A mortgage can be one of your greatest allies for building wealth, or it can be a noose around your neck. It all depends on how you use it. To sidestep the biggest mistakes is to know what they are. And few are more experienced than Sarah Thomson. After more than 20 years as a broker and over 1 Billion in loans written she's seen it all.
Also in this episode:
Knowing how to partner with the banks to win the wealth game is critical. And in this episode, you get a peek inside Sarah's playbook.
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Click here to access free courses and trainings, build new habits, and connect with us and others on the journey to financial self reliance.
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A mortgage can be one of your greatest allies for building wealth, or it can be a noose around your neck. It all depends on how you use it. To sidestep the biggest mistakes is to know what they are. And few are more experienced than Sarah Thomson. After more than 20 years as a broker and over 1 Billion in loans written she's seen it all.
Also in this episode:
Knowing how to partner with the banks to win the wealth game is critical. And in this episode, you get a peek inside Sarah's playbook.
Join the Private Podcast Community
Click here to access free courses and trainings, build new habits, and connect with us and others on the journey to financial self reliance.
Other links 👇
Money mentorship:
Click here to start putting what you've been learning into practice.
Corporate program:
Click here to find out more about our workplace program
Follow us on Instagram:
Click here to see behind the scenes of our business and learn more about personal finance in bite-sized chunks.
Welcome back to the WealthTime Freedom Show.
Speaker 1:I'm here with Sarah Thompson, one of Australia's most experienced mortgage brokers, and we've been talking about debt in this series and how it can be one of the most powerful tools in your wealth arsenal, and we've been talking about, I guess, how the monetary system works and the way we think about and look at debt and reframing the risk.
Speaker 1:In actual fact, it may be more risky not to have debt in the longer run than it is to actually have it, and so hopefully we've kind of reframed your view of that so that you're thinking and feeling about it differently. But really what we want to talk about in this episode is really get the best of what Sarah's got to offer, because there would be very few people that are as experienced as Sarah when it comes to helping or guiding people through those decisions and how to use debt, and Sarah's mind will be broken. Made this whole process so simple, so easy, so fast, so streamlined for me, and she as a business person for me, is an absolute model as well. So it's a real pleasure to be able to bring you on and hopefully I hate these words, but pick your brain. Thank you for coming, sarah.
Speaker 2:Thanks, Terry. Thanks for being a great client as well.
Speaker 1:No worries at all. Look, I want to quickly just touch on this point because really, what we're talking about here is how do we avoid the biggest mistakes when it comes to debt? And I love this quote, which is only a fool learns from their own mistakes. The wise man learns from the stakes of others, and I think I was really racking my brain. I was like who would have seen the most mistakes? There'd probably be a few people that were sort of sad scene. As many years you Do you want to talk about how long you've been mortgage-broken? For how long have you been doing this?
Speaker 2:Yeah, I'm over 20 years now as a mortgage broker, so the industry's changed a lot. I think something like over 70% of people that actually take out the home loans now go through brokers instead of individually to banks, so we're a fair force to be reckoned with now, which is great.
Speaker 1:That's amazing and I was trying to think about this. In terms of the total amount of dollars written in debt that you've done over that period of time, it must be in the hundreds of millions. Do you actually know what the number is?
Speaker 2:Yeah, just over 1.1 billion at the moment actually. So we hit one bill last year.
Speaker 1:How many actual people would that represent? Thousands of clients, thousands, yeah, yeah, amazing so 20 years. Thousands of clients. You would have seen so many patterns, right, like so many. Oh, it's another one of those. It's another one of those. It's another one of those?
Speaker 2:Yeah, absolutely, and it's also seemed to come in cycles the longer you're in something, the more you sort of do see it, but nothing phases us now and, yeah, we think we've seen most of the cycle so far.
Speaker 1:Yeah, that's actually pretty important too, isn't it? Because we are just in another cycle, but if you hadn't been through a few, you'd be like wow, what's?
Speaker 2:going on.
Speaker 1:That's critical. I think, having that perspective, with that period of time, we are going to get to the best of what you've learned. Hopefully we're going to get that from you Selflessly, for myself and for our audience. But also I want to start from the start. How did you actually get into mortgage-broken?
