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Equity Explained: Is It Really the Shortcut to Getting Rich? · She's On The Money

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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: 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 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
1:13
Speaker 3: already get it. Have you ever heard the phrase you
1:16
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,
1:37
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
1:56
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
2:01
Speaker 3: this and you're like, yeah, of course, I do for
2:03
Speaker 3: every person who says, yeah, of course, I do this
2:05
Speaker 3: like ten little like what equity? So we had you
2:08
Speaker 3: in for an episode at the start of the year
2:09
Speaker 3: to fill us in on all of the things that
2:11
Speaker 3: changed when it comes to mortgages over the last year,
2:14
Speaker 3: and I asked the community for their questions too, and
2:17
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
2:41
Speaker 3: difference between what your property is worth today and what
2:45
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,
2:50
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
3:02
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?
3:07
Speaker 1: No?
3:08
Speaker 3: Ah, So it's not just free money? No, okay, what
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Speaker 3: is it?
3:14
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
3:21
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
3:29
Speaker 2: I've got that.
3:31
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
3:38
Speaker 2: thousand dollars.
3:38
Speaker 3: Without selling your property. Correct? Okay, what could I access?
3:43
Speaker 2: In most cases, you can access up to eighty percent. Yeah,
3:46
Speaker 2: some other cases you can go over that, but there
3:49
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
4:43
Speaker 2: eight cash outs now.
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Speaker 3: Yeah, Yeah, and that's just their managing their risk and
4:47
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
4:54
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
4:57
Speaker 2: thousand dollars for a renovation, they want to see that. Obviously,
5:00
Speaker 2: the changes that you're saying are going to be made
5:02
Speaker 2: to the property are getting made because they're opening themselves
5:04
Speaker 2: up for more risk. So they're going to want to,
5:06
Speaker 2: like you said, manage those funds to the builder. Yeah.
5:09
Speaker 3: And I would say the most common equity cash out
5:11
Speaker 3: that we do as a business is people taking their
5:14
Speaker 3: equity out to buy another house. Yes, would you agree
5:17
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
5:22
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
5:40
Speaker 2: can service that debt, then yes.
5:42
Speaker 3: I could have a boat.
5:43
Speaker 2: You can have a boat.
5:44
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
5:53
Speaker 3: your personal feelings about people using their equity if.
5:55
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
6:02
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
6:07
Speaker 2: need to speak to the bank or a broker and
6:10
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.
6:15
Speaker 2: But yes, if you're asking me, I think that I'm
6:18
Speaker 2: well for it.
6:19
Speaker 3: Yeah, some am, I just not for the wrong things,
6:21
Speaker 3: Like I wouldn't. I'm very apprehensive when people say they
6:24
Speaker 3: want to take out their equity for a holiday. I'm like, oh,
6:27
Speaker 3: you're not going to have anything to show at the
6:29
Speaker 3: end of that. Like, you could technically take out equity
6:31
Speaker 3: for a holiday, but from my perspective, I think we
6:34
Speaker 3: should only be using it to build wealth. So whether
6:37
Speaker 3: that is purchasing assets that increase in value, or you're
6:41
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
6:49
Speaker 3: kind of similar.
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Speaker 2: Yeah, there's definitely been times where I've told people that
6:52
Speaker 2: I don't think that they should be Yeah, not decline them,
6:56
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,
7:03
Speaker 3: I don't know if this is the best idea given
7:04
Speaker 3: I've looked at your holistic financial situation. But like, that's
7:08
Speaker 3: just putting the client first, and then if they decide
7:10
Speaker 3: to go through with it, great, I can probably get
7:12
Speaker 3: you in the best deal, but we're just flagging that
7:15
Speaker 3: this might not be the best financial decision. But it's
7:17
Speaker 3: also yours to make.
7:18
Speaker 2: Yeah, you've got to weigh it all up. You're going
7:19
Speaker 2: to weigh up rate LVR. Is there any lender's Morgan
7:23
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
7:40
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.
7:45
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
7:51
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
7:54
Speaker 3: think you have four hundred thousand dollars equity, and you
7:56
Speaker 3: sell it for nine hundred thousand, you're gonna have four
7:58
Speaker 3: hundred grand in your hand less the agent fees. Yes,
8:02
Speaker 3: but like being really clean about it, But that's not
8:05
Speaker 3: how it works when you're asking the bank to have
8:07
Speaker 3: that money back, because they still require security over your
8:10
Speaker 3: property and security that you're going to pay back the loan,
8:13
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
8:21
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
8:27
Speaker 2: can we service what we're trying to take out. If
8:30
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
8:38
Speaker 3: hoops that you need to jump through that are not
8:40
Speaker 3: really hoops. It's like, technically you're borrowing the money, you
8:43
Speaker 3: need to be able to pay for it.
8:45
Speaker 2: Surely you actually need to make the repayments back on that.
8:48
Speaker 3: Damn it. I thought it was free money. So when
8:51
Speaker 3: you're looking up properties values on like domain or real
8:54
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
9:00
Speaker 3: like that varies a lot, Like I've been looking in
9:02
Speaker 3: our area a lot recently and it's like low nine hundred,
9:06
Speaker 3: mid one point three, high six billion dollars and you're like, wait,
9:10
Speaker 3: what what's going on? How can someone get a rough
9:13
Speaker 3: sense or a rough idea of whether they may or
9:16
Speaker 3: may not have equity before talking to a broker, because
9:19
Speaker 3: like I could google my address and then it says low, medium, high,
9:23
Speaker 3: yeah the range no, especially if you haven't bought the
9:26
Speaker 3: property recently.
9:27
Speaker 2: Yeah. I mean, if you speak to a bank or broker,
9:30
Speaker 2: they do have the tools. I guess to there's tools
9:33
Speaker 2: that we can jump online and have a better indication,
9:36
Speaker 2: like more of a you know, within a one hundred
9:38
Speaker 2: thousand dollars range, I guess, or we can actually do
9:40
Speaker 2: a valuation, which is either an online valuation depending on
9:43
Speaker 2: how much data we have to say that there's been
9:46
Speaker 2: recent sales in the area, or if we need to
9:48
Speaker 2: get someone out there and actually value the property in
9:50
Speaker 2: person because there's been works completed recently, we need a
9:53
Speaker 2: true and correct value, then we can do that too.
