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Ed McKnight: How to haggle your interest rate · The SME Stream

• 0:00
  Speaker 1: And welcome back to the Weekend Collective. This is the
• 0:02
  Speaker 1: One Roof Radio Show. By the way, if you missed
• 0:04
  Speaker 1: our fantastic panel with Mark Kraisl on Pete wolf Camp,
• 0:06
  Speaker 1: you can check it out shortly pretty much by the
• 0:09
  Speaker 1: time the show is wrapped up, where we'll package it
• 0:11
  Speaker 1: all up shovel on the podcast and you can check
• 0:14
  Speaker 1: it out on iHeartRadio just look for the Weekend Collective.
• 0:16
  Speaker 1: But right now it's time for the One Roof Radio Show.
• 0:19
  Speaker 1: And my guest who's in the studio with me right
• 0:21
  Speaker 1: now is Ed McKnight. Good Ed, how are you going?
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  Speaker 2: Oh, great to be here, Tim, excellent.
• 0:25
  Speaker 1: I keep forgetting to build which company you are with?
• 0:28
  Speaker 1: And it is before I say the wrong thing.
• 0:30
  Speaker 2: Ops partners.
• 0:31
  Speaker 1: Oh that's right, Ops Partners, Opes Partner if you want partners,
• 0:35
  Speaker 1: if you want to check it out. And hey, by
• 0:37
  Speaker 1: the way, congratulations, of course you have just got engaged.
• 0:41
  Speaker 1: Big news.
• 0:42
  Speaker 2: Yeah, now we're very excited. We're lucky. Angela said, yes.
• 0:46
  Speaker 1: That that is always a positive thing. I think when
• 0:48
  Speaker 1: you pop the question, so what yeah, so what tell
• 0:52
  Speaker 1: us about how did you do it? I'm always interested
• 0:54
  Speaker 1: to see how people got engaged.
• 0:55
  Speaker 2: Well, I did it?
• 0:56
  Speaker 3: Down in christ Church because that's where we met and
• 0:58
  Speaker 3: I hide out the Austin Bar, which was a little
• 1:00
  Speaker 3: speaker easy underground bar. We met there, we had all
• 1:03
  Speaker 3: of our first dates there. Asked her to be my
• 1:05
  Speaker 3: girlfriend there, so I hired it out and she actually
• 1:09
  Speaker 3: thought that she decided to go there because months in advance,
• 1:13
  Speaker 3: I'd been dropping little hints, Oh wasn't that a great bar.
• 1:16
  Speaker 2: Oh, they've got a new menu.
• 1:17
  Speaker 3: Oh, you really liked it there, just spaced out weeks apart,
• 1:21
  Speaker 3: and then we were going to be down there. She says,
• 1:22
  Speaker 3: we should go to the Aucin Bar. I said, what
• 1:24
  Speaker 3: a fantastic guy.
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  Speaker 1: Fantastic, so was obviously she said yes. But I always
• 1:30
  Speaker 1: like the reaction to it was tell us about the
• 1:32
  Speaker 1: reaction and were you on your own orre your friends there?
• 1:35
  Speaker 3: So I'd had her family, all of our friends upstairs
• 1:39
  Speaker 3: heading away ready for them to come down afterwards.
• 1:42
  Speaker 1: So if it was a no, it would have been
• 1:44
  Speaker 1: would come down down, come down.
• 1:45
  Speaker 2: Would have been a bit awkward. But I knew it
• 1:48
  Speaker 2: was going to be a yes.
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  Speaker 3: And in terms of the reaction, I told her to
• 1:54
  Speaker 3: come down to christ Church because we're going to have
• 1:57
  Speaker 3: a friend's party for something, and her reaction was, oh,
• 2:01
  Speaker 3: my gosh, why did he do it on the same
• 2:03
  Speaker 3: day as this friend's party when it's all about it's
• 2:07
  Speaker 3: all meant to be about his fiance. And then I
• 2:09
  Speaker 3: had to say, no, no, no, we're not going to that.
• 2:12
  Speaker 3: That was a whole ruse just to get you down.
• 2:13
  Speaker 1: Here, and then you pop the question and it was
• 2:16
  Speaker 1: all happy days, fantastic, I love and look, it's you
• 2:20
  Speaker 1: know the world is full of enough stress and things.
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  Speaker 1: I just think we've, you know, even though we're here
• 2:24
  Speaker 1: for the property hour, a little bit of love to
• 2:25
  Speaker 1: start off the show. Where you go.
• 2:26
  Speaker 2: Now, let's talk interstraights.
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  Speaker 1: Hey, congratulations Angela. If you're listening, I suspect you might be.
• 2:34
  Speaker 1: But anyway, anyway, ed interest rates now you've you've been
• 2:39
  Speaker 1: doing a bit of writing. It's appearing on the One
• 2:41
  Speaker 1: Roof website as well One Roof Dot Coat in z
• 2:44
  Speaker 1: Ed And of course this is a one roof radio show,
• 2:46
  Speaker 1: so it dovetails nicely on the whole interest rates because
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  Speaker 1: I imagine people refixing mortgages and stuff and I have
• 2:53
  Speaker 1: to refix literally on Monday. They've given me, you know
• 2:56
  Speaker 1: that it finally expires and have had all this notice
• 2:58
  Speaker 1: and I wanted to wait for Adrian or to decide
• 3:02
  Speaker 1: what we were hoping was sticking out of a side.
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  Speaker 2: But I've always felt that there wasn't.
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  Speaker 1: Really much haggling to do or go to a more
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  Speaker 1: mortgage broker. But you know you've written a piece about
• 3:11
  Speaker 1: can you you know whether you can actually haggle for
• 3:13
  Speaker 1: a better interest rate?
• 3:15
  Speaker 2: Yeah.
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  Speaker 3: So generally you see interest rates advertised by the banks,
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  Speaker 3: and it might be at the moment like six point
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  Speaker 3: five nine percent for a one year rate. Generally speaking,
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  Speaker 3: you can get lower than that when you go to
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  Speaker 3: a bank. Now, when you actually log into your app
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  Speaker 3: or you get a call from the bank, they'll typically
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  Speaker 3: offer you an interest rate that's slightly lower than that
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  Speaker 3: as a bit of an incentive to keep fixing. Same
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  Speaker 3: with you, if you go to a mortgage advisor, they'll
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  Speaker 3: be able to get a slightly lower interest rate. For example,
• 3:43
  Speaker 3: one of the banks at the moment is advertising I
• 3:45
  Speaker 3: think it is, so I'm going to get it exactly.
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  Speaker 3: There is one for you. One of them is advertising
• 3:52
  Speaker 3: six point five to five percent. But if you go
• 3:54
  Speaker 3: for how long, for a year, if you go on
• 3:57
  Speaker 3: to the bank cap or you talk to your mortgage advisor,
• 4:00
  Speaker 3: they should be able to get your six point three
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  Speaker 3: to five percent. So that zero point two percent off
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  Speaker 3: the advertised interest rate. Why, well, that's just what banks do.
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  Speaker 3: They will advertiser rate, but then there will be a
• 4:09
  Speaker 3: negotiated or a discounted rate in the background. The big
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  Speaker 3: issue most of the time is that you can't see
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  Speaker 3: what those are.
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  Speaker 2: So if you go on to.
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  Speaker 3: Any Facebook group about personal finance or saving money, often
• 4:22
  Speaker 3: people will be posting the interest rates that they are
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  Speaker 3: getting offered via the banks, because typically it is slightly
• 4:28
  Speaker 3: lower than the advertised rate. Now it does depend on
• 4:31
  Speaker 3: different rates, so more recently the two year rates they
• 4:36
  Speaker 3: fell quite a lot earlier in the year and so
• 4:38
  Speaker 3: there hasn't been as much discounting on those. There was
• 4:42
  Speaker 3: a lot of discounting on the one year rate earlier
• 4:44
  Speaker 3: this year. So for example, at one point most of
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  Speaker 3: the banks were advertising seven point one percent, but they
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  Speaker 3: were discounting down to six point eight five percent. So
• 4:55
  Speaker 3: it's quite difficult because those discounts are often hidden. That's
• 4:59
  Speaker 3: one reason why we're started just publishing them and releasing
• 5:01
  Speaker 3: them on our website. At Open's partner stock Coded and said,
• 5:04
  Speaker 3: just so that people know, oh yeah, sweet, this is
• 5:07
  Speaker 3: what a good interest rate looks like when I'm actually
• 5:10
  Speaker 3: offered it by the bank.