Speaker 2:It was by accident. Actually, I was a photographer previously and I didn't have a passion for it anymore and I saw an ad that said are you energetic? Do you love people and helping people? And I love figures as well, so I really love maths at school, so the two sort of went hand in hand. But I think helping people through one of the largest it is one of the biggest things in people's lives that they'll do is buying a house, and probably the most stressful, along with death, divorce and marriages and children being born. So I think being able to sort of guide people through that as well is probably one of the most exciting, and it's also great for clients because it can calm them and it doesn't end up being such a big deal. In a sense. All they have to do is really find the house they love and will help them do the rest. I fell into it, but then I fell in love with it as well.
Speaker 1:You know the debt thing for us for a long period of time and we've talked about this in the episodes before this but for a long period of time we're like we're going to rent until we absolutely know it's the right time for us to take on debt. And it usually comes with family formation and all of that happens all at once. Those things converge and then you've got these kids, you've got these extra costs that come with that responsibility. So it's quite a privileged position. And when we jumped on the phone with you, I'll be lying if I said I wasn't a little bit stressed about it, because I'm like I have no idea how this is going to play out, but you did such a good job of just really normalizing. I was just such a calming influencer and I can tell you've had so many of those conversations in the past, so you're doing a good job at that. Thanks, who do you mainly work with in terms of, like your clientele?
Speaker 2:Oh gosh, a community of our first home buyers from 20 years ago are now our upgrading properties or buying investments and they're sending their children to us. So we've got grandparents, grandchildren anywhere across the mix, work with investors as well. But I still love the first home buyers and being able to really nourish and help them through again through that process and guide them through it. It can be pretty daunting. It's not just about the house or not just the home loan. We've got the real estate agent, the conveyance, involved. What do they do? How do they work?
Speaker 1:How do?
Speaker 2:I pay a deposit. So just the whole buying process, that we sort of bring it together and be that conduit as well to help.
Speaker 1:This is actually probably an underrated part of your job and probably something I didn't even realise is how well you work in with the other professionals. For me, it was such a relief to be able to hand off some of that stuff and say you guys talk to each other like leave me out of it, I'm probably just going to stuff it up. Do you want to talk to how much of that goes on? Because it is a bit right. You're talking to the banks For us. You're talking to our buyers agent. There's all these different professionals. So what are those different professionals that are? Typical mortgage broker will be liaising within the process.
Speaker 2:Yeah, so the real estate agent obviously at the start and we can really get involved in our business. We do anyway. We really get involved in helping clients sometimes negotiate, but a lot of the times having a chat to the agent to let the agent know that the offer from our client is solid. Because if they've got other people that are looking at the property and the agent is not 100% sure on their finance but we actually contact the agent to let them know that our clients are good to go, that's usually pretty solid offer when it comes free from us and the agents. Obviously they don't want to have egg on their face so by doing that it gives them that confidence to know that the offer is going to be good. In the background you've got the conveyance. So liaising with them on any timelines and if there's finance clauses or checking through contracts before clients go to auction there is a lot of stuff going on behind, obviously, the dealing with the banks.
Speaker 2:Sometimes it can fly through and sometimes, depending on the lender at the time, it can be quite clunky. So we try and make sure that clients aren't aware of how clunky that can be in the back end and all they generally will see is a seamless transaction majority of the times. But we just try and make it as seamless for clients so that even if stuff's going balls up behind us in the bank and something's happened, they're not going to know about it because we'll do everything to fix it as well without anyone even worrying about it, because there's nothing they need to worry about, because we know that it's going to be okay.
Speaker 1:That was definitely apparent for us because I just couldn't believe how seamless it was in terms of the process itself Me knowing where I was at in the process, the tools we used, even the way you gather information, all that sort of stuff. Because it can be such a punish, this kind of thing, and for somebody like me who is absolutely allergic to paperwork, I found it so helpful and I feel like it is the 80-20 of that.
Speaker 2:Absolutely.
Speaker 1:There's something you said that I do want to just pick up on, which is probably underrated and undervalued and probably not even understood or known, is the role of that compounding relationship you have with real estate agents in the area and I know that you did this for us as well. You're working with the bank yourself and you're trying to negotiate the sale yourself. The agent doesn't know you at all. They don't have any kind of background, that confidence level in you as an individual. They just have no insight into that.
Speaker 1:But as soon as I'm working with someone like you, you're talking to Ben, who was our real estate agent who's selling the property. You and Ben are probably known each other. If you've been doing it for 20 years, ben's been probably doing it for 10 or 15 years, I don't know, but you know each other. Ben also knows my agent. So between the three there's all this goodwill compounded relationship. That just automatically means there's a higher level of confidence, higher level of trust, and I don't think you can put a number on that, but it is very valuable when you're talking about vendors and their different options. So when the agent is advising the other person on the options, that's got to play a massive role in the process right.
