3: one and only. We would never play you off against

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Speaker 3: each other. That would just be kind of low key

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Speaker 3: rude and in the best interest of the client.

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Speaker 2: Yeah, but we're going to look at obviously equity as

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Speaker 2: a number one. We're going to see which different banks

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Speaker 2: are going to allow us to go up to which

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Speaker 2: type of LVR, So thanks are going to have a

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Speaker 2: US cut it off at seventy percent of YA, some

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Speaker 2: will be at eighty percent, and some will allow us

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Speaker 2: to go above eighty percent. But we're now in ALUMI space,

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Speaker 2: so lend us Morgan insurance. How much is that going

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Speaker 2: to look like if we do go above eighty percent?

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Speaker 2: And also the third one obviously borrowing capacity, So yes,

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Speaker 2: we need to make sure that what we're looking to

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Speaker 2: take out that we can actually service that and what

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Speaker 2: that looks like.

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Speaker 3: Yeah, and the bank's also going to be like, hey, Jack,

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Speaker 3: why do you want to access your money and assess

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Speaker 3: that as well? And I think that sometimes it sounds

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Speaker 3: really really cool, and I just want to dispel this

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Speaker 3: for a hot second, because, like I mean, we're in

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Speaker 3: the middle of a cost of living crisis, so everyone's

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Speaker 3: trying to work out how to get more money.

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Speaker 2: What that looks like?

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Speaker 3: You know, we just need a little bit of like

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Speaker 3: wiggle room, and you might go, we could probably use

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Speaker 3: the equity, but we might assess your incomes right now,

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Speaker 3: and unfortunately you can't access that equity because you can't

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Speaker 3: pay back the additional loan because you're already living like

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Speaker 3: paycheck to paycheck in a way, and I find that

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Speaker 3: really disheartening for the client. Yeah, so like talk to

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Speaker 3: us still because we want to make a plan and

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Speaker 3: like every single like Zella Broker is going to make

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Speaker 3: sure that you have a budget, you have a cash loo,

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Speaker 3: and you do all of that stuff. But I think

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Speaker 3: also to set clean expectations, you can't just pull it

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Speaker 3: out and be like, oh, this is wiggle room. Yeah,

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Speaker 3: especially if you're already strapped for cash because your loan

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Speaker 3: is going to increase and they might go well on

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Speaker 3: your incomes, you can't pay back reasonably and therefore no

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Speaker 3: and that can be really disappointing if you've kind of

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Speaker 3: unlocked that idea in your head. I been like, this

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Speaker 3: is the thing that's going to give us some breathing room,

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Speaker 3: same as.

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Speaker 2: It's not changing employer. Yeah, so obviously you might have

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Speaker 2: equity available you want to pull it out. If you've

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Speaker 2: changed employer where you've gone to say maybe casual, you

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Speaker 2: might need to stay at that job for six months

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Speaker 2: before you can access it. Doesn't just mean that because

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Speaker 2: you are currently employed that you have the ability to

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Speaker 2: pull out the equity.

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Speaker 3: Yeah. Now you've worked for Zella for years and we're

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Speaker 3: really lucky. We have thousands of clients, and I would

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Speaker 3: say that you've seen thousands of applications go through. What

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Speaker 3: things make you go, m this is going to be

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Speaker 3: an issue when you see it pop up.

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Speaker 2: Going back to I guess employment type starting LBR, so

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Speaker 2: where you're already currently at and where you're trying to

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Speaker 2: get to, recently left your employer so recently quit or

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Speaker 2: again looking for new employment.

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Speaker 3: I would say maternity leaf. I think a lot of people,

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Speaker 3: and this is not a bad thing, but I think

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Speaker 3: a lot of people are like, well, I'm on matt leave,

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Speaker 3: I still have an income, i still have solid employment.

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Speaker 3: That's not how banks see it. No, and we're not

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Speaker 3: saying that that's fair. That's just the game that we're playing.

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Speaker 3: If you're on maternity leave, very often we have to say,

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Speaker 3: let's wait until you're back in your job and then

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Speaker 3: we can work it out because the banks are very conservative.

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Speaker 3: It makes me very frustrated, but the banks are very

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Speaker 3: conservative about it.

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Speaker 2: Yeah. It's not a cold, hard no, No, it's just

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Speaker 2: obviously a little bit trickier.

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Speaker 3: Yeah, and it definitely limits options I would say, say,

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Speaker 3: you and I are looking at my loan and we

398
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Speaker 3: can access equity. That looks really good, But I've got

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Speaker 3: forty thousand dollars worth of personal consumer debt. Can I

400
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Speaker 3: just roll that into my homeland? I feel like that's

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Speaker 3: a common question.

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Speaker 2: You certainly can, but you again, you need to speak

403
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Speaker 2: to your bank or broker if that's going to be

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Speaker 2: beneficial to you and how that's going to look. There

405
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Speaker 2: is two types of ways to structure it. You can

406
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Speaker 2: obviously add that consumer debt directly onto your existing home loan,

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Speaker 2: make it one repayment that could be for the time

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Speaker 2: frame of say thirty years your existing loan, keeping down repayments,

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Speaker 2: and you might be happy with that.

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Speaker 3: Are you happy with that?

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Speaker 2: Yeah? You're also paying interest over thirty years on that

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Speaker 2: portion as.

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Speaker 3: Well, so be more expensive. So you think you're lowering

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Speaker 3: your interest rate, but you're increasing your time paying that back,

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Speaker 3: which means it's probably going to be more expensive.

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Speaker 2: Yeah. Another option that you can look at is doing

417
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Speaker 2: say a split for that forty thousand dollars over say

418
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Speaker 2: a much smaller loan term, say seven years, and that

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Speaker 2: interest rates obviously less than what you're already paying maybe

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Speaker 2: at fifteen percent for a personal loan because now it's

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Speaker 2: on a home loan rate, but therefore you're still paying

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Speaker 2: it back within a.

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Speaker 3: Time, same period of time.

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Speaker 2: Yeah, just because you pick one way does not mean

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Speaker 2: that you're stuck in that structure forever. Yeah, you might

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Speaker 2: say adding the consumer debt to the home loan and

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Speaker 2: making it one repayment and the smallest amount of repayments

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Speaker 2: today is the best for me, just to keep my

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Speaker 2: payments down and then when things change in a year's

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Speaker 2: time you've got more cash flow, you might look at

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Speaker 2: splitting off that portion and just trying to mashing it down,

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Speaker 2: smashing it out and say five years and getting rid

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Speaker 2: of it. It doesn't mean that you're stuck. If you

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Speaker 2: choose one way now, you can always chop and change it.