• 5:11
  Speaker 1: Because obviously, if you are someone who's just bought a
• 5:14
  Speaker 1: house and you've got let's just go with a half
• 5:16
  Speaker 1: a million dollar mortgage. And I don't mean that casually
• 5:18
  Speaker 1: because it's a bloody lot of money. It's not funny.
• 5:25
  Speaker 1: You know, you look back in the years and put
• 5:26
  Speaker 1: people on what sums that roll off the tongues of people,
• 5:29
  Speaker 1: so like, oh, I got it for one point one
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  Speaker 1: there would have been twenty years ago people have going
• 5:33
  Speaker 1: one point one? What million? But anyway, half a million
• 5:37
  Speaker 1: dollar mortgage. If you're a new new mortgage, mortgage mortgage, jaw,
• 5:42
  Speaker 1: morg mortgag jaw, you're jaw, that's right. You you have
• 5:47
  Speaker 1: a bit of you've got a bit of play, you've
• 5:49
  Speaker 1: got some something. You're looking for a mortgage. You can
• 5:51
  Speaker 1: go around the banks, and that's an obvious place where
• 5:54
  Speaker 1: either through a broker or your own efforts, you can haggle.
• 5:57
  Speaker 1: But what about the people. So for instance, here's my one.
• 5:59
  Speaker 1: It's is your mortgage is up under my app with
• 6:02
  Speaker 1: the band come with that's anz it's no trade secret.
• 6:06
  Speaker 1: I just National Bank when I was a student, bought
• 6:08
  Speaker 1: by an Z. That's how it goes. So obviously I've
• 6:10
  Speaker 1: never changed banks, but I did shop around when we
• 6:14
  Speaker 1: first got a mortgage. But now it comes up you
• 6:16
  Speaker 1: need to refix your mortgage. What do you want? You know,
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  Speaker 1: here's what we're offering you. I I must say it.
• 6:22
  Speaker 1: It doesn't feel like there's a lot of room for
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  Speaker 1: haggling because of technology. It's like bingo, here's your offer,
• 6:27
  Speaker 1: Click on this, what do you want? Tick this box? Done. Yeah.
• 6:31
  Speaker 3: Back in the day, there was a lot more ability
• 6:34
  Speaker 3: to negotiate because you might be talking to your local
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  Speaker 3: bank manager. A lot of the time it's pretty set.
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  Speaker 3: So some banks actually have rate cards in the background,
• 6:42
  Speaker 3: so they might advertise a specific rate, but then they
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  Speaker 3: will send out discounted rates to mortgage advisors, which are
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  Speaker 3: often available to people you know through their apps anyway,
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  Speaker 3: that are slightly discounted. And I suppose that just makes
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  Speaker 3: you feel a little bit good when you go to
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  Speaker 3: locking your mortgage. Oh it's zero point two percent with
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  Speaker 3: than what they're advertising. Sweet, there's a bit of an
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  Speaker 3: incentive to go ahead with them.
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  Speaker 1: Yeah, So I mean for me, is there any Is
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  Speaker 1: there any other way as opposed to just clicking yes
• 7:09
  Speaker 1: or should I say I want to speak to someone
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  Speaker 1: and saying because what I'm thinking, And I'm making this
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  Speaker 1: up completely as I'm going along, and if my wife's listening,
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  Speaker 1: she'll be like, what do you mean how mortgage is
• 7:17
  Speaker 1: up for renewal? But part of me sort of thinks,
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  Speaker 1: so I might just wait till Monday rolls around and
• 7:24
  Speaker 1: then say, well, you know, I'm looking at going to
• 7:26
  Speaker 1: another bank. What are you going to do? But I
• 7:28
  Speaker 1: don't know if to be honest, I'm probably just going
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  Speaker 1: to click the six months and wait for the interest
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  Speaker 1: rates to keep dropping.
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  Speaker 3: To be honest to him, if I was a banker,
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  Speaker 3: i'd be calling your bluff there, because in order to
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  Speaker 3: refinance to another bank, it's actually a bit of a process.
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  Speaker 3: You know, you're going to have to go and put
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  Speaker 3: it in a mortgage application for another bank. There are
• 7:44
  Speaker 3: actually costs to refinance. It usually costs about one thousand
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  Speaker 3: dollars to move banks anyway.
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  Speaker 2: Because then you've got to go to your lawyer.
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  Speaker 3: The lawyer has to discharge the mortgage being registered against
• 7:55
  Speaker 3: the title. Then they've got to register a new one,
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  Speaker 3: so it's usually costs you about a thousand bucks to
• 7:58
  Speaker 3: switch anyway.
• 7:59
  Speaker 1: Drag.
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  Speaker 3: Generally speaking, I would not be you know, it's very
• 8:03
  Speaker 3: difficult to shop around interest rates anyway, because when you're
• 8:07
  Speaker 3: a first home buyer, banks don't like it when you
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  Speaker 3: go and apply to five different banks to try and
• 8:11
  Speaker 3: get the best interest rate anyway.
• 8:13
  Speaker 1: So the answer is you can't really haggle. Just it's
• 8:16
  Speaker 1: very difficul click the button. I mean actually saying can
• 8:19
  Speaker 1: you do a bit? Is it actually worth trying to
• 8:21
  Speaker 1: get a bank representative on the line and saying, look,
• 8:23
  Speaker 1: I do have to fix this. But you know, you
• 8:26
  Speaker 1: can bluff and say I'm looking at paying it off
• 8:28
  Speaker 1: because of some money that's coming, I'll keep it going
• 8:30
  Speaker 1: or whatever. But is it worth just saying, hey, is
• 8:32
  Speaker 1: this the best you can do?
• 8:33
  Speaker 3: Does it work in some rare instances I have heard
• 8:37
  Speaker 3: at work sometimes though, a lot of bankers have to
• 8:41
  Speaker 3: stick to script. So for example, I had Westpac called
• 8:44
  Speaker 3: me up the other day. They offered me a rate.
• 8:46
  Speaker 3: I said, I know for a fact that is quite
• 8:48
  Speaker 3: a bit higher. I think it was aboutzero point one
• 8:51
  Speaker 3: higher than some of the other banks. And the very
• 8:53
  Speaker 3: nice gentleman said, well, that's the right we're offering you.
• 8:57
  Speaker 1: So that's like that, you know what, maybe they should
• 9:00
  Speaker 1: have in their script listen like it or lump it
• 9:02
  Speaker 1: buddy if they said that something. Respect Thank you for
• 9:08
  Speaker 1: your honesty. So what advice do you have for people
• 9:12
  Speaker 1: when it comes to shopping around? Is it better to
• 9:14
  Speaker 1: I mean, what's the role of Most of the people
• 9:17
  Speaker 1: who come on our show would say a lot of
• 9:19
  Speaker 1: the time, and the received wisdom is get a mortgage broker.
• 9:22
  Speaker 1: Just get someone else to sort it for you.
• 9:23
  Speaker 3: Yeah, the truth of the matter and I agree with that,
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  Speaker 3: But the truth of the matter is generally mortgage advisors
• 9:28
  Speaker 3: aren't going to be able to get a substantially lower
• 9:29
  Speaker 3: interest rate than you could get yourself. So generally you
• 9:32
  Speaker 3: don't go to a mortgage advisor because they're going to
• 9:34
  Speaker 3: be able to get you a lower interest rate, but
• 9:37
  Speaker 3: that they're going to be able to help you get
• 9:38
  Speaker 3: your mortgage approved anyway.
• 9:40
  Speaker 4: Right.
• 9:41
  Speaker 3: What people don't realize is that when you put in
• 9:43
  Speaker 3: your mortgage application to the bank, there are a lot
• 9:46
  Speaker 3: of moving parts that you can pull in order to
• 9:50
  Speaker 3: get your mortgage a higher likelihood that it's going to
• 9:53
  Speaker 3: go ahead.
• 9:54
  Speaker 1: And get approved.