Speaker 2:Yeah, absolutely. And we can also put clients in a position, with that true, where we can send them unconditional approval because we've done a full assessment. We're not approving the loan, but we're doing an assessment, knowing that I could send you to auction and I'd be 100% comfortable with that, even if we don't have a pre-approval. A lot of the pre-approvals don't really mean much these days. If you walk into a bank and you do a pre-approval, it's a piece of paper, but generally an assessor hasn't even looked at that. So we make sure that when we're sending clients, we'll make sure that they're in the strongest position to be able to negotiate as well.
Speaker 1:Let's just define those terms while we have them. So two things you said there pre-approval unconditional. Do you want to just quickly define those for us?
Speaker 2:Yeah, so pre-approval is used to walk into the bank and you'd hand over all of your documents and then someone would assess that. It would take days and then it would come back and they'd say, yes, you are pre-approved to buy for X amount, but the pre-approval is always still subject to other things, so it could be subject to the valuation or subject to showing another pay slip or still subject to certain terms and conditions. An unconditional approval is you don't actually have to have your formal approval, but you can actually go unconditional, so you could go to an auction without an approval or a pre-approval. You could buy a property through private sale and offer an unconditional approval. Therefore I'm not actually putting any finance terms and conditions in there. If you do a private sale, you can still do subject to building inspection and things like that, but it means it takes the finance clause out of it, which is great for vendors because they know that it's instant.
Speaker 1:Yeah, higher confidence for a vendor right Unconditional versus pre-approved. You're like, okay, pre-approved, but this person over here, unconditional. That's different for me.
Speaker 2:Yeah, and unconditional is also pretty much instant and you've got generally a three-day cooling off, depending on state by state. But you've got a bit of cooling off but unconditional is it's done and it's dusted today, whereas with a pre-approval generally you finance clause that they'll put in there is 14 days. So some banks might take their time with that and actually make it 10. So as a vendor you're waiting around for up to two weeks Again, that's in Victoria and different state by state but you're waiting two weeks as a vendor to know whether or not it's a done and dusted deal.
Speaker 1:Love it. There's a lot that goes into the process and the journey that you take folks on. What is the one moment that's always the best moment for you, the most joyous part of your job?
Speaker 2:Do you know what it would be really around clients that have been told, no, you can't do this, or have been told by whether it's the bank or other people that you're not in a position or you're not going to get approved or they have been declined. And it might just be that they've been declined by a particular bank, but banks have different policies and processes. So we have over 60 different lenders that we have access to for residential mortgages with loan markets. So if one bank doesn't fit, we know that there's another 30 over here that will. So I think the clients that have been told they can't do it and then they come to us and they're an absolute shoe in and sometimes they don't quite believe you because they've already had one.
Speaker 2:No, there's actually 30 lenders that would actually take you on. You're a great client. It's not you, it's just that particular bank's policy. So don't worry about it, let it go. And I think, just that relief of, oh, we were so desperate to do it and then we were told we couldn't, and then the joy again yeah, I think that's probably one of the most exciting. I really love that. That's a good surprise.
Speaker 1:Yeah, that's cool. So something you just mentioned there, the 60 lenders, so there's something called a panel, right?
Speaker 2:Yeah.
Speaker 1:Different brokers have a different sized panel, so give us a sense of scale here. You've said 60. You've got 60 lenders on your panel. Is that big? Is that normal?
Speaker 2:Yeah, that's pretty huge. I mean there's lots of lenders out there but with a business or an aggregator like loan market they'll only take on. They'll look at businesses or banks that can also keep up with volume. Because if a bank has a really good deal and that's great for a client and everybody starts moving towards that bank, can the bank actually keep up with it? Some of the banks would blow out to two months for an approval and not joking like it would be.
Speaker 2:I mean through COVID. It was worse. It was six months for some of the major banks through that period because they couldn't keep up. Wow, so over 60 lenders is a lot. I mean that's thousands and thousands of products, let alone policies. So within that 60, there's very, very rarely you couldn't find something to fit for a client. But we can also go what we call off panel as well, and we can use other lenders if need be too. So we've got access to a lot.
Speaker 1:Amazing and what would be a red flag for you. So if your broker was less than 20 on the panel, that's a problem. What should you be looking for? A minimum of how many on the panel.