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Speaker 3: You just got to reach out and you don't have

436
00:19:28,600 --> 00:19:30,800
Speaker 3: to work that out yourself. Your broker can give you

437
00:19:30,880 --> 00:19:32,760
Speaker 3: a plan for that. By the way, Like it's not

438
00:19:33,160 --> 00:19:35,639
Speaker 3: you have to come. We can just like facilitate that. No,

439
00:19:35,760 --> 00:19:37,640
Speaker 3: we'll give you the plan of getting out of debt.

440
00:19:37,680 --> 00:19:40,200
Speaker 3: Because one of the things that I would say a

441
00:19:40,280 --> 00:19:42,600
Speaker 3: good broker does is flag things that are not going

442
00:19:42,680 --> 00:19:44,320
Speaker 3: to be in your best interest long term. So you

443
00:19:44,400 --> 00:19:47,000
Speaker 3: might go, well, my homelan interest rate is sitting at

444
00:19:47,040 --> 00:19:50,320
Speaker 3: five percent, I'd prefer that the my fifteen percent personal

445
00:19:50,400 --> 00:19:53,680
Speaker 3: loan rate. Jacqueline's going to sit down and be like, yes,

446
00:19:53,760 --> 00:19:55,840
Speaker 3: but over thirty years, this is what this looks like.

447
00:19:56,040 --> 00:19:58,240
Speaker 3: But we can still do it. If you made additional

448
00:19:58,320 --> 00:20:01,600
Speaker 3: contributions to your mortgage at that fifteen percent, right, we

449
00:20:01,640 --> 00:20:03,400
Speaker 3: could probably get rid of it in like two years

450
00:20:03,440 --> 00:20:05,639
Speaker 3: instead of the five that you still had left on

451
00:20:05,720 --> 00:20:08,119
Speaker 3: that personal term. And then also we could use that

452
00:20:08,200 --> 00:20:11,040
Speaker 3: money to consistently contribute to it after it's gone and

453
00:20:11,400 --> 00:20:15,120
Speaker 3: get down your mortgage exactly, pay less interest. And that's

454
00:20:15,160 --> 00:20:18,679
Speaker 3: really sexy. So there's lots of strategy that we can

455
00:20:18,760 --> 00:20:21,920
Speaker 3: give you, but you kind of need to start the conversation.

456
00:20:22,960 --> 00:20:27,600
Speaker 3: Jack going back to lenders, when they look at equity usage,

457
00:20:28,440 --> 00:20:31,760
Speaker 3: they're kind of really reading into like risk signs and going,

458
00:20:31,920 --> 00:20:34,720
Speaker 3: is this risky because like they're more likely to go, oh,

459
00:20:35,240 --> 00:20:37,240
Speaker 3: she wants to borrow one hundred grand to put another

460
00:20:37,280 --> 00:20:39,919
Speaker 3: bedroom on the back of the house. Yes, that's pretty sexy.

461
00:20:40,080 --> 00:20:42,480
Speaker 3: That's going to add value to the property that we're

462
00:20:42,480 --> 00:20:43,360
Speaker 3: already financing.

463
00:20:43,359 --> 00:20:43,800
Speaker 2: Security.

464
00:20:43,960 --> 00:20:47,680
Speaker 3: Yeah, Green flag. That sounds really good. Victoria Devine wants

465
00:20:47,720 --> 00:20:50,480
Speaker 3: to buy a boat and call it boating boat face.

466
00:20:51,520 --> 00:20:54,960
Speaker 3: That's probably a lot more risky. Is that going to

467
00:20:55,000 --> 00:20:57,879
Speaker 3: hold its value over time? What's it going to cost her?

468
00:20:58,000 --> 00:21:00,040
Speaker 3: Why is she going to do it? They're probably and

469
00:21:00,119 --> 00:21:02,560
Speaker 3: a look into in the background, just like, Okay, well

470
00:21:02,640 --> 00:21:05,080
Speaker 3: she'll have boat maintenance fees? What does that look like?

471
00:21:05,160 --> 00:21:07,760
Speaker 3: There's lots of weird questions that you might not have

472
00:21:07,880 --> 00:21:11,239
Speaker 3: thought of. Do you see that some lenders are more

473
00:21:11,320 --> 00:21:15,600
Speaker 3: conservative on letting you have equity than others? Maybe others

474
00:21:15,600 --> 00:21:18,480
Speaker 3: are more flexible definitely, Like so I could get bodymic

475
00:21:18,560 --> 00:21:20,800
Speaker 3: boat face, but it might not be the most conservative

476
00:21:20,920 --> 00:21:21,880
Speaker 3: bank you can.

477
00:21:22,359 --> 00:21:24,280
Speaker 2: But you're right, not every lender is probably going to

478
00:21:24,320 --> 00:21:26,879
Speaker 2: allow you to do that. And like I was saying before,

479
00:21:27,320 --> 00:21:30,680
Speaker 2: there are different LVR restrictions with different lenders. So some

480
00:21:30,920 --> 00:21:32,960
Speaker 2: might allow you to only go up to seventy percent

481
00:21:33,040 --> 00:21:35,360
Speaker 2: because that's where they draw the line and say it's

482
00:21:35,400 --> 00:21:39,200
Speaker 2: less risk adverse. The most common, sorry, would be eighty percent.

483
00:21:39,520 --> 00:21:41,520
Speaker 2: And then again in some cases they'll allow you to

484
00:21:41,600 --> 00:21:43,840
Speaker 2: go above eighty percent. I guess for the right reasons.

485
00:21:44,200 --> 00:21:47,959
Speaker 2: In that case, Bodymic boat Face eighty percent of ya

486
00:21:48,080 --> 00:21:49,679
Speaker 2: is probably going to be really hard to get across

487
00:21:49,680 --> 00:21:50,000
Speaker 2: the line.

488
00:21:50,359 --> 00:21:53,320
Speaker 3: That's really disappointing, all right. To deal with my disappointment,

489
00:21:53,320 --> 00:21:54,840
Speaker 3: I think that we should take a really quick break,

490
00:21:55,240 --> 00:21:57,040
Speaker 3: and when we get back, I want to get into

491
00:21:57,119 --> 00:21:59,359
Speaker 3: things that you need to think about before you're actually

492
00:21:59,520 --> 00:22:06,679
Speaker 3: using your equity. So guys, don't go anywhere. We are

493
00:22:06,720 --> 00:22:10,320
Speaker 3: talking about absolutely everything equity today with Jack Lan Jack.