• 9:54
  Speaker 3: I'll just give you one example. So let's say that
• 9:57
  Speaker 3: I have my own home, I've got a mortgage on it,
• 10:01
  Speaker 3: and I'm paying it off over ten years. I decide
• 10:03
  Speaker 3: to go and buy an investment property. The bank says, no,
• 10:06
  Speaker 3: you can't afford it yet in comes too low. Well,
• 10:09
  Speaker 3: one thing a mortgage advisor might say is, well, that's
• 10:12
  Speaker 3: because you're paying your mortgage off over ten years. For instance,
• 10:15
  Speaker 3: if we extend that term out to thirty years, then
• 10:19
  Speaker 3: your minimum repayments to the bank will look quite a
• 10:21
  Speaker 3: bit lower, and therefore they might then approve that mortgage
• 10:24
  Speaker 3: investment property. Now, you can still pay off your mortgage
• 10:27
  Speaker 3: over ten years, but if you document it or structure
• 10:31
  Speaker 3: it such that it's over thirty years, even if you
• 10:33
  Speaker 3: pay it off faster, you might get that investment property.
• 10:36
  Speaker 1: It's proved with most mortgages. You can pay every I
• 10:39
  Speaker 1: think when you have refixing rates, or you can pay
• 10:41
  Speaker 1: off a chunk every year, or something can't you isn't
• 10:43
  Speaker 1: there some ex bank could be different. My understanding was
• 10:46
  Speaker 1: you could pay five percent off the lump every time
• 10:49
  Speaker 1: you re refix.
• 10:51
  Speaker 3: Generally it's generally it's five percent. Even if you are
• 10:54
  Speaker 3: fixed and they won't charge your penalty. When your interest
• 10:58
  Speaker 3: rate comes up for a new as yours will you're
• 11:01
  Speaker 3: going to move on to a floating rate. You could
• 11:03
  Speaker 3: pay it all off then without penalty at that at
• 11:05
  Speaker 3: that point because it's floating.
• 11:07
  Speaker 1: Okay, right, So what would your advice be? Not specific advice,
• 11:10
  Speaker 1: and I'm not going to quote you, but I have to.
• 11:14
  Speaker 2: For you.
• 11:14
  Speaker 3: Well, that leads to a really good question about which
• 11:16
  Speaker 3: interest rate do you choose? And there's actually a bit
• 11:19
  Speaker 3: of math involved, and I've just run the numbers, right,
• 11:22
  Speaker 3: So one thing you'll probably think, he is, should I
• 11:24
  Speaker 3: go for the six month rate or for the one month,
• 11:27
  Speaker 3: for the twelve month rate the one year rate, And
• 11:31
  Speaker 3: what I've calculated is based on the you know, it's
• 11:33
  Speaker 3: kind of six point four to five percent for the
• 11:35
  Speaker 3: one year. It's about six point eight five percent for
• 11:38
  Speaker 3: the six month. The rates on your app which I
• 11:40
  Speaker 3: see that you're you're tapping away on your phone, they're
• 11:42
  Speaker 3: probably slightly lower because they'll be giving you negotiated rates.
• 11:47
  Speaker 1: Also equity as well, and there's two different rates. If
• 11:49
  Speaker 1: you've got eighty percent, you know, you own more than
• 11:52
  Speaker 1: twenty percent of your equity, then you get a better rate.
• 11:55
  Speaker 3: The truth of the matter is right now for the
• 11:58
  Speaker 3: six month which is slightly higher for that to make
• 12:00
  Speaker 3: sense in six months time, the interest rate you could
• 12:03
  Speaker 3: get that you get has to be six percent or
• 12:06
  Speaker 3: lower for it to make sense to choose the higher
• 12:09
  Speaker 3: rate right now, which is six months. And so the
• 12:12
  Speaker 3: question that you've got to then ask yourself is do
• 12:14
  Speaker 3: I think in six months time that I'll be able
• 12:17
  Speaker 3: to get an interest rate lower than six percent? And
• 12:20
  Speaker 3: based on ain Z's current forecast, they reckon that the
• 12:24
  Speaker 3: one year rate is going to be about five point
• 12:26
  Speaker 3: six percent in six months time at around that February March.
• 12:31
  Speaker 3: Over the next twelve months, if that was correct, it
• 12:33
  Speaker 3: might save you about twenty five dollars a week.
• 12:36
  Speaker 1: Well, here's the tricky one with what A and Z
• 12:37
  Speaker 1: are doing. And if you're listening, actually, by the way,
• 12:39
  Speaker 1: want your calls. How do you approach refixing your mortgage rate?
• 12:43
  Speaker 1: And do you try to shop around? Do you try
• 12:44
  Speaker 1: and call up a bank manager and say, listen, can
• 12:47
  Speaker 1: you save me point one of a percent here on
• 12:49
  Speaker 1: my mortgage is five hundred thousand. It's got to be
• 12:51
  Speaker 1: worth it to you guys, please, can you help me.
• 12:53
  Speaker 1: What can you do? I don't know if that I
• 12:54
  Speaker 1: would assume that that approach is worth trying. But here's
• 12:57
  Speaker 1: the interesting thing on the choice that I might have
• 12:59
  Speaker 1: right now six point eight five percent for six months. Right.
• 13:03
  Speaker 3: Oh, so they're only offering you what the advertised rate is.
• 13:06
  Speaker 3: That's interesting.
• 13:07
  Speaker 1: Yeah, it says standard rate seven point four to nine.
• 13:09
  Speaker 1: But oh, okay, is this something I need to know
• 13:12
  Speaker 1: from you? Anyway? I'm going to talk about that within
• 13:14
  Speaker 1: the break. But here we go eighteen months five point
• 13:16
  Speaker 1: nine to nine, and you would think over eighteen months
• 13:20
  Speaker 1: if to me, that's almost if you're happy just to
• 13:23
  Speaker 1: tick onto an eighteen month contract, that's an interesting equation
• 13:25
  Speaker 1: because you've got a bank on that six point eighty
• 13:29
  Speaker 1: five dropping down to a bit less than five point
• 13:32
  Speaker 1: nine to nine for it to be worth worthwhile or not,
• 13:34
  Speaker 1: wouldn't it.
• 13:35
  Speaker 2: Yeah, it's interesting.
• 13:36
  Speaker 3: There are other banks offering an eighteen month as well
• 13:40
  Speaker 3: as five point nine percent. It's not currently being advertised,
• 13:43
  Speaker 3: but behind the scenes, we'll have a little chatter in
• 13:46
  Speaker 3: the braak about monte anyway.
• 13:49
  Speaker 1: How do you go about refixing your mortgage and do
• 13:51
  Speaker 1: you try haggling or do you feel in this age
• 13:53
  Speaker 1: of technology that everything's presented to you on this plate
• 13:57
  Speaker 1: on the app and it's all sort of locked and loaded,
• 13:59
  Speaker 1: and I guess I just have to click this button.
• 14:02
  Speaker 1: Is that the approach you take? What do you call
• 14:03
  Speaker 1: your mortgage broker and say what can you do? Because,
• 14:06
  Speaker 1: as we say, if you need to refinance, you've got
• 14:08
  Speaker 1: to go to the lawyers. You've got to get you know,
• 14:09
  Speaker 1: new documents drawn up and all that, and it's not
• 14:11
  Speaker 1: that straightforward. So maybe that's what the banks know. When
• 14:14
  Speaker 1: you mortgage is getting down, maybe it's not worth it.
• 14:16
  Speaker 1: Give us a call. O one hundred eight ten and
• 14:18
  Speaker 1: eighty want to know your tactics text nine two nine two.
• 14:21
  Speaker 1: My guest is Ed McKnight from O Peas Partners. That's
• 14:24
  Speaker 1: opes is how they spell it, as opposed to ops ops.
• 14:28
  Speaker 1: What does it sound like an old cartoon character from
• 14:30
  Speaker 1: the fifties, isn't it? I'm thinking of op or something
• 14:32
  Speaker 1: like that. Anyway, that's completely irrelevant. Opeas Partners twenty one
• 14:36
  Speaker 1: and a half past four News Talks EDB and welcome
• 14:40
  Speaker 1: to back to News TALKSB. This is the one roof
• 14:42
  Speaker 1: radio show on the weekend, collecting my guest is Ed
• 14:44
  Speaker 1: McKnight from opeas Partners talking about how do we negotiate
• 14:48
  Speaker 1: or can you negotiate your interest rate? Once you're hooked
• 14:50
  Speaker 1: in there, you know, you're hooked in with that bank
• 14:52
  Speaker 1: and it's like they've got you and just click into
• 14:54
  Speaker 1: the app and can you do you have any other power?
• 14:57
  Speaker 1: Or how do you shop around for your interest rates?