Speaker 2:That's a great question, kerry. It depends on those lenders. I mean, if somebody was looking for an older person looking at a reverse mortgage and they didn't have one on their panel, then that wouldn't be great. It ends up not really being about the rate. So we legally have to act in clients' best interest to find them the best deal, because the cheapest or the best deal that particular lender doesn't have the policy that fits anyway, so you can't take it to that bank. So again, the more lenders you have, then the more scope, probably more around policy, not so much the rates.
Speaker 1:Gotcha. What about the flip side of that first question? I asked you what's the worst part of your job?
Speaker 2:Worst part. Worst part I think it's when you've got people that you know that if they actually could get into the house, if they could buy a home, would do anything in the world to make those payments and they would never, ever skip it. And I think it's the people that don't have maybe the ability. They're paying rent, but they don't have the ability to then also save much on top of that as well, and they don't have any family help, and I think that's the thing, like you know, desperately. And they don't have other debt and they're really trying hard to save, but they just don't have any family members that could possibly go as a guarantor or even a really small gift.
Speaker 1:Yeah, hard news to deliver.
Speaker 2:Yeah.
Speaker 1:Tell me about your first mortgage that you wrote and how that process has changed over the 20 years from the start to the finish. What did that look like and what does it look like now?
Speaker 2:It was horrible Looking back at it. We were talking about this the other day, actually and if you had a self-employed client and you had to send it to the bank, you had to sit on the phone to the bank. Nothing was online, so you couldn't sort of search online for products or policy. You had to sit on and hold to the bank for probably about an hour, an hour and a half, and ask a question about a scenario, and then if you hung up and you'd forgotten one thing, you had to call back again.
Speaker 2:but then everything was faxed, so you had to fax off paper applications or manual applications, and then if it got jammed these are the things I remember If it got jammed on the last piece, you had to do the whole thing all over again, or if you forgot one little number, it was really tedious, it was incredibly onerous. So things have definitely changed since then.
Speaker 1:I don't know what it is about me, but I'm generally quite a patient person, but I have zero patients when it comes to banks and that. The sort of a rigmarole, the little things, like you didn't put a full stuff on that sentence or whatever. You know what I mean. Those kind of things I'm like what is?
Speaker 2:going on. In the whole process of buying a house there are millions of things that could possibly go wrong and it can be down to people's ID. You know married maiden separation, you know ID itself can be an absolute nightmare when it comes to finance. So it'd be great if Australia as a whole got an ID, a verification system together that all of the banks used, or I'm happy to be scanned. It's to that stage now where it's just it's all about ID at the moment with all of the banks.
Speaker 1:So once you're coming into getting a mortgage for the first time, your understanding of what a broker is and why you use a broker is usually a little bit limited. And I would love to paint, I guess, a parallel universe where brokers didn't exist Right, so you couldn't do that job for me, where you were actually liaising with the banks and doing that on my behalf and then talking to the real estate agent and doing all this sort of stuff. If brokers didn't exist, what would this look like for the average individual?
Speaker 2:Yeah, I can give you a pretty clear picture on that one. I think. So Dolomite accounts. I think most of the people out there probably had one as kids. So the CVA had them and they'd go to the school and they'd sign you up and everybody would save. So pretty much the biggest bank in Australia. So I think majority of people that had one of those would go directly to the Commonwealth Bank and they would say can you give me a loan? And if they said no, people would go, oh well done, can't get it. And that would be it.
Speaker 2:People wouldn't sort of bank shop, because that's your bank, that's who you bank with, so it'd be very different. I think people would be more loyal to their banks that they are being now, and there's no point being loyal to banks, obviously.
Speaker 1:Yeah. So what does that cost folks? In a world like that, where in your mind there's one perceived option and they knock you back, what do you think that would cost people in terms of their opportunities in a lifestyle, a life stage, and also from an investment perspective?
Speaker 2:Oh yeah, absolutely.
Speaker 2:I mean that would cost them any sort of future, any opportunities to be able to, and obviously buying a home would probably either be the main one or investing, understanding how their money works, knowing that there are other options out there as well.
Speaker 2:So, yeah, absolutely detrimental. So I think that the broker role with that means that again, obviously us being able to deal with so many lenders, it means that you're not just with the Commonwealth Bank because you've been with them your entire life and what the person in the branch said, who might be and no disrespect, obviously we've got a lot of friends that work in banks and a lot have come across to broker land as well. So sometimes you might have a brand new person in the branch who's looking after a client who's ready to make one of the biggest decisions and is told that they're unable to do it, and again people will take that on board and say, oh well, I can't do it, I can't do it. So another 10 years goes and down the track, that property is worth double and they've dismissed on a doubling asset.