494
00:22:10,720 --> 00:22:12,199
Speaker 3: Who does using equity tend to.

495
00:22:12,240 --> 00:22:14,320
Speaker 2: Work really well for bridging clients?

496
00:22:14,640 --> 00:22:17,800
Speaker 3: Bridging clients? Tell me more so.

497
00:22:18,160 --> 00:22:21,200
Speaker 2: I guess if you're talking to an elderly couple and

498
00:22:21,280 --> 00:22:24,280
Speaker 2: they were looking to downsize their property, they're going to

499
00:22:24,400 --> 00:22:26,800
Speaker 2: use the equity in their existing property to purchase a

500
00:22:26,840 --> 00:22:29,359
Speaker 2: new property and then sell the other property. The same

501
00:22:29,440 --> 00:22:32,120
Speaker 2: goes for I guess a young couple with a family. Yeah,

502
00:22:32,160 --> 00:22:33,879
Speaker 2: they might just want to move straight from A to

503
00:22:34,000 --> 00:22:36,639
Speaker 2: B and not move from one property to a rental

504
00:22:37,040 --> 00:22:39,159
Speaker 2: back to the new purchase. So if you've got a

505
00:22:39,240 --> 00:22:41,680
Speaker 2: lot of equity, bridging is an option.

506
00:22:42,119 --> 00:22:45,800
Speaker 3: Yeah. Is that the same as bridging finance though? Yes,

507
00:22:46,240 --> 00:22:49,440
Speaker 3: so that's exactly what bridging finance is correct, use it?

508
00:22:49,560 --> 00:22:49,720
Speaker 2: Yeah?

509
00:22:50,359 --> 00:22:53,080
Speaker 3: No, but I think it's really important to clarify that too,

510
00:22:53,160 --> 00:22:55,919
Speaker 3: because I think a lot of people think bridging finances

511
00:22:55,960 --> 00:22:58,199
Speaker 3: these very very separate loan that you go and get,

512
00:22:58,240 --> 00:22:59,840
Speaker 3: which you can be like, we can go and get

513
00:23:00,040 --> 00:23:02,240
Speaker 3: additional finance to make it up if you don't have

514
00:23:02,320 --> 00:23:06,200
Speaker 3: equity inner property that you are purchasing today with the

515
00:23:06,240 --> 00:23:09,080
Speaker 3: promise that you will sell your property to extinguish that loan.

516
00:23:09,520 --> 00:23:12,159
Speaker 3: But like that's kind of where it can be not

517
00:23:12,359 --> 00:23:16,000
Speaker 3: so risk averse. So like there are bridging products, and

518
00:23:16,119 --> 00:23:18,840
Speaker 3: these bridging products are usually more expensive. But this is

519
00:23:18,880 --> 00:23:20,720
Speaker 3: a way of doing it at your current interest rate.

520
00:23:21,040 --> 00:23:23,399
Speaker 2: Correct, But you would need to have quite a lot

521
00:23:23,440 --> 00:23:25,680
Speaker 2: of equity to be able to do that, because most they.

522
00:23:25,720 --> 00:23:30,199
Speaker 3: Said old people, Well, I mean old people do have equity.

523
00:23:30,240 --> 00:23:31,760
Speaker 3: They've had more time to pay off.

524
00:23:31,640 --> 00:23:35,200
Speaker 2: The generally speaking, yes, they've either sat on their property

525
00:23:35,280 --> 00:23:37,760
Speaker 2: for some time and the property values have gone up,

526
00:23:38,080 --> 00:23:40,479
Speaker 2: or they have made a lot of additional payments over

527
00:23:40,520 --> 00:23:40,800
Speaker 2: that time.

528
00:23:40,920 --> 00:23:42,720
Speaker 3: So if your parents want to do this, you send

529
00:23:42,760 --> 00:23:46,719
Speaker 3: them to us, because we really like those loans. They're easy,

530
00:23:46,880 --> 00:23:49,560
Speaker 3: they're really fun. Your mum's probably really fun as.

531
00:23:49,520 --> 00:23:52,240
Speaker 2: Well, like symp them does Ella, we'll have a cup

532
00:23:52,280 --> 00:23:52,520
Speaker 2: of tea.

533
00:23:52,800 --> 00:23:53,880
Speaker 3: We may create tea.

534
00:23:54,240 --> 00:23:54,480
Speaker 1: We do.

535
00:23:54,720 --> 00:23:57,359
Speaker 3: We drink a lot of tea in our office on

536
00:23:57,440 --> 00:23:58,760
Speaker 3: the flip side. Who doesn't it.

537
00:23:58,840 --> 00:24:02,480
Speaker 2: Work for someone that's teetering on the edge of a

538
00:24:02,600 --> 00:24:05,560
Speaker 2: high ALVR already? And like I said, because some people

539
00:24:05,680 --> 00:24:08,800
Speaker 2: can go over that eighty percent. Some people have come

540
00:24:08,880 --> 00:24:11,440
Speaker 2: to us before and thought, I would like to deconsolidate

541
00:24:11,800 --> 00:24:15,040
Speaker 2: and look at adding the existing loan, pay that off

542
00:24:15,200 --> 00:24:17,520
Speaker 2: and add it to my mortgage. But that's pushing them

543
00:24:17,640 --> 00:24:20,679
Speaker 2: over an eighty percent LVR, which is adding lender's Morga insurance,

544
00:24:20,720 --> 00:24:23,800
Speaker 2: which is also pushing up their interest rates. So when

545
00:24:23,840 --> 00:24:27,000
Speaker 2: taking it into account the fees, the charges, and all

546
00:24:27,040 --> 00:24:29,719
Speaker 2: of that as a whole, it's not beneficial for them

547
00:24:29,760 --> 00:24:30,920
Speaker 2: to be looking at doing something like that.

548
00:24:31,119 --> 00:24:33,280
Speaker 3: Yeah. One of the things that I often talk about,

549
00:24:33,359 --> 00:24:36,359
Speaker 3: and not necessarily on the podcast, but just in general,

550
00:24:36,840 --> 00:24:38,800
Speaker 3: is I hate and I can be a little bit

551
00:24:38,800 --> 00:24:40,680
Speaker 3: more aggressive because you won't see me as your broker.