• 14:59
  Speaker 1: We've got lots of the things we're talking about when
• 15:01
  Speaker 1: it comes to that sort of thing and the incentives
• 15:03
  Speaker 1: that banks off of you and whether the cash back
• 15:05
  Speaker 1: incentives are worth you know, worth going with the bank
• 15:08
  Speaker 1: for that reason. My guess is night as I saying
• 15:10
  Speaker 1: we're going to dig into that. But first Eric, Hello.
• 15:13
  Speaker 5: Yehi guys. You know I'm just talking to you guys
• 15:16
  Speaker 5: from a perspective that I've paid off my mortgage.
• 15:19
  Speaker 1: You have good Yeah, Eric.
• 15:21
  Speaker 5: On my forties, I paid it off. But you know
• 15:24
  Speaker 5: I only started in my thirties. But I used the
• 15:28
  Speaker 5: system that a lot of people aren't talking about these days.
• 15:31
  Speaker 5: And I'm just lexit guy who never got at school,
• 15:34
  Speaker 5: c who was classed as thick as pig shirt.
• 15:38
  Speaker 1: But yeah, we might try and just soften our language.
• 15:41
  Speaker 1: Given it four thirty in the afternoon and there are
• 15:43
  Speaker 1: people driving around with the car.
• 15:45
  Speaker 5: Yeah thanks, Eric, Yeah all right, but yeah, you know
• 15:48
  Speaker 5: what I'm saying is you don't have to be an entrepreneur,
• 15:51
  Speaker 5: you know, with a degree to to figure it out.
• 15:56
  Speaker 5: It's pretty straightforward stuff, definitely, And talk to your banks,
• 15:59
  Speaker 5: you think, and see if you get a cheaper interest rate.
• 16:01
  Speaker 5: I did that every single time I refixed my mortgage.
• 16:04
  Speaker 5: Every single time, I'd say, look, can you do a
• 16:06
  Speaker 5: bit of better job a better price than that? And
• 16:10
  Speaker 5: that'd usually done, knock a little bit off. So that
• 16:12
  Speaker 5: was one thing. The other thing was your mate there,
• 16:16
  Speaker 5: I don't know he's here. Might Yeah, the Flexi loans,
• 16:22
  Speaker 5: the Flexi loan system.
• 16:24
  Speaker 2: Yeah you hear that. Yeah, you're dead right, Eric.
• 16:27
  Speaker 3: So what you're talking about there is either offset facilities
• 16:30
  Speaker 3: or revolving credits is the other thing that people do.
• 16:33
  Speaker 3: And Eric, just tell us how are you using the
• 16:35
  Speaker 3: flexi system in order to pay off your mortgage faster?
• 16:38
  Speaker 5: Okay? So I didn't use the revolve and credit credit
• 16:41
  Speaker 5: system because I didn't like I didn't like credit cards
• 16:43
  Speaker 5: for starters. So but I know how that works. You
• 16:45
  Speaker 5: basically put all your month you live off your credit
• 16:49
  Speaker 5: card for a month. It's a separate It's just like
• 16:52
  Speaker 5: an a flexi Loaners, you've got your whole loan. Let's
• 16:54
  Speaker 5: say your loan is a five hundred thousand, right, so
• 16:58
  Speaker 5: you put your whole entire loan over the longer longest
• 17:00
  Speaker 5: time possible that make it affordable for yourself. But take
• 17:04
  Speaker 5: a portion of that loan, like twenty grand, and stick
• 17:06
  Speaker 5: that on what they call the flexi loan.
• 17:09
  Speaker 1: Yeah, it's like a draw down facility type of thing.
• 17:11
  Speaker 5: Basic distant overdraft, but you can draw it back and
• 17:14
  Speaker 5: put the money back. You know, you can draw the
• 17:16
  Speaker 5: money back if you need it. So what I did
• 17:18
  Speaker 5: is I had a separate account. They had an overdraft
• 17:21
  Speaker 5: of twenty grand, and I poured any savings I had.
• 17:25
  Speaker 5: I didn't have it as savings in the bank, because
• 17:27
  Speaker 5: savings in the bank to me, was stupid because you're
• 17:29
  Speaker 5: only getting two percent off your money. So I took
• 17:32
  Speaker 5: all my spare money and I stuck everything on that
• 17:35
  Speaker 5: flexi loan because I knew I could get it back.
• 17:37
  Speaker 5: But I'm technically now getting five percent because I'm not
• 17:40
  Speaker 5: borrowing that money every month off the bank. If I
• 17:43
  Speaker 5: put two thousand dollars in there. That's two thousand dollars
• 17:46
  Speaker 5: I'm loaning to myself, which means I don't have to
• 17:47
  Speaker 5: pay five percent on it now. Over the period of
• 17:50
  Speaker 5: your mortgage. That adds up to a lot of money,
• 17:53
  Speaker 5: because the banks calculate your entire mortgage for thirty years,
• 17:56
  Speaker 5: and they calculate all the interest on it, and they
• 17:58
  Speaker 5: calculate how much into you'll pay if you can knock
• 18:01
  Speaker 5: that down. So every time the loan came around, what
• 18:05
  Speaker 5: I do is I would have got that mortgage down
• 18:07
  Speaker 5: to say that flexi loan that may be down to
• 18:10
  Speaker 5: say down ten grand or whatever in two years or whatever,
• 18:13
  Speaker 5: it may be twenty grand, and I take that money
• 18:17
  Speaker 5: that I've got it down, and I take that overdraft
• 18:20
  Speaker 5: back up again and dump all that money back onto
• 18:22
  Speaker 5: the main mortgage.
• 18:24
  Speaker 3: Yeah, and Eric, this is such a great strategy. In
• 18:26
  Speaker 3: my book Wealth Plan, we call it the mortgage buster strategy.
• 18:29
  Speaker 5: Which is that's little right.
• 18:30
  Speaker 3: Yeah, Well, certainly do your situation. But what we're really
• 18:34
  Speaker 3: talking about is if you move some of your mortgage
• 18:37
  Speaker 3: across to a revolving credit or a flexi facility, and
• 18:40
  Speaker 3: then if you've got money saved for a holiday or
• 18:42
  Speaker 3: invested somewhere else you might pot it into that facility.
• 18:45
  Speaker 3: You've still got access to the money for your car
• 18:48
  Speaker 3: appairs or for your holiday. But in the meantime, it's
• 18:50
  Speaker 3: saving your money.
• 18:51
  Speaker 2: Now.
• 18:51
  Speaker 3: One thing that I do want to talk about it.
• 18:53
  Speaker 3: I'm not sure if you've seen these Facebook ads either, Eric,
• 18:55
  Speaker 3: there are a number of mortgage advisors out there saying
• 18:58
  Speaker 3: at the moment, you can pay off your your home
• 19:00
  Speaker 3: loan and five to seven years, no extra repayments needed.
• 19:05
  Speaker 3: That is, and I won't use one of the words
• 19:07
  Speaker 3: er accused, but that is incorrect. That's not true. You
• 19:10
  Speaker 3: can't pay off your mortgage without making additional repayments. But
• 19:13
  Speaker 3: you can do some of the stuff that Eric's talking
• 19:15
  Speaker 3: about here, which can.
• 19:17
  Speaker 5: Say I was taking all like what I was doing right,
• 19:21
  Speaker 5: I was saying, Okay, I'll live off what I can.
• 19:22
  Speaker 5: So I've been a cheapye just living.
• 19:25
  Speaker 1: Can I ask you just quickly how long ago was this?
• 19:28
  Speaker 5: Okay, it's probably ten years ago now, But the fact
• 19:32
  Speaker 5: of the principal is still the same, Mate, and the
• 19:34
  Speaker 5: system is still there. But a lot of people don't
• 19:36
  Speaker 5: understand it. We need to go to the bank, the bank,
• 19:38
  Speaker 5: the tellers and that and the managers to say, you're
• 19:41
  Speaker 5: one of the very few people that have actually used
• 19:43
  Speaker 5: the system to your advantage and literally cut my mortgage
• 19:47
  Speaker 5: in half.