9:56
Speaker 3: That's what we did, so we knew that we didn't
9:59
Speaker 3: want It's called it desktop evaluation. And when I was
10:03
Speaker 3: going back and refinancing our mortgages and thinking about, Okay,
10:06
Speaker 3: what do we want to do in the future. I
10:08
Speaker 3: want to know my house value. I specifically requested an
10:11
Speaker 3: in person valuation because if you google the house that
10:14
Speaker 3: we had, so everybody knows we've just sold it or
10:16
Speaker 3: sold it last year. I knew that the information online
10:21
Speaker 3: was not reflective of the property that we'd created. So
10:24
Speaker 3: I was like, we've done this really cool renovation, Like
10:26
Speaker 3: we've actually tipped a couple of hundred grand into this,
10:28
Speaker 3: and like, I think it looks slick. I need someone
10:31
Speaker 3: to come and look at all of this so that
10:33
Speaker 3: we can get an accurate reflection. Yeah, and in some
10:36
Speaker 3: cases it might cost you money, but in most cases,
10:39
Speaker 3: if you're thinking about going through that process of getting equity, yes, Jack,
10:44
Speaker 3: if you order that, that's free, correct, So like through
10:46
Speaker 3: the you're broker, they can organize it most of the
10:49
Speaker 3: time free. It will depend on your circumstances and like
10:53
Speaker 3: sometimes location and whatnot. But I'd say ninety nine percent
10:56
Speaker 3: of our clients get that valuation done for free. Yes,
10:59
Speaker 3: What things actually we influence a lender valuation? So obviously,
11:03
Speaker 3: like if you've renovated your house significantly like I did,
11:06
Speaker 3: and by the way, we got a better valuation that
11:08
Speaker 3: I was stoked.
11:09
Speaker 2: I was like, that was worth it, Yeah, exactly.
11:11
Speaker 3: But what other things actually influence that things.
11:14
Speaker 2: Will that will influence is obviously how many comparatible sales
11:18
Speaker 2: that the bank has got in the area versus, you know,
11:21
Speaker 2: a more rural property, is there less on the market
11:24
Speaker 2: when was last one sold. That type of thing is
11:26
Speaker 2: going to have a big influence on if they can
11:28
Speaker 2: just do a straightforward, like you said, online valuation or
11:32
Speaker 2: a desktop valuation versus if they actually need to go
11:34
Speaker 2: out in person. So that can have a pull on
11:37
Speaker 2: what the bank sort of, like I say, spits back
11:40
Speaker 2: as a first valuation of the property. But we can
11:43
Speaker 2: always sort of push back on that if we don't
11:45
Speaker 2: think that that's accurate enough, And like you said, if
11:47
Speaker 2: we need to get someone out there, we will.
11:49
Speaker 3: Yeah, and we've done it before, and like I don't
11:52
Speaker 3: want to set this expectation to hybrid for clarity's sake.
11:56
Speaker 3: We've gotten a bank valuation back from a property that
11:58
Speaker 3: we weren't happy with, and yeah, we could get them
12:01
Speaker 3: to go back out and revalue it. But we've also
12:03
Speaker 3: gone to other banks before to be like, don't really
12:06
Speaker 3: like your valuation, don't believe it. Our neighbors literally sold
12:09
Speaker 3: for two hundred and fifty thousand dollars more, and we
12:11
Speaker 3: have the same townhouse wide that feels like you didn't
12:13
Speaker 3: take that into consideration. We're just going to go get
12:15
Speaker 3: a different bank valuation.
12:17
Speaker 2: We do see that quite often. So just because you
12:19
Speaker 2: get fun valuation back with one bank, that's not the
12:22
Speaker 2: end of it. I guess. We've definitely had where we've
12:25
Speaker 2: gone to another bank or two, two to three other banks,
12:28
Speaker 2: I guess, and completed valuations and we have seen valuations
12:31
Speaker 2: come in even one hundred and fifty thousand dollars more
12:33
Speaker 2: than the other one.
12:35
Speaker 3: So it get a good broker who's actually going to
12:38
Speaker 3: put the effort in as well, because some brokers will
12:40
Speaker 3: be like, well, sorry, Jacqueline, that's just what your vowl
12:43
Speaker 3: came back as because they're not willing to not shop
12:46
Speaker 3: it around but get a second opinion, And like, you
12:49
Speaker 3: want a broker like and this is obviously I'm so biased,
12:52
Speaker 3: because I obviously love Zella and I love the team,
12:54
Speaker 3: and I think that we do a really good job.
12:56
Speaker 3: But you want a broker that is on your team.
13:00
Speaker 3: Like if you've said to your broker, look, I really
13:01
Speaker 3: want to do this right now, and it's two hundred
13:03
Speaker 3: and fifty grand, and then you know the vowels come
13:05
Speaker 3: back and told you that you probably can borrow one
13:08
Speaker 3: point eighty. Like a lot of brokers will be like, well,
13:10
Speaker 3: that's just what you can borrow, whereas we'll be like, nah,
13:13
Speaker 3: I reckon. We could get another valuation that would tip
13:15
Speaker 3: it over and like work out what goes on here
13:17
Speaker 3: and here, Like it becomes like a game twice like
13:21
Speaker 3: and I don't I mean that in the most professional sense,
13:24
Speaker 3: but sorry, there's a like there's it's like a game.
13:28
Speaker 3: You've just told me that it's worth this, and like,
13:30
Speaker 3: you know, if I genuinely believe it's more or I've done.
13:33
Speaker 3: We're not silly. We work with property every day. Like again,
13:36
Speaker 3: if you saw your neighbor sell for more, or like
13:38
Speaker 3: three townhouses that you think have similar specs have gone
13:41
Speaker 3: fifty grand over that, I want a second opinion. Yeah,
13:45
Speaker 3: it's like a doctor.