552
00:24:40,840 --> 00:24:43,399
Speaker 3: You get actually is much nicer. But I hate that

553
00:24:43,560 --> 00:24:48,000
Speaker 3: people sometimes use equity to manage their lifestyle creep because

554
00:24:48,040 --> 00:24:50,000
Speaker 3: I feel like it just slips through your fingers, Like

555
00:24:50,080 --> 00:24:52,359
Speaker 3: if you're like, oh, well, we'll just release some equity

556
00:24:52,400 --> 00:24:54,600
Speaker 3: and we'll be fine later, go on this holiday, we'll

557
00:24:54,640 --> 00:24:57,280
Speaker 3: upgrade our cars. We'll do this, Like the money doesn't last,

558
00:24:57,359 --> 00:24:59,320
Speaker 3: and then you need to find a way to keep

559
00:24:59,400 --> 00:25:01,800
Speaker 3: up with the life style that you've just built again

560
00:25:02,000 --> 00:25:04,399
Speaker 3: with releasing equity, Like, that's not a cycle you can

561
00:25:04,520 --> 00:25:07,640
Speaker 3: keep up with. That's a cycle of you going into

562
00:25:07,680 --> 00:25:09,480
Speaker 3: more and more debt or not getting ahead when it

563
00:25:09,560 --> 00:25:10,639
Speaker 3: comes to wealth creation.

564
00:25:10,840 --> 00:25:12,960
Speaker 2: And your property value can dip over time as well,

565
00:25:13,280 --> 00:25:15,120
Speaker 2: So that's something that you need to be mindful of too,

566
00:25:15,320 --> 00:25:17,760
Speaker 2: just because you could go up to these lvrs and

567
00:25:18,280 --> 00:25:21,439
Speaker 2: take out additional funds for whatever reason. If your property

568
00:25:21,520 --> 00:25:24,240
Speaker 2: value did decrease over time, what does that look like?

569
00:25:24,280 --> 00:25:25,960
Speaker 2: Are you going to end up selling and not making

570
00:25:26,040 --> 00:25:26,639
Speaker 2: a dime off that?

571
00:25:26,720 --> 00:25:28,360
Speaker 3: And do you sell boating? Make boat face?

572
00:25:29,040 --> 00:25:30,560
Speaker 2: I know that's the last thing we want to do.

573
00:25:30,720 --> 00:25:32,840
Speaker 3: No, but like it can be And I think that

574
00:25:32,960 --> 00:25:34,920
Speaker 3: that's where people go, well, I'll just sell it. And

575
00:25:35,000 --> 00:25:37,520
Speaker 3: it's like, well, that's a decreasing asset, Like that's not

576
00:25:37,640 --> 00:25:39,760
Speaker 3: going to be worth the same as what it was before.

577
00:25:39,960 --> 00:25:41,560
Speaker 3: So even if later down the line you're like, oh

578
00:25:41,600 --> 00:25:43,600
Speaker 3: well we'll sell the boat and put that back in

579
00:25:43,640 --> 00:25:45,479
Speaker 3: the mortgage, you're not going to be at the position

580
00:25:45,560 --> 00:25:48,240
Speaker 3: that you were before, correct, So I think that's really

581
00:25:48,480 --> 00:25:51,440
Speaker 3: important to take into consideration. That's why I said, you're

582
00:25:51,480 --> 00:25:53,560
Speaker 3: not going to like me. It's a bit blunt. Don't

583
00:25:53,640 --> 00:25:56,280
Speaker 3: use it for lifestyle. Do you ever tell clients that

584
00:25:56,320 --> 00:25:58,159
Speaker 3: they shouldn't use equity or you as blunt as me?

585
00:25:58,240 --> 00:26:01,480
Speaker 3: Do you go you shouldn't be doing this even if

586
00:26:01,520 --> 00:26:02,239
Speaker 3: they technically can.

587
00:26:02,520 --> 00:26:05,080
Speaker 2: Yes, but that's because I'm providing them with the facts

588
00:26:05,080 --> 00:26:08,400
Speaker 2: as to why they shouldn't. And yeah, I'll give you options,

589
00:26:08,560 --> 00:26:10,000
Speaker 2: I'll let you have a look over it, and then

590
00:26:10,000 --> 00:26:12,560
Speaker 2: i'll sort of give my recommendation as to why. But again,

591
00:26:12,840 --> 00:26:15,640
Speaker 2: like you said before, it's completely up to the client

592
00:26:15,640 --> 00:26:17,560
Speaker 2: if they want to proceed with that or not.

593
00:26:17,800 --> 00:26:20,399
Speaker 3: But yeah, and I think that we talk about this

594
00:26:20,520 --> 00:26:22,399
Speaker 3: a lot in the office because we've got such a

595
00:26:22,440 --> 00:26:26,160
Speaker 3: beautiful and diverse client range. Like we do do people

596
00:26:26,240 --> 00:26:28,800
Speaker 3: who are downsizing, we do do first home buyers, we

597
00:26:28,880 --> 00:26:32,000
Speaker 3: do do people who are accessing equity to pay down debt,

598
00:26:32,160 --> 00:26:34,720
Speaker 3: like we do all of these things. But sometimes when

599
00:26:34,760 --> 00:26:38,240
Speaker 3: there's a like, ah, like, let's chat this through. I'm

600
00:26:38,240 --> 00:26:40,080
Speaker 3: about to have a conversation with a client where I'm

601
00:26:40,080 --> 00:26:41,800
Speaker 3: going to tell them that I don't think their idea

602
00:26:41,960 --> 00:26:45,560
Speaker 3: is a good idea. And it's always like we'll tell them, like,

603
00:26:46,080 --> 00:26:49,159
Speaker 3: I think our business is very pro just be honest,

604
00:26:50,200 --> 00:26:52,760
Speaker 3: be kind, but be honest, because I would prefer the

605
00:26:52,800 --> 00:26:54,320
Speaker 3: client to be in a better position and go, you

606
00:26:54,359 --> 00:26:56,000
Speaker 3: know what, Jack, you're right, don't write the loan and

607
00:26:56,040 --> 00:26:58,359
Speaker 3: they walk away and we make no money. That feels

608
00:26:58,400 --> 00:27:00,119
Speaker 3: like a better ethical position to be in.

609
00:27:00,640 --> 00:27:02,000
Speaker 2: Yeah, then oh.