• 19:48
  Speaker 1: Yeah, well done, Eric, I mean, the whole revolving credit thing,
• 19:52
  Speaker 1: the flexi loan, whatever they want to brand it, which
• 19:54
  Speaker 1: tells them at me is probably where they an z
• 19:56
  Speaker 1: actually because it sounds like a familiar expression. It's basically,
• 19:59
  Speaker 1: if you've got extra cash that you're playing with for
• 20:01
  Speaker 1: your life, if you are lucky enough that you are,
• 20:03
  Speaker 1: you have a lifestyle where you build up resources, and
• 20:06
  Speaker 1: you better to stick that into a flexi loan because
• 20:09
  Speaker 1: at least you're getting the benefit of not having that
• 20:12
  Speaker 1: off your mortgage.
• 20:12
  Speaker 3: Yeah, and if you compare putting money into your mortgage
• 20:15
  Speaker 3: versus a term deposit. Remember, if you put ten thousand
• 20:18
  Speaker 3: dollars into a term deposit, you might get six percent.
• 20:20
  Speaker 3: Then you've got to pay tax off that, so your
• 20:22
  Speaker 3: returns really four percent. If you sick it against your mortgage,
• 20:24
  Speaker 3: you're actually getting that you know, six or seven percent
• 20:27
  Speaker 3: savings on there. The key thing is to do what
• 20:30
  Speaker 3: I think Eric was talking about, which is when you
• 20:32
  Speaker 3: have that flexi facility and you're putting money in there,
• 20:35
  Speaker 3: make sure you don't spend it. One of the things
• 20:37
  Speaker 3: some people do as they start putting their money into
• 20:40
  Speaker 3: their revolving credit or the flexi facility, then they feel
• 20:43
  Speaker 3: rich because they've got that money available there, and then
• 20:45
  Speaker 3: they go and spend it and they don't actually pay
• 20:47
  Speaker 3: off their mortgage faster. That's one of the classic fish
• 20:50
  Speaker 3: hooks that we see.
• 20:50
  Speaker 1: I'm always amazed at how many This is slightly off topic,
• 20:54
  Speaker 1: but when interest rates get down and people go and
• 20:57
  Speaker 1: borrow a truckload more because to buy that car they've
• 20:59
  Speaker 1: always wanted us like you just I don't know that
• 21:02
  Speaker 1: the willingness of people to get into debt when it's
• 21:05
  Speaker 1: maybe not that necessary sort of always surprises me. Yeah.
• 21:09
  Speaker 3: One classic way that kiwis funds their lifestyles, whether to
• 21:13
  Speaker 3: buy a boat or a new car, or a bike
• 21:15
  Speaker 3: or a jets key, whatever it happens to be, as
• 21:17
  Speaker 3: the old home loan top up, just go and borrow
• 21:20
  Speaker 3: a little bit more money against the house in order
• 21:22
  Speaker 3: to be able to pay for that. Not always the
• 21:24
  Speaker 3: best financial decision.
• 21:25
  Speaker 1: No, hey what about now cash back offers? So you're
• 21:30
  Speaker 1: looking to either refinance or you're going to get your
• 21:35
  Speaker 1: first mortgage and obviously banks have a lot of incentives.
• 21:38
  Speaker 1: I think I've even seen things where you can get
• 21:41
  Speaker 1: a holiday or something if you holiday to the Gold
• 21:43
  Speaker 1: Coast or something if you sign up with us, which
• 21:45
  Speaker 1: to me, I always think suspiciously, somehow I'm paying for that,
• 21:48
  Speaker 1: even though it feels like it's something they given me.
• 21:50
  Speaker 1: But anyway, cash backs are they ever worthwhile using because well,
• 21:57
  Speaker 1: hell it's a bit of extra cash in your pocket
• 21:59
  Speaker 1: and you've done the business.
• 22:00
  Speaker 3: Yeah, I think cash banks are definitely worth it from
• 22:02
  Speaker 3: the banks, and just for anybody who maybe hasn't got
• 22:04
  Speaker 3: a mortgage recently doesn't know what those are. Let's say
• 22:07
  Speaker 3: you take out a half a million dollar mortgage, and yes,
• 22:09
  Speaker 3: it does roll off the tongue easily, doesn't it. Till
• 22:12
  Speaker 3: so you take out your half a million dollar mortgage.
• 22:14
  Speaker 3: Generally speaking, at the moment, banks are offering between zero
• 22:17
  Speaker 3: point eight percent and up to one percent as a
• 22:20
  Speaker 3: cash back. So that means you take out that half
• 22:22
  Speaker 3: a million dollar mortgage and when you draw it down
• 22:25
  Speaker 3: they will put four to five thousand dollars into your
• 22:28
  Speaker 3: bank account. You can spend that on anything generally that
• 22:32
  Speaker 3: it pitchres a way to help cover your legal fees,
• 22:34
  Speaker 3: because when you are a first home buyer and you
• 22:37
  Speaker 3: take out a mortgage, there's a lot of costs with that.
• 22:40
  Speaker 3: If you refinance, like you switch banks, as I said before,
• 22:44
  Speaker 3: could cost you about one thousand dollars. So it's a
• 22:46
  Speaker 3: way to help cover some of those fees. But if
• 22:50
  Speaker 3: it only costs you call it one thousand dollars to
• 22:52
  Speaker 3: move banks, and they'll give you four thousand dollars, then hey,
• 22:56
  Speaker 3: it's a little bit of three grand profit there.
• 22:58
  Speaker 1: Okay. See I just sort of think, oh, well, if
• 23:02
  Speaker 1: you're going to take that cash, you should really just
• 23:03
  Speaker 1: stick it off against your mortgage, shouldn't you.
• 23:06
  Speaker 3: Well, I think many people possibly do that, and I
• 23:08
  Speaker 3: think that's probably a very good decision. Oh, I'm sure
• 23:11
  Speaker 3: some people are out there bettering on whatever they want to.
• 23:14
  Speaker 3: Of course, there are a couple of fish hooks with
• 23:17
  Speaker 3: cash backs that we need to be aware of. Generally,
• 23:19
  Speaker 3: banks will make you stick with them for two to
• 23:21
  Speaker 3: four years if you are going to get a cash back,
• 23:25
  Speaker 3: and let's say they say, right, Tim, we're going to
• 23:27
  Speaker 3: give you a cash back, but you've got to stick
• 23:29
  Speaker 3: with us for three years. If you try and leave
• 23:31
  Speaker 3: them one or two years early, they'll make you pay
• 23:33
  Speaker 3: some of that back. Same as if you know, let's
• 23:36
  Speaker 3: say you take out a big mortgage, they give you
• 23:38
  Speaker 3: a cash back, then you decide to pay it all
• 23:40
  Speaker 3: off because you've got an inheritance, you might have to
• 23:42
  Speaker 3: pay some of that.
• 23:43
  Speaker 1: Actually, that is, if they're giving you one percent or
• 23:45
  Speaker 1: something that's close to whate that's a lot of money
• 23:47
  Speaker 1: when you consider the interest rates.
• 23:49
  Speaker 3: I think it's a lot of money. And one interesting
• 23:51
  Speaker 3: thing that I'll tell you about that we've recently seen,
• 23:55
  Speaker 3: because we've got a team of mortgage advisors at Open's Partners,
• 23:58
  Speaker 3: we've seen retention ca This is something that's a little
• 24:01
  Speaker 3: bit new. So you've said that you've been with A
• 24:04
  Speaker 3: and Z for a long long time, and A and
• 24:07
  Speaker 3: Z knows that if you decide to walk across the
• 24:09
  Speaker 3: road to ASB or Kiwibank or something like that, they're
• 24:13
  Speaker 3: probably going to give you a cash back. Now, some
• 24:15
  Speaker 3: banks are offering retention cash, which is, if you decide
• 24:18
  Speaker 3: that you're going to refinance to somewhere else to get
• 24:21
  Speaker 3: that cash back, why don't we just give you a
• 24:23
  Speaker 3: little bit of cash instead and you stay. Now, retention
• 24:26
  Speaker 3: cash is generally not as generous as a cash back,
• 24:31
  Speaker 3: it might be somewhere between zero point five to zero
• 24:33
  Speaker 3: point six percent. But the benefit then is you don't
• 24:36
  Speaker 3: have to pay the one grand to the lawyers, so
• 24:38
  Speaker 3: it works out to be slightly less, but there's less
• 24:41
  Speaker 3: FAF to go through. But that's one other thing to
• 24:43
  Speaker 3: talk to your mortgage deviser about. Just before you jump
• 24:45
  Speaker 3: in Tim and say, well, where's my retention cash offer
• 24:48
  Speaker 3: from a seid?