13:46
Speaker 2: Make it work, but it's going to get us the
13:48
Speaker 2: outcome that we want.
13:49
Speaker 3: And I want my clients to be like, yeah, Jack
13:51
Speaker 3: was the best, or working at Zella was the best. Yeah,
13:54
Speaker 3: because we tried really hard for that reputation. Not gonna lie.
13:59
Speaker 3: So Jack, let's go back to that nine hundred thousand
14:01
Speaker 3: dollar example. Let's say I have a house and I
14:03
Speaker 3: reckon it's worth about nine hundred grand and on my
14:06
Speaker 3: loan there's five hundred thousand dollars still sitting there. If
14:09
Speaker 3: I came to you, ad Zella, what other things that
14:12
Speaker 3: you were going to look at to see if I
14:14
Speaker 3: can actually borrow the equity? Like, what are you going
14:17
Speaker 3: to go through? How's that conversation going to go?
14:19
Speaker 2: Yes, So we're going to obviously look at what the
14:22
Speaker 2: property value roughly is, and like you said, we can
14:25
Speaker 2: We're not stuck with one lender. We can look at
14:27
Speaker 2: multiple lenders and see what they come back with. But
14:29
Speaker 2: we're going to see as a rough amount how much
14:31
Speaker 2: equity you do have.
14:32
Speaker 3: If you're one of our bdms and you're listening to
14:34
Speaker 3: this episode because you're like, wow, Zella is on an episode,
14:38
Speaker 3: just turn it off and pretend that you never heard
14:39
Speaker 3: that we would shop it around. We would not do
14:41
Speaker 3: that too, you guys. We are layer our one and only,
14:44
Speaker 3: one and only. We would never play you off against
14:46
Speaker 3: each other. That would just be kind of low key
14:48
Speaker 3: rude and in the best interest of the client.
14:50
Speaker 2: Yeah, but we're going to look at obviously equity as
14:54
Speaker 2: a number one. We're going to see which different banks
14:56
Speaker 2: are going to allow us to go up to which
14:58
Speaker 2: type of LVR, So thanks are going to have a
15:01
Speaker 2: US cut it off at seventy percent of YA, some
15:03
Speaker 2: will be at eighty percent, and some will allow us
15:06
Speaker 2: to go above eighty percent. But we're now in ALUMI space,
15:08
Speaker 2: so lend us Morgan insurance. How much is that going
15:10
Speaker 2: to look like if we do go above eighty percent?
15:13
Speaker 2: And also the third one obviously borrowing capacity, So yes,
15:16
Speaker 2: we need to make sure that what we're looking to
15:18
Speaker 2: take out that we can actually service that and what
15:20
Speaker 2: that looks like.
15:21
Speaker 3: Yeah, and the bank's also going to be like, hey, Jack,
15:23
Speaker 3: why do you want to access your money and assess
15:26
Speaker 3: that as well? And I think that sometimes it sounds
15:29
Speaker 3: really really cool, and I just want to dispel this
15:32
Speaker 3: for a hot second, because, like I mean, we're in
15:34
Speaker 3: the middle of a cost of living crisis, so everyone's
15:36
Speaker 3: trying to work out how to get more money.
15:38
Speaker 2: What that looks like?
15:39
Speaker 3: You know, we just need a little bit of like
15:41
Speaker 3: wiggle room, and you might go, we could probably use
15:43
Speaker 3: the equity, but we might assess your incomes right now,
15:48
Speaker 3: and unfortunately you can't access that equity because you can't
15:51
Speaker 3: pay back the additional loan because you're already living like
15:54
Speaker 3: paycheck to paycheck in a way, and I find that
15:57
Speaker 3: really disheartening for the client. Yeah, so like talk to
15:59
Speaker 3: us still because we want to make a plan and
16:01
Speaker 3: like every single like Zella Broker is going to make
16:03
Speaker 3: sure that you have a budget, you have a cash loo,
16:05
Speaker 3: and you do all of that stuff. But I think
16:07
Speaker 3: also to set clean expectations, you can't just pull it
16:10
Speaker 3: out and be like, oh, this is wiggle room. Yeah,
16:13
Speaker 3: especially if you're already strapped for cash because your loan
16:16
Speaker 3: is going to increase and they might go well on
16:18
Speaker 3: your incomes, you can't pay back reasonably and therefore no
16:22
Speaker 3: and that can be really disappointing if you've kind of
16:24
Speaker 3: unlocked that idea in your head. I been like, this
16:27
Speaker 3: is the thing that's going to give us some breathing room,
16:30
Speaker 3: same as.
16:31
Speaker 2: It's not changing employer. Yeah, so obviously you might have
16:34
Speaker 2: equity available you want to pull it out. If you've
16:37
Speaker 2: changed employer where you've gone to say maybe casual, you
16:40
Speaker 2: might need to stay at that job for six months
16:42
Speaker 2: before you can access it. Doesn't just mean that because
16:44
Speaker 2: you are currently employed that you have the ability to
16:47
Speaker 2: pull out the equity.
16:49
Speaker 3: Yeah. Now you've worked for Zella for years and we're
16:52
Speaker 3: really lucky. We have thousands of clients, and I would
16:55
Speaker 3: say that you've seen thousands of applications go through. What
16:59
Speaker 3: things make you go, m this is going to be
17:02
Speaker 3: an issue when you see it pop up.
17:03
Speaker 2: Going back to I guess employment type starting LBR, so
17:07
Speaker 2: where you're already currently at and where you're trying to
17:09
Speaker 2: get to, recently left your employer so recently quit or
17:14
Speaker 2: again looking for new employment.
17:16
Speaker 3: I would say maternity leaf. I think a lot of people,
17:19
Speaker 3: and this is not a bad thing, but I think
17:20
Speaker 3: a lot of people are like, well, I'm on matt leave,
17:22
Speaker 3: I still have an income, i still have solid employment.