610
00:27:02,040 --> 00:27:04,400
Speaker 3: Yeah, well yeah, maybe you shouldn't, but like the loan

611
00:27:04,480 --> 00:27:06,440
Speaker 3: will go through and it'll be easy just to get

612
00:27:06,600 --> 00:27:07,000
Speaker 3: no pay.

613
00:27:07,119 --> 00:27:09,840
Speaker 2: Every time I've given feedback as to why that they shouldn't,

614
00:27:09,960 --> 00:27:12,200
Speaker 2: I feel like the clients have always been really thankful

615
00:27:12,280 --> 00:27:15,520
Speaker 2: and actually listen to us. I don't think it's a

616
00:27:15,600 --> 00:27:18,000
Speaker 2: case of just like, oh, well, I'm going to do

617
00:27:18,040 --> 00:27:19,879
Speaker 2: it anyway, I'm going to go to another lender, like.

618
00:27:21,800 --> 00:27:24,560
Speaker 3: Right, I haven't really Yeah, And it does make us

619
00:27:24,560 --> 00:27:25,920
Speaker 3: feel a little bit bad when we have to have

620
00:27:25,960 --> 00:27:27,920
Speaker 3: a hard conversation. No one wants to have a hard conversation.

621
00:27:28,600 --> 00:27:30,159
Speaker 3: We're willing to do it, but no one wants to

622
00:27:30,280 --> 00:27:34,800
Speaker 3: do it. So what questions should someone ask themselves before

623
00:27:34,840 --> 00:27:38,000
Speaker 3: they're going to use their equity. So I've decided yep,

624
00:27:38,040 --> 00:27:41,160
Speaker 3: I can. Maybe I've already spoken to you and you're like, yeah,

625
00:27:41,560 --> 00:27:44,040
Speaker 3: you can actually access one hundred thousand dollars worth of equity.

626
00:27:44,320 --> 00:27:46,600
Speaker 3: What am I asking myself before going yeah, let's pull

627
00:27:46,640 --> 00:27:47,240
Speaker 3: the trigger on that?

628
00:27:47,359 --> 00:27:50,879
Speaker 2: Yeah? I mean is it going to be beneficial? How much?

629
00:27:50,920 --> 00:27:56,480
Speaker 2: Because both face no, okay, yeah, is it going to

630
00:27:56,520 --> 00:27:59,719
Speaker 2: be beneficial? I guess for the future. How much equity

631
00:27:59,760 --> 00:28:02,639
Speaker 2: do I have? What happens if the property value drops?

632
00:28:02,680 --> 00:28:06,000
Speaker 2: What does that look like? What's my exit strategy? If

633
00:28:06,040 --> 00:28:09,119
Speaker 2: we're purchasing a new investment are we looking at the

634
00:28:09,400 --> 00:28:11,480
Speaker 2: risks for that as well? Like you said that, the

635
00:28:11,560 --> 00:28:13,399
Speaker 2: different lenders are going to look into different things. So

636
00:28:13,440 --> 00:28:14,680
Speaker 2: if we did say that we were going to be

637
00:28:14,760 --> 00:28:18,359
Speaker 2: purchasing using the deposit to purchase a new investment property,

638
00:28:18,600 --> 00:28:21,639
Speaker 2: there are additional expenses that need to be captured. So

639
00:28:21,720 --> 00:28:24,720
Speaker 2: therefore it can reduce your borrowing again.

640
00:28:24,680 --> 00:28:26,600
Speaker 3: Yeah, because we're looking at stamp duty and you're not

641
00:28:26,640 --> 00:28:28,360
Speaker 3: going to get the concessions that you got when you're

642
00:28:28,359 --> 00:28:29,200
Speaker 3: a first home buyer.

643
00:28:29,480 --> 00:28:32,199
Speaker 2: Yeah. Yeah, I mean it's also going to restrict your

644
00:28:32,200 --> 00:28:35,280
Speaker 2: future borrowings as well, So you're taking on more debt. Therefore,

645
00:28:35,320 --> 00:28:36,960
Speaker 2: it's going to limit what you can do in the

646
00:28:37,000 --> 00:28:39,240
Speaker 2: future too. So if you had a plan of you know,

647
00:28:39,320 --> 00:28:42,800
Speaker 2: purchasing the property in five years time, is taking out

648
00:28:42,840 --> 00:28:45,960
Speaker 2: one hundred thousand dollars for bo boat face the best

649
00:28:46,000 --> 00:28:46,680
Speaker 2: option right now?

650
00:28:46,720 --> 00:28:49,160
Speaker 3: Yes it is, And thank you for making me question it.

651
00:28:49,240 --> 00:28:51,960
Speaker 3: I'm doubling down. But I do think that that's really

652
00:28:52,000 --> 00:28:54,880
Speaker 3: important because like I laugh about boating boat face, but

653
00:28:54,960 --> 00:28:57,880
Speaker 3: it's like, that's a lifestyle decision, and I think that

654
00:28:58,320 --> 00:29:00,440
Speaker 3: that trivializes it in a way. You go, well, that

655
00:29:00,480 --> 00:29:02,360
Speaker 3: would be silly, Victorian, and go, well, yes, that's why

656
00:29:02,360 --> 00:29:04,120
Speaker 3: I'm saying it in a silly way, because I don't

657
00:29:04,160 --> 00:29:07,520
Speaker 3: want you to be funding your lifestyle through equity. That

658
00:29:07,800 --> 00:29:11,080
Speaker 3: could if you've got access to one hundred grand, that's power. Yeah,

659
00:29:11,400 --> 00:29:14,160
Speaker 3: like that is you could do some really cool stuff.

660
00:29:14,960 --> 00:29:18,280
Speaker 3: You could build a share portfolio, you could put an

661
00:29:18,320 --> 00:29:20,680
Speaker 3: extension on the house and you know, add value that

662
00:29:20,760 --> 00:29:23,840
Speaker 3: way by an investment property. Like, there are so many

663
00:29:24,120 --> 00:29:26,080
Speaker 3: cool things you can do with equity that I just

664
00:29:26,200 --> 00:29:28,600
Speaker 3: get a little bit like, no, what are you doing

665
00:29:28,720 --> 00:29:30,720
Speaker 3: when people cash it out for reasons that I go,

666
00:29:30,960 --> 00:29:33,840
Speaker 3: that's not going to help future you. I also think

667
00:29:34,240 --> 00:29:37,400
Speaker 3: if you're going to like what else should you be

668
00:29:37,520 --> 00:29:39,960
Speaker 3: looking at? If you in your head are like, well,

669
00:29:39,960 --> 00:29:42,320
Speaker 3: we're going to do an extension, have you actually gone

670
00:29:42,360 --> 00:29:45,680
Speaker 3: and gotten quotes, like if you and your head are like, oh, well,

671
00:29:45,680 --> 00:29:48,240
Speaker 3: one hundred grand should be enough to cover that. In

672
00:29:48,320 --> 00:29:51,560
Speaker 3: this economy, nothing is promised, So like, go get quotes

673
00:29:51,600 --> 00:29:53,560
Speaker 3: from builders what would it cost to put this on?