• 24:51
  Speaker 1: My expression there, I don't think I'm getting a retention
• 24:53
  Speaker 1: for my mortgage.
• 24:54
  Speaker 3: No, But that's because you did tell me that your
• 24:56
  Speaker 3: mortgage is quite small. Generally these only cacking for loans
• 24:59
  Speaker 3: about two hundred k or more.
• 25:00
  Speaker 1: Yeah, just that rolls off the tongue, doesn't it. Yeah,
• 25:03
  Speaker 1: half a million, two hundred thousand, isn't it funny? In
• 25:06
  Speaker 1: every other aspect of our lives, the big money, we
• 25:09
  Speaker 1: treat it importantly with the mortgage. My mortgage is down
• 25:12
  Speaker 1: to three hundred thousand. Oh lucky you. Anyway, Hey, look,
• 25:15
  Speaker 1: we want to take your cause on this. Do you
• 25:17
  Speaker 1: haggle with your bank or how do you approach refinancing
• 25:21
  Speaker 1: or do you just go with the technology. It clicks
• 25:23
  Speaker 1: on your screen and there we go apart from Okay,
• 25:26
  Speaker 1: here's one that says, apart from Heartland, who charge like
• 25:29
  Speaker 1: balls allegedly, I guess are there other options that can
• 25:34
  Speaker 1: free up equity for the mortgage free, asset rich, cash
• 25:38
  Speaker 1: poor elderly. That's from Chrissy.
• 25:40
  Speaker 3: Oh, so here we're talking about reverse mortgages and Heartland
• 25:43
  Speaker 3: are one of the leaders in reverse mortgages in New Zealand.
• 25:46
  Speaker 3: And I don't purport to be an expert, but just
• 25:49
  Speaker 3: to explain that for any people out there who are like, oh,
• 25:51
  Speaker 3: what's a reverse mortgage? So let's say that you're seventy
• 25:54
  Speaker 3: years old, you're struggling to just live off super you've
• 25:58
  Speaker 3: spent your key, we say, and you've got this mortgage
• 26:01
  Speaker 3: free house. But you've got so you're quite rich in
• 26:04
  Speaker 3: asset terms, but you don't have a lot of income.
• 26:06
  Speaker 3: That's where Heartland and other reverse mortgage providers will say, Okay,
• 26:10
  Speaker 3: we'll give you fifty thousand dollars and you don't have
• 26:13
  Speaker 3: to pay that off until you sell the house or
• 26:16
  Speaker 3: you eventually pass away, and then they sell the house
• 26:20
  Speaker 3: and you pay it back. Now that sounds really good,
• 26:22
  Speaker 3: but there's a lot of interest in there because you're
• 26:25
  Speaker 3: paying quite a high interest rate.
• 26:26
  Speaker 1: I think, well, it's basically taking your kids' inheritance if
• 26:29
  Speaker 1: you've got kids, isn't.
• 26:30
  Speaker 3: It sort of Yeah, but how much do you love
• 26:32
  Speaker 3: your kids?
• 26:32
  Speaker 2: Team Well, a lot, of course.
• 26:38
  Speaker 1: Actually it's something about that. But of course you've got
• 26:40
  Speaker 1: to also live, don't you. So it's a difficult decision
• 26:43
  Speaker 1: for a lot of people.
• 26:43
  Speaker 3: Yeah, a couple of things in there, because I just
• 26:45
  Speaker 3: did a podcast about it on the Property Academy podcast,
• 26:48
  Speaker 3: And one thing that my co host Andrew was talking
• 26:51
  Speaker 3: about was he had a client who was thinking about
• 26:55
  Speaker 3: going and getting a reverse mortgage, but then their kids
• 26:58
  Speaker 3: were worried about their inheritance side. So what the kids
• 27:00
  Speaker 3: all decided to do was, why don't we all do
• 27:03
  Speaker 3: a mortgage top up? Give them money to mum and dad,
• 27:06
  Speaker 3: because they're going to be able to borrow at a
• 27:08
  Speaker 3: much lower interest rate than a reverse mortgage would be. Because
• 27:11
  Speaker 3: a reverse mortgage, I'm pretty sure. I don't want to
• 27:14
  Speaker 3: get an angry call from Heartland, but I think it's
• 27:16
  Speaker 3: about ten percent was the interest rate that they've been using. Yeah,
• 27:20
  Speaker 3: giving me a face, Yes, it's quite high.
• 27:23
  Speaker 1: Yeah, that's quite up there, isn't it. I'm surprised there's
• 27:25
  Speaker 1: not more competition for the banks for the reverse mortgages.
• 27:28
  Speaker 1: Do you think we'll ever get a bit more like that?
• 27:30
  Speaker 1: Because when that person text about Heartland, it's almost that's
• 27:33
  Speaker 1: one of their things they advertise all the.
• 27:35
  Speaker 2: Time, isn't it.
• 27:36
  Speaker 3: It's a very specialist kind of mortgage type. So I
• 27:40
  Speaker 3: don't know whether there's any better deals out there than Heartland.
• 27:43
  Speaker 3: One thing that I will tell you, because I interviewed
• 27:45
  Speaker 3: them for that podcast, I was quite impressed with some
• 27:48
  Speaker 3: of the safeguards that they've got in place to make
• 27:51
  Speaker 3: sure that people don't take out too much debt.
• 27:53
  Speaker 1: Now, well, well that's good. I guess that's probably because
• 27:57
  Speaker 1: of the way our laws are crafted around lending and
• 27:59
  Speaker 1: responsible lending too, isn't it.
• 28:00
  Speaker 2: Yeah.
• 28:00
  Speaker 3: I think they'd definitely want to be a responsible lending provider.
• 28:04
  Speaker 1: Yeah. Okay, here's another one. Lots of text question. If
• 28:07
  Speaker 1: you got a call, You've got a question for Ed
• 28:09
  Speaker 1: McKnight around how you approach how you should approach We're
• 28:12
  Speaker 1: not going to specific financial advice, of course, but you're
• 28:15
  Speaker 1: looking to remortgage or finance and haggling over interest rates?
• 28:18
  Speaker 1: Can you do it? Give us a call? Oh, eight
• 28:20
  Speaker 1: hundred and eighty ten to eight. Somebody said, what do
• 28:21
  Speaker 1: you think about SBS offering five point five nine percent
• 28:25
  Speaker 1: lowest rate advertising the country and no one seems to
• 28:27
  Speaker 1: talk about it? Extremely competitive, writes this person, who I
• 28:30
  Speaker 1: don't know if they work for SPS, but it would
• 28:32
  Speaker 1: be a good, good move for them to have texted that.
• 28:35
  Speaker 3: So you were saying five point five to nine, oh
• 28:37
  Speaker 3: for the first home combo, as I've just seen on
• 28:40
  Speaker 3: interes stock codering ZIN. So it looks like that for
• 28:42
  Speaker 3: a one year they've got the first home combo. To
• 28:45
  Speaker 3: be honest, I don't know much about that specific offer.
• 28:47
  Speaker 1: Okay, okay, so we're not going to comment about that.
• 28:50
  Speaker 2: I'll dig into it.
• 28:51
  Speaker 1: I'll dig into it another time. If banks don't like
• 28:56
  Speaker 1: clients shopping around and apply to applying to multitudes of
• 28:58
  Speaker 1: banks for loans, as your guests says, and look to
• 29:00
  Speaker 1: punish those that do, I'm sure they look to punish
• 29:03
  Speaker 1: those that do. Do they surely that's oh somebody's wondering
• 29:05
  Speaker 1: if they look to punish those that shop around. I
• 29:07
  Speaker 1: don't think they do that. No, So what I'd say,
• 29:10
  Speaker 1: they just don't incentivize as much as.
• 29:13
  Speaker 3: Well it's not preferred because the trouble with applying for
• 29:16
  Speaker 3: a mortgage is that there's lots of people trying to
• 29:19
  Speaker 3: do it, and if people go and apply to every
• 29:20
  Speaker 3: single bank, then it slows everybody else down because you've
• 29:23
  Speaker 3: got a big traffic queue in terms of your mortgage applications.