Speaker 1:Really, and now brokers write the majority of loans in a shade, don't they?
Speaker 2:Yeah, it's well over 70%. So going back four or five years ago, even pre-royal commission around there, it was probably around 50, like low 50. So then, after the royal commission, it's now increased to over 70.
Speaker 1:And was that because of something that happened in the royal commission that increased the number of brokers?
Speaker 2:or it was a lot to do with the royal commission.
Speaker 2:It was a lot to do without the banks initially and holding the banks to account, and I think they had a couple of brokers that were pulled up at the very end of it and those brokers were made an example of. So I think some of the banks were actually trying to get rid of brokers at that stage or would have liked brokers to not have such a foothold in the industry too, and we're trying to obviously get clients to come more directly to them. And again, obviously if you're going directly to a bank, usually that's the bank you're using and you might not have other options. So by trying to get brokers out of the field, it means that people can't vote with their feet and go and look at other lenders.
Speaker 2:So the switching costs go up a lot yeah absolutely and it did backfire and there's a huge push, not just from broker businesses, but obviously you can imagine real estate agents as well going well hang on, if they're trying to get rid of brokers which it felt like that at the time. It's the first time in 20 years that I'd ever felt not vulnerable, but it really crossed because we know what we do for clients and how much we help them and how many people wouldn't buy if we weren't around. So we were really crossed, and I think the agents were too, because you can imagine them then having to send people to a bank to try and get a loan and they get to client and decline and decline. So, yeah, it was a big change from there and I think we had a huge push for brokers from consumers, because consumers want to use brokers. You want choice and you want to be able to find the best deal you possibly can and be guided through the process. So, yeah, there was really interesting times.
Speaker 1:It's such a no-brainer from my point of view, right, because not only do you save the time not having to work through the processes, all the processes, yourself, because you've obviously streamlined that whole thing, found the efficiencies, used the technology, you know how to make it all work, so you save the time figuring out what's already been figured out. That's number one. But the other part of it, what we touched on it before, is the increase in bargaining power, or leverage to your position. Number one to the bank, but also, as we said before, if you are putting an offering automatically, you're sort of viewed very differently. In that sense, and even just for that leverage, that changing bargaining power, it's worth it. I would never ask this question, I've never even actually considered it. But how did broken start More? Which broken, do you know?
Speaker 2:Yeah, a great question was when the industry was deregulated I think it was in the 80s Was Aussie or Rams? I think Aussie was probably the first aggregator as such who started then and then off the back of that, obviously it's just boomed.
Speaker 1:It's gone from there and so what is the revenue model for a broker? So how do you get paid? Because obviously it's not out of pocket for the person who's working with you, but obviously you need to get paid because it's a business. So maybe just talk people through how that whole thing works in the relationship with the banks.
Speaker 2:I think it's one of the best things, too, because sometimes we'll have clients that will actually come in or that we speak to and they say, oh, how much do I owe you for our advice or for helping them, especially in the initial stages, because you can spend a lot of time with people and sometimes we get people that pull out their wallets and I always have a bit of a giggle. I think it's gorgeous, because it's probably one of the only roles in the world where there's no fee for our service. Yet it doesn't mean you're paying a higher price for your product. So we actually paid by the banks for arranging the loans. So we get paid an upfront fee from the bank, which doesn't impact your interest rate, and we also get an ongoing fee for the life of the loan as long as our client is our client. So the whole idea with that is obviously that we look after our clients. We make sure that they're on a really good deal. We're trying to always get the rate down with the bank. We call that repricing and trying to reduce the rate, because sometimes the banks out of line with the RBA on the first Tuesday of each month. Sometimes they'll just increase their rates out of turn and they might increase at 0.1, 0.05. And then after a couple of years or after a year, that rate might be half a percent higher than it should have been.
Speaker 2:So it's also our role, then, because we are getting paid by the bank to look after the client, to be able to do a little top-up for them if they needed $20,000 increase, or to restructure, or if we're fixing, or just to be there for the client. But the great thing with that too is we're so contactable. It's not like you're having to call a bank and sit on hold and go through the process to try and get something done With small business. It's great because we can do it pretty much same day, on the spot, next day, whatever it might be. But and again, we take that stress away from the client. So not only are clients not paying fees, they're also getting really great service, and we're constantly trying to find them better deals as well and obviously structuring loans to make sure they're right for our investors. So, really, the fee is paid by the bank. The bank doesn't then have to have as many staff.