17:25
Speaker 3: That's not how banks see it. No, and we're not
17:28
Speaker 3: saying that that's fair. That's just the game that we're playing.
17:31
Speaker 3: If you're on maternity leave, very often we have to say,
17:34
Speaker 3: let's wait until you're back in your job and then
17:37
Speaker 3: we can work it out because the banks are very conservative.
17:39
Speaker 3: It makes me very frustrated, but the banks are very
17:41
Speaker 3: conservative about it.
17:43
Speaker 2: Yeah. It's not a cold, hard no, No, it's just
17:46
Speaker 2: obviously a little bit trickier.
17:47
Speaker 3: Yeah, and it definitely limits options I would say, say,
17:51
Speaker 3: you and I are looking at my loan and we
17:53
Speaker 3: can access equity. That looks really good, But I've got
17:57
Speaker 3: forty thousand dollars worth of personal consumer debt. Can I
18:01
Speaker 3: just roll that into my homeland? I feel like that's
18:03
Speaker 3: a common question.
18:04
Speaker 2: You certainly can, but you again, you need to speak
18:06
Speaker 2: to your bank or broker if that's going to be
18:08
Speaker 2: beneficial to you and how that's going to look. There
18:11
Speaker 2: is two types of ways to structure it. You can
18:13
Speaker 2: obviously add that consumer debt directly onto your existing home loan,
18:17
Speaker 2: make it one repayment that could be for the time
18:20
Speaker 2: frame of say thirty years your existing loan, keeping down repayments,
18:24
Speaker 2: and you might be happy with that.
18:25
Speaker 3: Are you happy with that?
18:26
Speaker 2: Yeah? You're also paying interest over thirty years on that
18:29
Speaker 2: portion as.
18:29
Speaker 3: Well, so be more expensive. So you think you're lowering
18:32
Speaker 3: your interest rate, but you're increasing your time paying that back,
18:35
Speaker 3: which means it's probably going to be more expensive.
18:37
Speaker 2: Yeah. Another option that you can look at is doing
18:39
Speaker 2: say a split for that forty thousand dollars over say
18:43
Speaker 2: a much smaller loan term, say seven years, and that
18:45
Speaker 2: interest rates obviously less than what you're already paying maybe
18:48
Speaker 2: at fifteen percent for a personal loan because now it's
18:51
Speaker 2: on a home loan rate, but therefore you're still paying
18:53
Speaker 2: it back within a.
18:54
Speaker 3: Time, same period of time.
18:56
Speaker 2: Yeah, just because you pick one way does not mean
18:59
Speaker 2: that you're stuck in that structure forever. Yeah, you might
19:03
Speaker 2: say adding the consumer debt to the home loan and
19:06
Speaker 2: making it one repayment and the smallest amount of repayments
19:10
Speaker 2: today is the best for me, just to keep my
19:12
Speaker 2: payments down and then when things change in a year's
19:15
Speaker 2: time you've got more cash flow, you might look at
19:17
Speaker 2: splitting off that portion and just trying to mashing it down,
19:20
Speaker 2: smashing it out and say five years and getting rid
19:22
Speaker 2: of it. It doesn't mean that you're stuck. If you
19:23
Speaker 2: choose one way now, you can always chop and change it.
19:26
Speaker 3: You just got to reach out and you don't have
19:28
Speaker 3: to work that out yourself. Your broker can give you
19:30
Speaker 3: a plan for that. By the way, Like it's not
19:33
Speaker 3: you have to come. We can just like facilitate that. No,
19:35
Speaker 3: we'll give you the plan of getting out of debt.
19:37
Speaker 3: Because one of the things that I would say a
19:40
Speaker 3: good broker does is flag things that are not going
19:42
Speaker 3: to be in your best interest long term. So you
19:44
Speaker 3: might go, well, my homelan interest rate is sitting at
19:47
Speaker 3: five percent, I'd prefer that the my fifteen percent personal
19:50
Speaker 3: loan rate. Jacqueline's going to sit down and be like, yes,
19:53
Speaker 3: but over thirty years, this is what this looks like.
19:56
Speaker 3: But we can still do it. If you made additional
19:58
Speaker 3: contributions to your mortgage at that fifteen percent, right, we
20:01
Speaker 3: could probably get rid of it in like two years
20:03
Speaker 3: instead of the five that you still had left on
20:05
Speaker 3: that personal term. And then also we could use that
20:08
Speaker 3: money to consistently contribute to it after it's gone and
20:11
Speaker 3: get down your mortgage exactly, pay less interest. And that's
20:15
Speaker 3: really sexy. So there's lots of strategy that we can
20:18
Speaker 3: give you, but you kind of need to start the conversation.
20:22
Speaker 3: Jack going back to lenders, when they look at equity usage,
20:28
Speaker 3: they're kind of really reading into like risk signs and going,
20:31
Speaker 3: is this risky because like they're more likely to go, oh,
20:35
Speaker 3: she wants to borrow one hundred grand to put another
20:37
Speaker 3: bedroom on the back of the house. Yes, that's pretty sexy.
20:40
Speaker 3: That's going to add value to the property that we're
20:42
Speaker 3: already financing.
20:43
Speaker 2: Security.
20:43
Speaker 3: Yeah, Green flag. That sounds really good. Victoria Devine wants
20:47
Speaker 3: to buy a boat and call it boating boat face.
20:51
Speaker 3: That's probably a lot more risky. Is that going to
20:55
Speaker 3: hold its value over time? What's it going to cost her?
20:58
Speaker 3: Why is she going to do it? They're probably and
21:00
Speaker 3: a look into in the background, just like, Okay, well
21:02
Speaker 3: she'll have boat maintenance fees? What does that look like?
21:05
Speaker 3: There's lots of weird questions that you might not have
21:07
Speaker 3: thought of. Do you see that some lenders are more
21:11
Speaker 3: conservative on letting you have equity than others? Maybe others
21:15
Speaker 3: are more flexible definitely, Like so I could get bodymic
21:18
Speaker 3: boat face, but it might not be the most conservative
21:20
Speaker 3: bank you can.