• 29:26
  Speaker 3: So certainly what some people borrowers get frustrated about is
• 29:31
  Speaker 3: if you go and talk to a mortgage advisor and
• 29:33
  Speaker 3: you say, go to every single bank and try and
• 29:36
  Speaker 3: get me the best interest rate. A mortgage advisor will
• 29:38
  Speaker 3: not do that, and the reason is because the banks
• 29:40
  Speaker 3: don't like doing that because it slows everybody down in
• 29:42
  Speaker 3: terms of a queue.
• 29:44
  Speaker 2: I'm not sure whether a bank.
• 29:45
  Speaker 3: Goes ahead and punishes it, but what I will say
• 29:47
  Speaker 3: is that if you go out and apply to a
• 29:50
  Speaker 3: number of banks, that will show up on your credit report,
• 29:53
  Speaker 3: and then that will sometimes make banks nervous because if
• 29:56
  Speaker 3: they're saying, well, you've applied to four other bank, why
• 30:00
  Speaker 3: are the other bank's saying no.
• 30:03
  Speaker 1: Oh okay, yeah, okay, that's interesting advice there, yeah, or
• 30:06
  Speaker 1: point to observe. Yet it's twenty minutes to five news talks.
• 30:09
  Speaker 1: You be back in just a moment. My guest is
• 30:11
  Speaker 1: Ed mc knight. This is the Wee Can Collective One
• 30:13
  Speaker 1: Roof Radio Show at twenty minutes to five and welcome back.
• 30:20
  Speaker 1: I love a little bit of ob easy into one
• 30:22
  Speaker 1: of our sessions at the One Roof Radio Show. My
• 30:23
  Speaker 1: guest is Ed mcnah I'm Tim Beverage and let's take
• 30:26
  Speaker 1: some calls talking about interest rates, taggling for you know,
• 30:28
  Speaker 1: your refinance for your new mortgage. Neil.
• 30:30
  Speaker 6: Hello, yeah, hi guys, are good.
• 30:34
  Speaker 1: Thanks for you.
• 30:36
  Speaker 6: I had quite a question with my wife and I
• 30:38
  Speaker 6: have done really well over the years and actually quite
• 30:41
  Speaker 6: enjoy playing around with our mortgage and looking at the
• 30:44
  Speaker 6: options available. So I've been enjoying the conversation today. However,
• 30:48
  Speaker 6: over the years we've always thought, hey, we want to
• 30:50
  Speaker 6: deal directly with the bank. However, then you know they
• 30:54
  Speaker 6: don't do what we want, and we hear these guys
• 30:56
  Speaker 6: are getting better deals, and then you know the advice is, hey,
• 30:59
  Speaker 6: go to a broker, they can get a better deal.
• 31:01
  Speaker 6: Brokers have a backdoor that I can't access as a
• 31:04
  Speaker 6: regular guy. Or what's the story?
• 31:07
  Speaker 3: Oh the question such a great question because there's often
• 31:10
  Speaker 3: quite a few misconceptions here, so a lot of people
• 31:12
  Speaker 3: think that mortgage brokers can get a lower interest rate.
• 31:16
  Speaker 3: Generally speaking, that's not the case. Whether you go directly
• 31:19
  Speaker 3: to the bank or you use a mortgage advisor, the
• 31:21
  Speaker 3: interest rate's probably going to be the interest rate. The
• 31:24
  Speaker 3: real value in a mortgage advisor is setting up your
• 31:28
  Speaker 3: lending the right way. So, for instance, if you were
• 31:30
  Speaker 3: going to go ahead, Neil and buy an investment property,
• 31:33
  Speaker 3: one of the key strategies we often talk about is
• 31:35
  Speaker 3: split banking, which is effectively cheating on your bank using
• 31:38
  Speaker 3: multiple banks at once, and mortgage advisors are really good
• 31:41
  Speaker 3: about setting it up the right way so it is
• 31:44
  Speaker 3: the most tax efficient way for you to do it,
• 31:46
  Speaker 3: and also setting up your mortgages so that when you
• 31:48
  Speaker 3: want to go and buy your second investment property, hey,
• 31:51
  Speaker 3: look it's all set up so you're able to go
• 31:53
  Speaker 3: ahead and do it. So the best deal is probably
• 31:56
  Speaker 3: correct in terms of setting it up the right way,
• 31:58
  Speaker 3: making sure you're able to get the lending that you
• 32:01
  Speaker 3: are wanting, that you get your mortgage approved, But in
• 32:03
  Speaker 3: terms of best interest rate, I don't really think that happened.
• 32:07
  Speaker 1: Although some mortgage some mortgage brokers have specific relationships with
• 32:11
  Speaker 1: banks who may offer them a slightly better rate, isn't
• 32:14
  Speaker 1: that right?
• 32:14
  Speaker 3: Well, generally we talk about the advertised rates and the
• 32:18
  Speaker 3: negotiated rates. Now, the negotiated rates mortgage advisors have access
• 32:22
  Speaker 3: to because they know, you know, what other customers or
• 32:26
  Speaker 3: borrowers have been able to get. But generally the bank
• 32:30
  Speaker 3: will be able to offer you the same rates that
• 32:32
  Speaker 3: the mortgage advisor would be able to get.
• 32:33
  Speaker 2: That's the truth of the matter.
• 32:34
  Speaker 1: Actually, funny enough, I spoke to the guy who helped
• 32:37
  Speaker 1: us with our mortgage and game McCall and said, look,
• 32:39
  Speaker 1: I'm refinancing. Should I do it through you? And he
• 32:40
  Speaker 1: said what rate of the bank going for? And I
• 32:44
  Speaker 1: told him and he said, just go with that, don't
• 32:47
  Speaker 1: worry about it, you know, just save me the hassle
• 32:49
  Speaker 1: of it, So which was quite helpful. Actually, right, Let's
• 32:51
  Speaker 1: take another call Sue.
• 32:53
  Speaker 4: Hello, Hello, how are you doing good?
• 32:56
  Speaker 1: Thanks? Where you go?
• 33:00
  Speaker 4: Okay? Strategy, I don't know that you've said it or not,
• 33:03
  Speaker 4: but for me and we're just refinancing at the moment. Definitely,
• 33:07
  Speaker 4: I wouldn't look at changing banks because of simply the
• 33:09
  Speaker 4: legal costs, etc. And the drama, but I definitely would
• 33:14
  Speaker 4: work towards what can I afford for the next period
• 33:19
  Speaker 4: of time. So is it six months, is it a year?
• 33:21
  Speaker 4: Is it eighteen months? And that would be one of
• 33:24
  Speaker 4: the big drivers, not just.
• 33:26
  Speaker 1: What is the interest rate, so more thinking about how
• 33:29
  Speaker 1: can I plow off as much money as I can
• 33:32
  Speaker 1: and structure it that way. And that's worth you know,
• 33:35
  Speaker 1: worth more than a haggling over an interest rate.
• 33:37
  Speaker 4: Well that plus plus how stressed am I going to
• 33:41
  Speaker 4: be if I if I say I'm going to fix
• 33:43
  Speaker 4: for six months and then the interest rates unconceivably go up,
• 33:48
  Speaker 4: then I'm going to be screwed. Whereas if I fix
• 33:50
  Speaker 4: for twelve months, then and I know that that's my
• 33:54
  Speaker 4: spending for the next twelve months, And it's a good
• 33:57
  Speaker 4: strategy because that way, it's a little bit like having
• 34:00
  Speaker 4: a high purchase that youre not gonna have them. But
• 34:03
  Speaker 4: do you know the amount that you're going to pay
• 34:05
  Speaker 4: every week? It's set solid.
• 34:09
  Speaker 1: Yeah, that's a good point, isn't it. So so's basically
• 34:11
  Speaker 1: saying the attitude to your mortgage and paying it off quicker.
• 34:13
  Speaker 1: It's going to be worse than trying to save point
• 34:15
  Speaker 1: one percent or something. Just pay it off.
• 34:18
  Speaker 3: It's outrageous the amount that you can save on your
• 34:20
  Speaker 3: mortgage if you just pay a little bit more than
• 34:22
  Speaker 3: the minimum repayments.
• 34:23
  Speaker 2: And I think that's such a good point.