Speaker 1:Quite an interesting relationship, isn't it? Because you are reducing their overheads, they don't have to have as many folks in branches doing this kind of work. But then also it's kind of a love-hate relationship from their point of view, isn't it? Because you actually aren't beholden to them, you actually aren't their employee. They can't really control you. And actually for someone like yourself I know you actually hold a lot of bargaining power because of the amount of loans that you can write through someone as well. So I actually really like it. From a consumer's point of view, it really does balance the power out a lot, doesn't it? Because otherwise it's just literally old you versus the big bank.
Speaker 2:Yeah, absolutely. And the other thing after the Royal Commission. So for us, as I said before, we legally have to act in a client's best interest and that is to find them the cheapest. And, as I said before, sometimes people go I don't want the cheapest because it's with this bank, never heard of them, et cetera, whereas a bank they're not actually obliged to do that because it's just their own products and that's it. So it's a great power tool for us as well to be able to look after products.
Speaker 1:Do they not even have to tell you their cheapest product?
Speaker 2:No, I mean they can, they will, because they've only got a couple.
Speaker 1:It's kind of interesting, though, that you're legislated to, but they're not.
Speaker 2:Correct, because they've only got their own products. They can't make comparisons with other banks, so they can only give their own products and that's it, whereas we've got to pit 60 different lenders. You might just want a really good low basic rate without any bells and whistles, so we've got to compare all of those basic rates against all of those lenders and go this one's the cheapest, this one the second, this one the third, but this one's got really good internet banking if that's what you're looking for, so yeah.
Speaker 1:But even if they've only got like a few to sell a few different products, they're still not legislated to tell you what the best one is for you. But you are, you're like this is the best situation for you.
Speaker 2:Good question. I don't know. I'm assuming usually they've got like just a basic and a basic package and a fixed rate one, two, three, four and five year fixed rate.
Speaker 1:So it's assumed that you can make that decision for yourself, but you actually have to say this is the best one. Yeah, yeah, correct. What about yourself personally? So you've been in this industry for 20 years now. You would have seen the role that debt can play for folks with their own personal sort of wealth strategy. How do you think about it? How do you use it for yourself?
Speaker 2:Oh, I loved it because I've seen it as a vehicle to build wealth. But sometimes there's two in a relationship. So, for example, many, many years ago, my husband was incredibly conservative, so sometimes that can be not a battle, but you know, it's a two and fro going, I know, like in the finance world what we can do here.
Speaker 2:but he was more. I don't like debt, I don't want it. So I've sort of lived through that and it's been really interesting. So he trusts me, which is great, but being able to educate him along the way, and not in a patronizing way, but to be able to say, hey look, we bought that and now look where it is Like, so if you sold it now it would be worth X and that would be ours. If we tried to save that amount of money, there's no way we would have saved that much that that property increased in value by. So after he sort of saw that it was easier than to be able to leverage, especially for investments as well, and very much, I think people with investment properties getting in for your first home brilliant. You know the first home buyers that we see that bought. And it doesn't matter when people buy whether it's right now, it was five years ago or they're aiming towards that coming up. But I just think the sooner you can get into the market, the better with property.
Speaker 1:I'm really glad you kind of brought that up because I would assume it's a real pattern, right? You've got two different feelings about the word debt, and I guess it'd be very normalizing too, right Cause I think in every couple there's going to be different feelings about that. I've got a bit of a theory that you're feeling about debt. It's very much related to the kind of relationships you had growing up, you know. Is it traditional, is it coercive, is it you know what I mean? And is it controlling and cause?
Speaker 1:It can feel like debt is like that for you and you're like I don't want to be controlled, nobody's going to control me, that's not going to happen for me. I would definitely say that I would have fallen into that category. But the education part of it is critical because it starts to reframe how you actually see risk, and that's what we talked about the last episode. You see the risk as having debt, but then you actually understand the costs of not having debt in a debt based system is actually quite big, and that analogy that we gave is basically the folks that are using debt are actually using travelators and everybody else is running with baggage. So it's kind of hard but like, do you have any tips? Sort of working through that conversation with a couple, because you're 100% right, having both people on the same page and sort of pulling the same directions really important. What would your tips be there?