21:22
Speaker 2: But you're right, not every lender is probably going to
21:24
Speaker 2: allow you to do that. And like I was saying before,
21:27
Speaker 2: there are different LVR restrictions with different lenders. So some
21:30
Speaker 2: might allow you to only go up to seventy percent
21:33
Speaker 2: because that's where they draw the line and say it's
21:35
Speaker 2: less risk adverse. The most common, sorry, would be eighty percent.
21:39
Speaker 2: And then again in some cases they'll allow you to
21:41
Speaker 2: go above eighty percent. I guess for the right reasons.
21:44
Speaker 2: In that case, Bodymic boat Face eighty percent of ya
21:48
Speaker 2: is probably going to be really hard to get across
21:49
Speaker 2: the line.
21:50
Speaker 3: That's really disappointing, all right. To deal with my disappointment,
21:53
Speaker 3: I think that we should take a really quick break,
21:55
Speaker 3: and when we get back, I want to get into
21:57
Speaker 3: things that you need to think about before you're actually
21:59
Speaker 3: using your equity. So guys, don't go anywhere. We are
22:06
Speaker 3: talking about absolutely everything equity today with Jack Lan Jack.
22:10
Speaker 3: Who does using equity tend to.
22:12
Speaker 2: Work really well for bridging clients?
22:14
Speaker 3: Bridging clients? Tell me more so.
22:18
Speaker 2: I guess if you're talking to an elderly couple and
22:21
Speaker 2: they were looking to downsize their property, they're going to
22:24
Speaker 2: use the equity in their existing property to purchase a
22:26
Speaker 2: new property and then sell the other property. The same
22:29
Speaker 2: goes for I guess a young couple with a family. Yeah,
22:32
Speaker 2: they might just want to move straight from A to
22:34
Speaker 2: B and not move from one property to a rental
22:37
Speaker 2: back to the new purchase. So if you've got a
22:39
Speaker 2: lot of equity, bridging is an option.
22:42
Speaker 3: Yeah. Is that the same as bridging finance though? Yes,
22:46
Speaker 3: so that's exactly what bridging finance is correct, use it?
22:49
Speaker 2: Yeah?
22:50
Speaker 3: No, but I think it's really important to clarify that too,
22:53
Speaker 3: because I think a lot of people think bridging finances
22:55
Speaker 3: these very very separate loan that you go and get,
22:58
Speaker 3: which you can be like, we can go and get
23:00
Speaker 3: additional finance to make it up if you don't have
23:02
Speaker 3: equity inner property that you are purchasing today with the
23:06
Speaker 3: promise that you will sell your property to extinguish that loan.
23:09
Speaker 3: But like that's kind of where it can be not
23:12
Speaker 3: so risk averse. So like there are bridging products, and
23:16
Speaker 3: these bridging products are usually more expensive. But this is
23:18
Speaker 3: a way of doing it at your current interest rate.
23:21
Speaker 2: Correct, But you would need to have quite a lot
23:23
Speaker 2: of equity to be able to do that, because most they.
23:25
Speaker 3: Said old people, Well, I mean old people do have equity.
23:30
Speaker 3: They've had more time to pay off.
23:31
Speaker 2: The generally speaking, yes, they've either sat on their property
23:35
Speaker 2: for some time and the property values have gone up,
23:38
Speaker 2: or they have made a lot of additional payments over
23:40
Speaker 2: that time.
23:40
Speaker 3: So if your parents want to do this, you send
23:42
Speaker 3: them to us, because we really like those loans. They're easy,
23:46
Speaker 3: they're really fun. Your mum's probably really fun as.
23:49
Speaker 2: Well, like symp them does Ella, we'll have a cup
23:52
Speaker 2: of tea.
23:52
Speaker 3: We may create tea.
23:54
Speaker 1: We do.
23:54
Speaker 3: We drink a lot of tea in our office on
23:57
Speaker 3: the flip side. Who doesn't it.
23:58
Speaker 2: Work for someone that's teetering on the edge of a
24:02
Speaker 2: high ALVR already? And like I said, because some people
24:05
Speaker 2: can go over that eighty percent. Some people have come
24:08
Speaker 2: to us before and thought, I would like to deconsolidate
24:11
Speaker 2: and look at adding the existing loan, pay that off
24:15
Speaker 2: and add it to my mortgage. But that's pushing them
24:17
Speaker 2: over an eighty percent LVR, which is adding lender's Morga insurance,
24:20
Speaker 2: which is also pushing up their interest rates. So when
24:23
Speaker 2: taking it into account the fees, the charges, and all
24:27
Speaker 2: of that as a whole, it's not beneficial for them
24:29
Speaker 2: to be looking at doing something like that.
24:31
Speaker 3: Yeah. One of the things that I often talk about,
24:33
Speaker 3: and not necessarily on the podcast, but just in general,
24:36
Speaker 3: is I hate and I can be a little bit
24:38
Speaker 3: more aggressive because you won't see me as your broker.
24:40
Speaker 3: You get actually is much nicer. But I hate that
24:43
Speaker 3: people sometimes use equity to manage their lifestyle creep because
24:48
Speaker 3: I feel like it just slips through your fingers, Like
24:50
Speaker 3: if you're like, oh, well, we'll just release some equity
24:52
Speaker 3: and we'll be fine later, go on this holiday, we'll
24:54
Speaker 3: upgrade our cars. We'll do this, Like the money doesn't last,
24:57
Speaker 3: and then you need to find a way to keep
24:59
Speaker 3: up with the life style that you've just built again
25:02
Speaker 3: with releasing equity, Like, that's not a cycle you can
25:04
Speaker 3: keep up with. That's a cycle of you going into
25:07
Speaker 3: more and more debt or not getting ahead when it
25:09
Speaker 3: comes to wealth creation.
25:10
Speaker 2: And your property value can dip over time as well,
25:13
Speaker 2: So that's something that you need to be mindful of too,
25:15
Speaker 2: just because you could go up to these lvrs and
25:18
Speaker 2: take out additional funds for whatever reason. If your property
25:21
Speaker 2: value did decrease over time, what does that look like?