• 34:24
  Speaker 1: So yeah, in fact you can go and do just
• 34:27
  Speaker 1: it's worth doing comparison calculations. What how much more? How
• 34:29
  Speaker 1: much am I paying on my mortgage if I go
• 34:31
  Speaker 1: for the extra five years or whatever, and seeing the
• 34:34
  Speaker 1: massive difference, and you think how many overseas holidays is
• 34:37
  Speaker 1: that they can blow it on? Anyway, Hey, thanks for
• 34:39
  Speaker 1: coll So we'll be back in just One Roof Property
• 34:41
  Speaker 1: of the Week is next. It's twelve minutes to five
• 34:43
  Speaker 1: news Talk sd B and welcome back to the One
• 34:51
  Speaker 1: Roof radio show. That music is completely incidental and no
• 34:54
  Speaker 1: comment on my guest ed McKnight from Opio's partners. And
• 34:58
  Speaker 1: it is that magic time of day though. It's minutes
• 35:00
  Speaker 1: to five. Yes, and the one we propably of the
• 35:07
  Speaker 1: week is well, it's a in Buller. It's a Fox
• 35:11
  Speaker 1: River Buller five seven seven O State Highway six. You
• 35:14
  Speaker 1: can look it up on the One Roof website and
• 35:17
  Speaker 1: it is our second where I just click on the
• 35:19
  Speaker 1: screen here. It's got an asking price at one point
• 35:21
  Speaker 1: six million. It's three bedrooms, two bathrooms, five car garage, workshop.
• 35:26
  Speaker 1: It looks like it setventh. Here's the thing, fifty acres
• 35:29
  Speaker 1: with two separate titles that you can profit from while
• 35:31
  Speaker 1: I'm enjoying yourself. It says entertaining decks, a spar pool,
• 35:34
  Speaker 1: a fire pit. It looks like it's a house as
• 35:37
  Speaker 1: well as a sort of separate and Airbnb. In fat
• 35:40
  Speaker 1: one of their photos, it's got a lineup of the
• 35:42
  Speaker 1: crayfish that they've probably caught nearby. It's so it's yeah.
• 35:46
  Speaker 1: It talks about an eighty one square meter garage or
• 35:48
  Speaker 1: workshop space surrounded by avery than The West Coast is
• 35:50
  Speaker 1: known and loved for crayfish, hector dolphins, two e's and
• 35:53
  Speaker 1: gorgeous native bush. Interestingly ed which you noticed when we
• 35:57
  Speaker 1: were chatting about it in the break. It's been listed
• 35:59
  Speaker 1: for a little while, being on the market for a
• 36:01
  Speaker 1: little bit, so they'd be wanting to get rid of it.
• 36:03
  Speaker 1: I guess.
• 36:03
  Speaker 3: It was launched on December twenty twenty one, updated twelve
• 36:07
  Speaker 3: days ago. This is always something to look at when
• 36:09
  Speaker 3: you're purchasing properties, because that tells you if they've updated
• 36:12
  Speaker 3: the listing, maybe changed the sale process, moved to maybe
• 36:15
  Speaker 3: an asking price where in the past it might have
• 36:17
  Speaker 3: been been priced by negotiation. That's a little bit of
• 36:21
  Speaker 3: a signal that there could be a deal to be
• 36:22
  Speaker 3: had because that updating the listing. They're like, oh, we're
• 36:25
  Speaker 3: having some conversations about.
• 36:27
  Speaker 1: It, and it's quite a spectacular looking property. I always
• 36:30
  Speaker 1: get so every week when we have it, I say,
• 36:32
  Speaker 1: it's like taking a mini holiday, just going to have
• 36:33
  Speaker 1: a look at someone else's house. But what a beautiful area.
• 36:36
  Speaker 3: Stunning, isn't it one point six million dollars in Buller.
• 36:39
  Speaker 3: I thought you might be able to buy half the
• 36:41
  Speaker 3: West Coast for that, and we've just feen such.
• 36:44
  Speaker 1: An Auckland's statement. We've sell I can sell my house
• 36:49
  Speaker 1: in Auckland and I could buy half the West Coast.
• 36:51
  Speaker 3: Um, we're going to get a lot of agri callers now.
• 36:56
  Speaker 1: Actually it's a gorgeous link property though those views look
• 36:59
  Speaker 1: absolutely magnificent, and don't.
• 37:00
  Speaker 3: They and beautiful part of the country down on the
• 37:03
  Speaker 3: west coast.
• 37:04
  Speaker 1: Yeah right, Muzz says, holy something. I can't say what
• 37:08
  Speaker 1: he's saying, but he's moving to Buller. I'm guessing Muzz
• 37:10
  Speaker 1: lives in Auckland and he's worked out that he can
• 37:12
  Speaker 1: cash up we've got time.
• 37:15
  Speaker 2: Maybe we've got time for one.
• 37:18
  Speaker 1: Actually, no, here's a quick text to here. Hi, Tim,
• 37:20
  Speaker 1: can you tell me how much commission mortgage brokers get
• 37:23
  Speaker 1: and how does that work out in the whole equation?
• 37:24
  Speaker 3: Yeah, generally it's zero point six percent of the mortgage value.
• 37:27
  Speaker 3: So let's say that it's a half a million dollar mortgage,
• 37:30
  Speaker 3: it might be a three grand commission.
• 37:33
  Speaker 1: Excellent, Right, Let's squeeze on another caller, Josh today.
• 37:37
  Speaker 2: How's that, Fellows?
• 37:38
  Speaker 1: Good things? You got two minutes.
• 37:40
  Speaker 5: Let's go.
• 37:41
  Speaker 1: Hey, I'm in my love her twenties and I've got
• 37:44
  Speaker 1: a question for you guys. I'm probably going to be
• 37:45
  Speaker 1: in the housing market in like five to eight years.
• 37:48
  Speaker 1: Whether you think it's going to be then? Do you
• 37:49
  Speaker 1: think they're going to be better or worse? Or oh
• 37:52
  Speaker 1: what do you mean? More expensive? No, they're interest rates. Oh,
• 37:56
  Speaker 1: got your thoughts on the market, big, big core for prediction.
• 38:00
  Speaker 1: Because I know nothing about property, don't listen to me.
• 38:03
  Speaker 1: I reckon it's going to be maybe a point lower
• 38:05
  Speaker 1: than it is now.
• 38:06
  Speaker 3: To be honest, I wouldn't know. I wouldn't even be
• 38:09
  Speaker 3: willing to guess five years out. I'd guess three years
• 38:12
  Speaker 3: out and say I'd expect them to be low. But
• 38:14
  Speaker 3: the issue is that the long run OCR is kind
• 38:18
  Speaker 3: of two and a half to two point seventy five percent.
• 38:20
  Speaker 3: That suggests that the one year interest rate might be
• 38:23
  Speaker 3: about five percent when the reserve banks neither trying to
• 38:26
  Speaker 3: speed up or slow down the economy. But there's going
• 38:29
  Speaker 3: to be some world event that happens in the next
• 38:30
  Speaker 3: five to eight years, whether it be another COVID or
• 38:33
  Speaker 3: something's going to happen that's going to screw with interest
• 38:35
  Speaker 3: rates because the economy is constantly responding. So I wouldn't
• 38:39
  Speaker 3: even have a guess at what it's going to pen
• 38:40
  Speaker 3: five to eight years. It's too far out.
• 38:42
  Speaker 1: How's your saving going, Josh, how's Australia? Now, how's your
• 38:47
  Speaker 1: saving going?
• 38:48
  Speaker 5: Not? How going good?
• 38:50
  Speaker 1: Yeah, how's Australia. Yeah, savings are going good. Yeah. There
• 38:57
  Speaker 1: are a few people who are heading off to Australia,
• 38:58
  Speaker 1: probably because they see that as a way of saving
• 39:00
  Speaker 1: and maybe never return.
• 39:01
  Speaker 4: Hey.
• 39:02
  Speaker 1: Ed, great to have you in and I see nice
• 39:04
  Speaker 1: to see your piece on the One Roof, One Roof website.
• 39:08
  Speaker 1: And yeah, and of course you'll get your podcasts that
• 39:10
  Speaker 1: you do daily. I think isn't it.
• 39:12
  Speaker 3: Yeah, the property cannedy Podcasting. Go and check out that
• 39:14
  Speaker 3: interest rate cut counter on the One Roof website.
• 39:17
  Speaker 2: It's excellent, excellent.
• 39:18
  Speaker 1: Right, we will be back with the Parents squad. We
• 39:21
  Speaker 1: have a brand new guest on the show, very exciting
• 39:24
  Speaker 1: and her name is Kim Harvey and she'll be in
• 39:26
  Speaker 1: the studio with me very shortly. It's four minutes to
• 39:30
  Speaker 1: five