Speaker 2:I think you need to really like a mediator, not like a marriage mediator, but like a mediator. So so many times, you know, we'll have the conversation with the same person over and over and they're like well, my husband or my partner or whatever doesn't want to. I'd really love to buy a property, but they don't want to, and a lot of times that can be clients that are in actually a really good position but they're just too afraid to take a stab. So I think really being nearly like a mediator not trying to convince them, but having both of them in the same room is really important and then having the conversation of like understanding that somebody might be really uncomfortable with the thought of debt.
Speaker 2:So I've got one at the moment where I've got a female and they've got a tiny her and her husband, they've got a tiny little mortgage and they've got so much equity and she's on good income and he's self-employed and sort of on a lower income and he 100% does not want to do anything. I haven't spoken to him yet, I plan to, but she 100% wants to buy something. It's like, well, why can't she without him which she could or why can't we get him on board? But I think he just needs to be heard as well, like what his concerns are.
Speaker 2:He might be worried about his parents might have been in a similar position and then something happened, or so things can be in place to protect him and make sure that he's comfortable, and because you don't want them going to bed at nighttime, one's really happy and the other is just feeling sick because they've got this debt. You wanna make sure that people are comfortable and I think the more knowledge they have about debt and how it can work for them and how that might save them some tax or through depreciation with investment properties and how that can benefit their family.
Speaker 1:I'll be interested in your view on this, but one of the most important skills I think that we help folks with is actually to forecast the changes and actually to understand what it would look like and also do all the what ifs. So, for example, what if the rate hits this, this and this? You probably couldn't have taken debt on at a worse time if you just focused on rates than when I did, but I already knew what it would be in the worst case scenario and I knew we could cope with it.
Speaker 2:Yeah, 100%. I think you were adding on another, maybe three or 4%. Someone else was adding on none.
Speaker 1:Yes, I'm like I expect this is going to change and I know that if that happens, we're still going to be okay. Now we're coming up to that point, but also my situation hasn't stayed the same. So we've continued to grow and grow the business. So actually that margin has kind of actually gotten better. But I think that is actually a really important part of where you actually move, because the point that we make is that you're going to be forecasting anyway. You're just going to do an emotional forecast and you're going to just draw a line out into the future and go it's all going to be bad, it's going to be bad forever, it's going to suffer forever. So no, but we're like what about? We do a financial forecast and we look at okay, what do we expect to happen, what's the worst case scenario, but also what's the best case scenario? What would that look like and what choices would that mean for you? Do you have those conversations with folks as well?
Speaker 2:Yeah, absolutely, and sometimes it might be things around their superannuation as well. Looking at what people have made within their super within the last 10 or 20 years in a government role and then looking at their individual property as well and saying so, your property is actually made more in five or 10 years than your super did, or shares or whatever it might have been in the last 20. But 100% giving people a worse case, then you do get that a lot. When people say, well, should I buy now? Well, what if I lose my job? It's like, well, what if you don't lose your job? And if you did lose your job, you seem like a really highly inflatable guy. I think you're going to be fine. What's?
Speaker 2:the worst case scenario Go and do something else. So yeah, I do like the worst and best case.
Speaker 1:The what ifs. Going through every what if, I think is a very big one for resolving fear and just very irrational fear, because you can actually put it on paper and you actually look at it and you go what are the actual odds of that happening? And has that never happened? Not at all. And also I usually say to folks hey, can you name me one month in the last 10 years where you didn't make any money? And most people like no and I'm like but why are you acting like the money could all just dry up tomorrow? Is this an interesting feeling?
Speaker 2:Yeah, yeah, and I think a lot of it you were saying before about a lot of it is how you were brought up with it as well, like what your parents might have been like, or had they been in the depression or had they been through the recession and then how that impacts, or did they even talk about debt?
Speaker 2:Don't know about you, but back in, I know, with my parents, it's not a lot of times. It was like religion, politics no, they did talk politics with my sisters, but things like religion, those are the things that you don't talk about with other people or your finances. But I think now things have really changed and it's a much more a sharing environment where people want to know and they want to learn, whereas it used to be very hush-hush 100%.
Speaker 1:I want to just shift gears here for a sec, Even in this, for 20 years. So you're going to have a level of detail, nuance, insight and real, I guess understanding through the cycles that most folks won't ever have, and I'd imagine that you find yourself in a lot of conversations with people who have no any level of insight but are a lot more opinionated and sure of themselves than you are, and that's always the case when it comes to expertise. So the question I have here is what important truth about debt do you hold that most people who aren't you would disagree with?