25:24
Speaker 2: Are you going to end up selling and not making
25:26
Speaker 2: a dime off that?
25:26
Speaker 3: And do you sell boating? Make boat face?
25:29
Speaker 2: I know that's the last thing we want to do.
25:30
Speaker 3: No, but like it can be And I think that
25:32
Speaker 3: that's where people go, well, I'll just sell it. And
25:35
Speaker 3: it's like, well, that's a decreasing asset, Like that's not
25:37
Speaker 3: going to be worth the same as what it was before.
25:39
Speaker 3: So even if later down the line you're like, oh
25:41
Speaker 3: well we'll sell the boat and put that back in
25:43
Speaker 3: the mortgage, you're not going to be at the position
25:45
Speaker 3: that you were before, correct, So I think that's really
25:48
Speaker 3: important to take into consideration. That's why I said, you're
25:51
Speaker 3: not going to like me. It's a bit blunt. Don't
25:53
Speaker 3: use it for lifestyle. Do you ever tell clients that
25:56
Speaker 3: they shouldn't use equity or you as blunt as me?
25:58
Speaker 3: Do you go you shouldn't be doing this even if
26:01
Speaker 3: they technically can.
26:02
Speaker 2: Yes, but that's because I'm providing them with the facts
26:05
Speaker 2: as to why they shouldn't. And yeah, I'll give you options,
26:08
Speaker 2: I'll let you have a look over it, and then
26:10
Speaker 2: i'll sort of give my recommendation as to why. But again,
26:12
Speaker 2: like you said before, it's completely up to the client
26:15
Speaker 2: if they want to proceed with that or not.
26:17
Speaker 3: But yeah, and I think that we talk about this
26:20
Speaker 3: a lot in the office because we've got such a
26:22
Speaker 3: beautiful and diverse client range. Like we do do people
26:26
Speaker 3: who are downsizing, we do do first home buyers, we
26:28
Speaker 3: do do people who are accessing equity to pay down debt,
26:32
Speaker 3: like we do all of these things. But sometimes when
26:34
Speaker 3: there's a like, ah, like, let's chat this through. I'm
26:38
Speaker 3: about to have a conversation with a client where I'm
26:40
Speaker 3: going to tell them that I don't think their idea
26:41
Speaker 3: is a good idea. And it's always like we'll tell them, like,
26:46
Speaker 3: I think our business is very pro just be honest,
26:50
Speaker 3: be kind, but be honest, because I would prefer the
26:52
Speaker 3: client to be in a better position and go, you
26:54
Speaker 3: know what, Jack, you're right, don't write the loan and
26:56
Speaker 3: they walk away and we make no money. That feels
26:58
Speaker 3: like a better ethical position to be in.
27:00
Speaker 2: Yeah, then oh.
27:02
Speaker 3: Yeah, well yeah, maybe you shouldn't, but like the loan
27:04
Speaker 3: will go through and it'll be easy just to get
27:06
Speaker 3: no pay.
27:07
Speaker 2: Every time I've given feedback as to why that they shouldn't,
27:09
Speaker 2: I feel like the clients have always been really thankful
27:12
Speaker 2: and actually listen to us. I don't think it's a
27:15
Speaker 2: case of just like, oh, well, I'm going to do
27:18
Speaker 2: it anyway, I'm going to go to another lender, like.
27:21
Speaker 3: Right, I haven't really Yeah, And it does make us
27:24
Speaker 3: feel a little bit bad when we have to have
27:25
Speaker 3: a hard conversation. No one wants to have a hard conversation.
27:28
Speaker 3: We're willing to do it, but no one wants to
27:30
Speaker 3: do it. So what questions should someone ask themselves before
27:34
Speaker 3: they're going to use their equity. So I've decided yep,
27:38
Speaker 3: I can. Maybe I've already spoken to you and you're like, yeah,
27:41
Speaker 3: you can actually access one hundred thousand dollars worth of equity.
27:44
Speaker 3: What am I asking myself before going yeah, let's pull
27:46
Speaker 3: the trigger on that?
27:47
Speaker 2: Yeah? I mean is it going to be beneficial? How much?
27:50
Speaker 2: Because both face no, okay, yeah, is it going to
27:56
Speaker 2: be beneficial? I guess for the future. How much equity
27:59
Speaker 2: do I have? What happens if the property value drops?
28:02
Speaker 2: What does that look like? What's my exit strategy? If
28:06
Speaker 2: we're purchasing a new investment are we looking at the
28:09
Speaker 2: risks for that as well? Like you said that, the
28:11
Speaker 2: different lenders are going to look into different things. So
28:13
Speaker 2: if we did say that we were going to be
28:14
Speaker 2: purchasing using the deposit to purchase a new investment property,
28:18
Speaker 2: there are additional expenses that need to be captured. So
28:21
Speaker 2: therefore it can reduce your borrowing again.
28:24
Speaker 3: Yeah, because we're looking at stamp duty and you're not
28:26
Speaker 3: going to get the concessions that you got when you're
28:28
Speaker 3: a first home buyer.
28:29
Speaker 2: Yeah. Yeah, I mean it's also going to restrict your
28:32
Speaker 2: future borrowings as well, So you're taking on more debt. Therefore,
28:35
Speaker 2: it's going to limit what you can do in the
28:37
Speaker 2: future too. So if you had a plan of you know,
28:39
Speaker 2: purchasing the property in five years time, is taking out
28:42
Speaker 2: one hundred thousand dollars for bo boat face the best
28:46
Speaker 2: option right now?
28:46
Speaker 3: Yes it is, And thank you for making me question it.