674
00:29:53,720 --> 00:29:56,040
Speaker 3: Or if you're renovating the kitchen or the bathroom or whatever,

675
00:29:56,320 --> 00:29:59,560
Speaker 3: go get at least three comparable quotes so that you

676
00:29:59,680 --> 00:30:01,840
Speaker 3: know average what it's going to cost. Because I feel

677
00:30:01,880 --> 00:30:05,280
Speaker 3: like building at the moment is absolutely blowing out. Like

678
00:30:05,440 --> 00:30:09,000
Speaker 3: most of our clients who are building, it's stressful because

679
00:30:09,240 --> 00:30:11,160
Speaker 3: they keep coming back and being like, oh, we've gone

680
00:30:11,200 --> 00:30:14,440
Speaker 3: over ten percent, or you know, we didn't realize that

681
00:30:14,560 --> 00:30:16,560
Speaker 3: this wasn't factory in, or our builders come back and

682
00:30:16,600 --> 00:30:19,960
Speaker 3: said this material is actually more expensive because we didn't

683
00:30:20,000 --> 00:30:22,200
Speaker 3: get in on the cutoff and the pricing create it's

684
00:30:22,280 --> 00:30:25,240
Speaker 3: actually chaos. And you're laughing because I know you've just

685
00:30:25,320 --> 00:30:28,200
Speaker 3: gone through this personally with a reno. I went through

686
00:30:28,240 --> 00:30:30,440
Speaker 3: it with my reno and like never again.

687
00:30:30,760 --> 00:30:33,280
Speaker 2: Yeah, So every reear stress too, are.

688
00:30:33,200 --> 00:30:35,760
Speaker 3: There any other smart ways that you've seen people use

689
00:30:35,800 --> 00:30:37,720
Speaker 3: their equity apart from like investing.

690
00:30:37,880 --> 00:30:40,840
Speaker 2: I'd say the biggest one would be purchasing an investment properly,

691
00:30:41,000 --> 00:30:44,040
Speaker 2: like using the funds for a deposit to eliminate the

692
00:30:44,160 --> 00:30:47,000
Speaker 2: need for lenders morg insurance on the other side, Yeah,

693
00:30:47,080 --> 00:30:49,800
Speaker 2: I guess cash flow is tightened up, and therefore majority

694
00:30:49,800 --> 00:30:52,520
Speaker 2: of people's funds is going towards the mortgage and reducing

695
00:30:52,960 --> 00:30:55,400
Speaker 2: the current home loans. So a lot of people don't

696
00:30:55,440 --> 00:30:58,640
Speaker 2: tend to have, you know, a large savings just sitting

697
00:30:58,680 --> 00:31:01,240
Speaker 2: in their accounts right now. It's all tied up in equity.

698
00:31:01,360 --> 00:31:03,920
Speaker 3: We've talked about the risks of equity obviously, like you're

699
00:31:03,920 --> 00:31:06,160
Speaker 3: not being able to afford it your cash flow, you know,

700
00:31:06,280 --> 00:31:10,080
Speaker 3: being a little bit more snug whatever. Even property going

701
00:31:10,160 --> 00:31:12,280
Speaker 3: down in value and you're going, excuse me, that's not

702
00:31:12,360 --> 00:31:16,480
Speaker 3: what I expected. Have you ever seen something go really

703
00:31:16,560 --> 00:31:20,440
Speaker 3: wrong with an equity release. I just want to scare

704
00:31:20,480 --> 00:31:21,560
Speaker 3: the community there.

705
00:31:22,160 --> 00:31:27,200
Speaker 2: Well, yeah, obviously the property value dropping below what they've purchased. Therefore,

706
00:31:27,560 --> 00:31:30,240
Speaker 2: you know, if you're at a ninety percent LVR and

707
00:31:30,320 --> 00:31:32,960
Speaker 2: the property dropped, you know, by ten percent, and therefore

708
00:31:33,000 --> 00:31:35,360
Speaker 2: you looked at selling, you actually need to make additional

709
00:31:35,480 --> 00:31:38,040
Speaker 2: repayments to the bank to pay back that property.

710
00:31:38,200 --> 00:31:40,480
Speaker 3: Yeah, you don't actually extinguish all the debt by Yeah,

711
00:31:40,960 --> 00:31:41,360
Speaker 3: you could.

712
00:31:41,320 --> 00:31:43,480
Speaker 2: End up with, like I say, a forty or fifty

713
00:31:43,480 --> 00:31:46,200
Speaker 2: thousand dollars additional loan even when the property's gone and

714
00:31:46,240 --> 00:31:48,280
Speaker 2: you've sold and you're still having to make repayments back

715
00:31:48,320 --> 00:31:50,720
Speaker 2: on it. So you do need to be really careful

716
00:31:51,240 --> 00:31:53,360
Speaker 2: about sort of how much you're taking out and what

717
00:31:53,520 --> 00:31:54,480
Speaker 2: the use is for.

718
00:31:54,760 --> 00:31:57,560
Speaker 3: Yeah, And that's why even if you went to your

719
00:31:57,640 --> 00:32:00,240
Speaker 3: bank originally and got your first home loan it and

720
00:32:00,280 --> 00:32:03,160
Speaker 3: it was all hunky dory and it went really well fantastic.

721
00:32:03,720 --> 00:32:06,160
Speaker 3: That's why if you're thinking about an equity release, please

722
00:32:06,240 --> 00:32:08,640
Speaker 3: just talk to a broker one to get the right situation,

723
00:32:08,800 --> 00:32:11,160
Speaker 3: but so that they can do the strategy, because the

724
00:32:11,240 --> 00:32:13,720
Speaker 3: bank isn't going to look at your personal circumstances and

725
00:32:13,800 --> 00:32:16,840
Speaker 3: be like, so are you planning kids soon? Like what's

726
00:32:16,880 --> 00:32:19,760
Speaker 3: your life plan? Got any big events coming up? Any holiday? Like,

727
00:32:19,800 --> 00:32:23,560
Speaker 3: they don't give two flying ducks. What they care about

728
00:32:23,680 --> 00:32:25,520
Speaker 3: is can you afford it? They're on the numbers and

729
00:32:25,560 --> 00:32:27,560
Speaker 3: you're like, yeah, we'll release that out no aries, Like

730
00:32:28,200 --> 00:32:30,320
Speaker 3: you'll probably have a drop down menu of why you

731
00:32:30,400 --> 00:32:33,880
Speaker 3: want the equity to be released. Maybe I've had a plan,

732
00:32:34,560 --> 00:32:36,160
Speaker 3: but there's a drop down menu of why you would

733
00:32:36,200 --> 00:32:39,120
Speaker 3: want to release your equity, and they'll be like, yeah, sweet.

734
00:32:38,880 --> 00:32:39,800
Speaker 2: Notion like that.

735
00:32:39,840 --> 00:32:42,040
Speaker 3: Don't even care. People even get equity out and lie

736
00:32:42,080 --> 00:32:43,520
Speaker 3: to the bank. I'm not saying this is a good idea,

737
00:32:43,520 --> 00:32:45,120
Speaker 3: but they might be like, it's for renovation. Then all

738
00:32:45,160 --> 00:32:47,080
Speaker 3: of a sudden, they've spent it on boating boat face

739
00:32:47,200 --> 00:32:50,560
Speaker 3: Like that happens because once the equity is released, it

740
00:32:50,680 --> 00:32:53,080
Speaker 3: just goes into your bank account like it's actual cash

741
00:32:53,320 --> 00:32:55,800
Speaker 3: you've got access to. And so for me, that's a

742
00:32:55,880 --> 00:32:58,800
Speaker 3: risk as well not having a solid plan for your

743
00:32:58,880 --> 00:33:01,840
Speaker 3: equity once it hit your account. Like one of the

744
00:33:01,920 --> 00:33:05,160
Speaker 3: things that I would say is if you are accessing

745
00:33:05,240 --> 00:33:07,120
Speaker 3: equity and you're not, you know, using it for a

746
00:33:07,200 --> 00:33:10,480
Speaker 3: home deposit or something immediate, make sure it goes into

747
00:33:10,520 --> 00:33:13,520
Speaker 3: your offset account immediately immediately.

748
00:33:13,720 --> 00:33:15,200
Speaker 2: Yeah, so it just sits the funding.

749
00:33:15,280 --> 00:33:17,680
Speaker 3: The day you get your funding, that money goes straight

750
00:33:17,720 --> 00:33:19,920
Speaker 3: into your offset account and sits there, and it will

751
00:33:19,960 --> 00:33:22,320
Speaker 3: sit there for the entire time that you're doing your renovations.

752
00:33:22,360 --> 00:33:24,520
Speaker 3: And drawing down on it, don't have it go into

753
00:33:24,600 --> 00:33:28,240
Speaker 3: a separate savings account, like at least offset the interest

754
00:33:28,320 --> 00:33:31,080
Speaker 3: on your mortgage for the time being, because like, if

755
00:33:31,120 --> 00:33:33,680
Speaker 3: you're renovating, it might be like, who knows, I'm making

756
00:33:33,760 --> 00:33:37,160
Speaker 3: this schedule up right, it might be like twenty percent

757
00:33:37,240 --> 00:33:39,320
Speaker 3: upfront to get the builders, and then you get to

758
00:33:39,360 --> 00:33:41,520
Speaker 3: fifty percent and you're not even paying the rest of

759
00:33:41,600 --> 00:33:46,040
Speaker 3: it off until twenty twenty seven. And that's fine, but sorry,

760
00:33:46,120 --> 00:33:48,160
Speaker 3: that money should be working for you while it's in

761
00:33:48,240 --> 00:33:50,440
Speaker 3: your hands, because you can't invest it in their short

762
00:33:50,560 --> 00:33:53,480
Speaker 3: term like that's not an option. I feel like that's

763
00:33:53,560 --> 00:33:55,720
Speaker 3: a good little situation to be in. But then also

764
00:33:55,920 --> 00:33:58,840
Speaker 3: be really open with your broker about your life and

765
00:33:58,920 --> 00:34:02,360
Speaker 3: your circumstances and what's going on. Because one thing that

766
00:34:02,400 --> 00:34:04,360
Speaker 3: we've sayd all a couple of things actually that come

767
00:34:04,440 --> 00:34:07,160
Speaker 3: to mind is if you're planning on changing jobs soon

768
00:34:07,600 --> 00:34:10,040
Speaker 3: and you go, no, it's fine, like I'm getting a promotion,

769
00:34:10,920 --> 00:34:13,319
Speaker 3: like in theory, that sounds really good, but banks don't

770
00:34:13,440 --> 00:34:16,279
Speaker 3: like job change. So like even if you come to

771
00:34:16,400 --> 00:34:18,640
Speaker 3: me or come to us and say, hey, I want equity,

772
00:34:18,680 --> 00:34:20,920
Speaker 3: and we're halfway through the application and then you call

773
00:34:21,080 --> 00:34:22,920
Speaker 3: us and you're just getting an update on your loan

774
00:34:22,960 --> 00:34:25,520
Speaker 3: application process or whatever, and then you go, oh, Jack,

775
00:34:25,560 --> 00:34:27,120
Speaker 3: by the way, oh my god, I got a new job,

776
00:34:27,760 --> 00:34:31,680
Speaker 3: Like you would think that as a beautiful client. We're

777
00:34:31,719 --> 00:34:34,960
Speaker 3: so excited for you. Yeah, that is alarm bells to us.

778
00:34:35,080 --> 00:34:36,839
Speaker 3: That is terrified, is it not, Jack?

779
00:34:37,080 --> 00:34:39,560
Speaker 2: Yeah, your mind's already gone elsewhere. It's like, how can

780
00:34:39,600 --> 00:34:40,399
Speaker 2: I fix this? Yeah?