28:49
Speaker 3: I'm doubling down. But I do think that that's really
28:52
Speaker 3: important because like I laugh about boating boat face, but
28:54
Speaker 3: it's like, that's a lifestyle decision, and I think that
28:58
Speaker 3: that trivializes it in a way. You go, well, that
29:00
Speaker 3: would be silly, Victorian, and go, well, yes, that's why
29:02
Speaker 3: I'm saying it in a silly way, because I don't
29:04
Speaker 3: want you to be funding your lifestyle through equity. That
29:07
Speaker 3: could if you've got access to one hundred grand, that's power. Yeah,
29:11
Speaker 3: like that is you could do some really cool stuff.
29:14
Speaker 3: You could build a share portfolio, you could put an
29:18
Speaker 3: extension on the house and you know, add value that
29:20
Speaker 3: way by an investment property. Like, there are so many
29:24
Speaker 3: cool things you can do with equity that I just
29:26
Speaker 3: get a little bit like, no, what are you doing
29:28
Speaker 3: when people cash it out for reasons that I go,
29:30
Speaker 3: that's not going to help future you. I also think
29:34
Speaker 3: if you're going to like what else should you be
29:37
Speaker 3: looking at? If you in your head are like, well,
29:39
Speaker 3: we're going to do an extension, have you actually gone
29:42
Speaker 3: and gotten quotes, like if you and your head are like, oh, well,
29:45
Speaker 3: one hundred grand should be enough to cover that. In
29:48
Speaker 3: this economy, nothing is promised, So like, go get quotes
29:51
Speaker 3: from builders what would it cost to put this on?
29:53
Speaker 3: Or if you're renovating the kitchen or the bathroom or whatever,
29:56
Speaker 3: go get at least three comparable quotes so that you
29:59
Speaker 3: know average what it's going to cost. Because I feel
30:01
Speaker 3: like building at the moment is absolutely blowing out. Like
30:05
Speaker 3: most of our clients who are building, it's stressful because
30:09
Speaker 3: they keep coming back and being like, oh, we've gone
30:11
Speaker 3: over ten percent, or you know, we didn't realize that
30:14
Speaker 3: this wasn't factory in, or our builders come back and
30:16
Speaker 3: said this material is actually more expensive because we didn't
30:20
Speaker 3: get in on the cutoff and the pricing create it's
30:22
Speaker 3: actually chaos. And you're laughing because I know you've just
30:25
Speaker 3: gone through this personally with a reno. I went through
30:28
Speaker 3: it with my reno and like never again.
30:30
Speaker 2: Yeah, So every reear stress too, are.
30:33
Speaker 3: There any other smart ways that you've seen people use
30:35
Speaker 3: their equity apart from like investing.
30:37
Speaker 2: I'd say the biggest one would be purchasing an investment properly,
30:41
Speaker 2: like using the funds for a deposit to eliminate the
30:44
Speaker 2: need for lenders morg insurance on the other side, Yeah,
30:47
Speaker 2: I guess cash flow is tightened up, and therefore majority
30:49
Speaker 2: of people's funds is going towards the mortgage and reducing
30:52
Speaker 2: the current home loans. So a lot of people don't
30:55
Speaker 2: tend to have, you know, a large savings just sitting
30:58
Speaker 2: in their accounts right now. It's all tied up in equity.
31:01
Speaker 3: We've talked about the risks of equity obviously, like you're
31:03
Speaker 3: not being able to afford it your cash flow, you know,
31:06
Speaker 3: being a little bit more snug whatever. Even property going
31:10
Speaker 3: down in value and you're going, excuse me, that's not
31:12
Speaker 3: what I expected. Have you ever seen something go really
31:16
Speaker 3: wrong with an equity release. I just want to scare
31:20
Speaker 3: the community there.
31:22
Speaker 2: Well, yeah, obviously the property value dropping below what they've purchased. Therefore,
31:27
Speaker 2: you know, if you're at a ninety percent LVR and
31:30
Speaker 2: the property dropped, you know, by ten percent, and therefore
31:33
Speaker 2: you looked at selling, you actually need to make additional
31:35
Speaker 2: repayments to the bank to pay back that property.
31:38
Speaker 3: Yeah, you don't actually extinguish all the debt by Yeah,
31:40
Speaker 3: you could.
31:41
Speaker 2: End up with, like I say, a forty or fifty
31:43
Speaker 2: thousand dollars additional loan even when the property's gone and
31:46
Speaker 2: you've sold and you're still having to make repayments back
31:48
Speaker 2: on it. So you do need to be really careful
31:51
Speaker 2: about sort of how much you're taking out and what
31:53
Speaker 2: the use is for.
31:54
Speaker 3: Yeah, And that's why even if you went to your
31:57
Speaker 3: bank originally and got your first home loan it and
32:00
Speaker 3: it was all hunky dory and it went really well fantastic.
32:03
Speaker 3: That's why if you're thinking about an equity release, please
32:06
Speaker 3: just talk to a broker one to get the right situation,
32:08
Speaker 3: but so that they can do the strategy, because the
32:11
Speaker 3: bank isn't going to look at your personal circumstances and
32:13
Speaker 3: be like, so are you planning kids soon? Like what's
32:16
Speaker 3: your life plan? Got any big events coming up? Any holiday? Like,
32:19
Speaker 3: they don't give two flying ducks. What they care about
32:23
Speaker 3: is can you afford it? They're on the numbers and
32:25
Speaker 3: you're like, yeah, we'll release that out no aries, Like
32:28
Speaker 3: you'll probably have a drop down menu of why you
32:30
Speaker 3: want the equity to be released. Maybe I've had a plan,
32:34
Speaker 3: but there's a drop down menu of why you would
32:36
Speaker 3: want to release your equity, and they'll be like, yeah, sweet.
32:38
Speaker 2: Notion like that.
32:39
Speaker 3: Don't even care. People even get equity out and lie
32:42
Speaker 3: to the bank. I'm not saying this is a good idea,
32:43
Speaker 3: but they might be like, it's for renovation. Then all
32:45
Speaker 3: of a sudden, they've spent it on boating boat face
32:47
Speaker 3: Like that happens because once the equity is released, it
32:50
Speaker 3: just goes into your bank account like it's actual cash
32:53
Speaker 3: you've got access to. And so for me, that's a
32:55
Speaker 3: risk as well not having a solid plan for your
32:58
Speaker 3: equity once it hit your account. Like one of the
33:01
Speaker 3: things that I would say is if you are accessing
33:05
Speaker 3: equity and you're not, you know, using it for a
33:07
Speaker 3: home deposit or something immediate, make sure it goes into
33:10
Speaker 3: your offset account immediately immediately.
33:13
Speaker 2: Yeah, so it just sits the funding.
33:15
Speaker 3: The day you get your funding, that money goes straight
33:17
Speaker 3: into your offset account and sits there, and it will
33:19
Speaker 3: sit there for the entire time that you're doing your renovations.
33:22
Speaker 3: And drawing down on it, don't have it go into
33:24
Speaker 3: a separate savings account, like at least offset the interest
33:28
Speaker 3: on your mortgage for the time being, because like, if
33:31
Speaker 3: you're renovating, it might be like, who knows, I'm making
33:33
Speaker 3: this schedule up right, it might be like twenty percent
33:37
Speaker 3: upfront to get the builders, and then you get to
33:39
Speaker 3: fifty percent and you're not even paying the rest of
33:41
Speaker 3: it off until twenty twenty seven. And that's fine, but sorry,
33:46
Speaker 3: that money should be working for you while it's in
33:48
Speaker 3: your hands, because you can't invest it in their short
33:50
Speaker 3: term like that's not an option. I feel like that's
33:53
Speaker 3: a good little situation to be in. But then also
33:55
Speaker 3: be really open with your broker about your life and
33:58
Speaker 3: your circumstances and what's going on. Because one thing that
34:02
Speaker 3: we've sayd all a couple of things actually that come
34:04
Speaker 3: to mind is if you're planning on changing jobs soon
34:07
Speaker 3: and you go, no, it's fine, like I'm getting a promotion,
34:10
Speaker 3: like in theory, that sounds really good, but banks don't
34:13
Speaker 3: like job change. So like even if you come to
34:16
Speaker 3: me or come to us and say, hey, I want equity,
34:18
Speaker 3: and we're halfway through the application and then you call
34:21
Speaker 3: us and you're just getting an update on your loan
34:22
Speaker 3: application process or whatever, and then you go, oh, Jack,
34:25
Speaker 3: by the way, oh my god, I got a new job,
34:27
Speaker 3: Like you would think that as a beautiful client. We're
34:31
Speaker 3: so excited for you. Yeah, that is alarm bells to us.
34:35
Speaker 3: That is terrified, is it not, Jack?
34:37
Speaker 2: Yeah, your mind's already gone elsewhere. It's like, how can
34:39
Speaker 2: I fix this? Yeah?
34:40
Speaker 3: Yeah, because some banks will then be like, yeah, you
34:43
Speaker 3: were preapproved, you were accessible for that, but now you've
34:45
Speaker 3: got this new job. You need to get through probation
34:48
Speaker 3: on your new job before we're willing to give you
34:50
Speaker 3: access to that cash, and they might cancel the thing
34:52
Speaker 3: completely and we have to update the bank on that.
34:55
Speaker 3: We can't be deceptive. And another one is people are like,
34:58
Speaker 3: should I be using my equity now now for like
35:01
Speaker 3: a reno before we have kids?
35:03
Speaker 2: I was about to say this one, Yeah, so you
35:04
Speaker 2: need to do Yeah.
35:05
Speaker 3: So what's the answer there. Should we be releasing our
35:08
Speaker 3: equity before we have kids and doing the reno? Now?
35:10
Speaker 3: Do we just wait until we have kids and then
35:11
Speaker 3: release the equity?
35:12
Speaker 2: I mean, obviously you can do it either way. However,
35:15
Speaker 2: if you're going to take the equity at now and
35:17
Speaker 2: then you're going on maternity leave. You need to make
35:20
Speaker 2: sure you're already factored into account this extra borrowing and
35:23
Speaker 2: extra payments that are going to be coming out, because
35:25
Speaker 2: just because you're borrowing it now and then you're going
35:27
Speaker 2: on maternity leave, your payments don't stop, so you need
35:30
Speaker 2: to make sure you've taken that into account.
35:31
Speaker 3: Your cash flow is so important. Yeah, isn't it funny?
35:34
Speaker 3: You're like process and structure and driven and the like
35:36
Speaker 3: cash flow, budget, money, cash flow, cash flow. I'm just
35:41
Speaker 3: a broken record at this point. Anyway, I feel like
35:44
Speaker 3: we have clocked what it means to use your equity,
35:48
Speaker 3: access your equity, what equity means. We have so many
35:51
Speaker 3: educational posts when it comes to like information about mortgages
35:54
Speaker 3: and information about equity, et cetera on our Zeala Journey Instagram.
35:58
Speaker 3: So we'll make sure that all of that is linked below.
36:00
Speaker 3: And I'll also be really brazen and just put the
36:02
Speaker 3: links so that you can book with one of our
36:04
Speaker 3: Zello brokers should you want to do that in the
36:06
Speaker 3: show notes as well. Jack, thank you for being on
36:09
Speaker 3: the show again. I know this is one of the
36:11
Speaker 3: topics that gets talked about a lot in our community,
36:14
Speaker 3: and I know that they love it when you're on
36:15
Speaker 3: the show, so I married them together. You guys are
36:18
Speaker 3: so very welcome. And if you're thinking about your own
36:21
Speaker 3: situation and you want to understand all of your options,
36:23
Speaker 3: obviously I've put all of Jack's links and my links
36:26
Speaker 3: and the Zella links in the show notes. And if
36:29
Speaker 3: this has helped demystify equity for you, please make sure
36:32
Speaker 3: you share it with someone who keeps saying that they
36:33
Speaker 3: might use their equity one day. And of course hit
36:36
Speaker 3: subscribes so that you don't miss an episode. And guys,
36:38
Speaker 3: we will see you, not Jack, but we will see
36:40
Speaker 3: the rest of you on Friday for Friday Drinks. Bye Bye.
36:49
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