781
00:34:40,480 --> 00:34:43,080
Speaker 3: Yeah, because some banks will then be like, yeah, you

782
00:34:43,120 --> 00:34:45,879
Speaker 3: were preapproved, you were accessible for that, but now you've

783
00:34:45,880 --> 00:34:47,800
Speaker 3: got this new job. You need to get through probation

784
00:34:48,000 --> 00:34:50,200
Speaker 3: on your new job before we're willing to give you

785
00:34:50,320 --> 00:34:52,239
Speaker 3: access to that cash, and they might cancel the thing

786
00:34:52,280 --> 00:34:55,040
Speaker 3: completely and we have to update the bank on that.

787
00:34:55,120 --> 00:34:58,320
Speaker 3: We can't be deceptive. And another one is people are like,

788
00:34:58,400 --> 00:35:01,400
Speaker 3: should I be using my equity now now for like

789
00:35:01,520 --> 00:35:02,960
Speaker 3: a reno before we have kids?

790
00:35:03,000 --> 00:35:04,520
Speaker 2: I was about to say this one, Yeah, so you

791
00:35:04,600 --> 00:35:05,280
Speaker 2: need to do Yeah.

792
00:35:05,360 --> 00:35:07,960
Speaker 3: So what's the answer there. Should we be releasing our

793
00:35:08,000 --> 00:35:10,000
Speaker 3: equity before we have kids and doing the reno? Now?

794
00:35:10,080 --> 00:35:11,520
Speaker 3: Do we just wait until we have kids and then

795
00:35:11,560 --> 00:35:12,320
Speaker 3: release the equity?

796
00:35:12,520 --> 00:35:15,120
Speaker 2: I mean, obviously you can do it either way. However,

797
00:35:15,600 --> 00:35:17,800
Speaker 2: if you're going to take the equity at now and

798
00:35:17,880 --> 00:35:20,200
Speaker 2: then you're going on maternity leave. You need to make

799
00:35:20,239 --> 00:35:23,200
Speaker 2: sure you're already factored into account this extra borrowing and

800
00:35:23,360 --> 00:35:25,520
Speaker 2: extra payments that are going to be coming out, because

801
00:35:25,960 --> 00:35:27,279
Speaker 2: just because you're borrowing it now and then you're going

802
00:35:27,320 --> 00:35:30,160
Speaker 2: on maternity leave, your payments don't stop, so you need

803
00:35:30,200 --> 00:35:31,720
Speaker 2: to make sure you've taken that into account.

804
00:35:31,760 --> 00:35:34,439
Speaker 3: Your cash flow is so important. Yeah, isn't it funny?

805
00:35:34,480 --> 00:35:36,759
Speaker 3: You're like process and structure and driven and the like

806
00:35:36,840 --> 00:35:41,719
Speaker 3: cash flow, budget, money, cash flow, cash flow. I'm just

807
00:35:41,760 --> 00:35:44,440
Speaker 3: a broken record at this point. Anyway, I feel like

808
00:35:44,600 --> 00:35:48,080
Speaker 3: we have clocked what it means to use your equity,

809
00:35:48,200 --> 00:35:51,680
Speaker 3: access your equity, what equity means. We have so many

810
00:35:51,840 --> 00:35:54,600
Speaker 3: educational posts when it comes to like information about mortgages

811
00:35:54,640 --> 00:35:58,880
Speaker 3: and information about equity, et cetera on our Zeala Journey Instagram.

812
00:35:58,960 --> 00:36:00,839
Speaker 3: So we'll make sure that all of that is linked below.

813
00:36:00,880 --> 00:36:02,759
Speaker 3: And I'll also be really brazen and just put the

814
00:36:02,840 --> 00:36:04,279
Speaker 3: links so that you can book with one of our

815
00:36:04,360 --> 00:36:06,800
Speaker 3: Zello brokers should you want to do that in the

816
00:36:06,840 --> 00:36:09,400
Speaker 3: show notes as well. Jack, thank you for being on

817
00:36:09,480 --> 00:36:11,279
Speaker 3: the show again. I know this is one of the

818
00:36:11,320 --> 00:36:13,800
Speaker 3: topics that gets talked about a lot in our community,

819
00:36:14,239 --> 00:36:15,880
Speaker 3: and I know that they love it when you're on

820
00:36:15,960 --> 00:36:18,719
Speaker 3: the show, so I married them together. You guys are

821
00:36:18,800 --> 00:36:21,160
Speaker 3: so very welcome. And if you're thinking about your own

822
00:36:21,239 --> 00:36:23,720
Speaker 3: situation and you want to understand all of your options,

823
00:36:23,840 --> 00:36:26,760
Speaker 3: obviously I've put all of Jack's links and my links

824
00:36:26,760 --> 00:36:29,000
Speaker 3: and the Zella links in the show notes. And if

825
00:36:29,080 --> 00:36:32,040
Speaker 3: this has helped demystify equity for you, please make sure

826
00:36:32,080 --> 00:36:33,719
Speaker 3: you share it with someone who keeps saying that they

827
00:36:33,760 --> 00:36:36,319
Speaker 3: might use their equity one day. And of course hit

828
00:36:36,400 --> 00:36:38,799
Speaker 3: subscribes so that you don't miss an episode. And guys,

829
00:36:38,880 --> 00:36:40,839
Speaker 3: we will see you, not Jack, but we will see

830
00:36:40,880 --> 00:36:44,160
Speaker 3: the rest of you on Friday for Friday Drinks. Bye Bye.

831
00:36:49,680 --> 00:36:52,200
Speaker 4: Bid By shared on She's on the Money is general

832
00:36:52,280 --> 00:36:56,120
Speaker 4: in nature and does not consider your individual circumstances. She's

833
00:36:56,160 --> 00:36:59,560
Speaker 4: on the Money exists purely for educational purposes and should

834
00:36:59,640 --> 00:37:02,840
Speaker 4: not be relied upon to make an investment or financial decision.

835
00:37:03,200 --> 00:37:05,680
Speaker 4: If you do choose to buy a financial product, read

836
00:37:05,680 --> 00:37:09,800
Speaker 4: the PDS TMD and obtain appropriate financial advice tailored towards

837
00:37:09,880 --> 00:37:13,120
Speaker 4: your needs. Victoria Divine and She's on the Money are

838
00:37:13,200 --> 00:37:16,800
Speaker 4: authorized representatives of money sherper p t y lt D

839
00:37:17,080 --> 00:37:19,439
Speaker 4: A b N three two one IS six four nine

840
00:37:19,600 --> 00:37:23,480
Speaker 4: two seven seven zero eight AFSL four five one two

841
00:37:23,600 --> 00:37:24,080
Speaker 4: eight nine