Speaker 2:I think debt is good, 100% debt is good. I look at so many of our clients that without debt there's no way they would be in a position they are today. In a really simplified way if you're looking at buying a house for $500,000, if you try to save that money, even just to get a deposit and you took a long time, obviously to save the cash to get it the property has already gone up by potentially another $50,000 by the time you do it. So really, debt outruns savings in a sense, as in to speed it up, so it speeds up. It's the whole work smarter, not harder, I think.
Speaker 1:Yeah, the creation of money is happening faster than you can save it, basically, and the sooner you can get on the right side of that equation, the easier it all goes. I talked about the travelator before. If you want to be on the travelator, it's actually whether you're on, you've got debt or you don't have debt.
Speaker 2:Yeah, absolutely.
Speaker 1:To be honest, I don't love that, but that's actually just a world we live in. So you can either rail against the world and make the world try to fit and bend to your reality, or you can actually just play the card. You dealt basically. Yeah, absolutely.
Speaker 1:That's absolutely the way I see it as well. How do you coach family and friends to think about and use debt? So let's say someone's coming to you, maybe a niece or something like that. It's a first home and they're just a little bit afraid about it and they're just not quite sure. Like what are the most important speaking points that you get across?
Speaker 2:Probably a lot of them would be, for the first time, buyers and things like that.
Speaker 2:It's definitely around cash flow, which obviously you guys deal with daily, and about people understanding where their money goes too, as well. So if people do and I don't like the word budget your expenses, your living, whatever it might be, there's generally at least we find 10, if not 20% of people's income that are wasted on stuff that they didn't even know that they were wasting on it. So it's really about and people sometimes when I say balk at this but they might not be ready but it's about tracking what you're doing, Like actually track where your money is going so that you know where you're spending it and how much you want to be saving out of that and how much you're happy to be spending, to know where your money is going. Because if you're not tracking it and you have no idea, it's just people will spend what's in their bank accounts. So I think if you took out $50 from somebody's bank account every single week and they didn't know that you'd taken that $50 out, they're still spending exactly the same and it would feel the same.
Speaker 1:Yes, true, isn't it? It's actually you just being in cross. I remember you saying to me you guys have to spend more in A, b and C categories, because I can't remember what it was. But I was like you're not spending enough in these categories. You need to get this up a little bit because you're not sitting in the normal.
Speaker 2:Yeah, it was probably really low, which I would assume for you, because you're really good at these two and it might have been. You need to go out for dinner more often, or something.
Speaker 1:I think it was dinner. I was like we don't really do that much of that.
Speaker 2:Well, I suppose the other one on that too is and young people doesn't know they're younger, old, you know we've got first time buyers that were in their 60s and 70s. I think the other thing is, if people are setting a figure to be saving and putting away for a home, to not overestimate that figure, because then they'll start taking back. We've seen it before they start going, I can't, I need to take it back. And as soon as they start dipping back into that savings, it's like it's been broken.
Speaker 2:So we say, just start with a little bit and get used to it and then increase that.
Speaker 1:Increase that. Yeah, rather, start with a big number. Yeah, I love that. What do you wish all of your clients were doing before they came to see you? We just talked about tracking, but is there anything else?
Speaker 2:Probably and this is not a biggie so much anymore, but the banks used to go through people's bank statements with a fine tooth comb. Probably the main thing would be, when you're transferring money to other people, just be careful how you label it on there, because banks we read that, we read that. I don't want to see that.
Speaker 1:I reckon everyone does that too.
Speaker 2:Oh, look, I've had people blushing in the office before, where they just sit there and they say, oh my gosh, I can't believe she's reading through the statements that have that written on it. But no, look, it'd be probably about making sure that accounts aren't overdrawn.
Speaker 2:So banks don't like accounts going into overdrawn or mispayments a lot, because obviously they think that if they're going to give you a mortgage, then they want you to be able to pay those on time.
Speaker 2:The other one would be people's credit scores. So making sure that and usually the things for this are your credit cards any personal loans or mortgages that are always paid on time like within reason, but always paid on time, because if they're not, they can actually put that on your credit score and then that can impact the lenders that we can go to as well. Also, at the moment we've got a lot of people out there that are declaring hardship, which is 100% fine. With that, the hardship goes on people's credit scores. It stays on there for a year, but as long as people can then catch back up and they can show they've made six months consecutive payments with most banks, then it's still fine. So a lot of people are declaring hardship at the moment because they're finding it really tough for mortgage payments. But, again, a lot of people that were saying that are declaring hardship are actually on very good incomes and could pay their mortgage. There's plenty of dinners out still happening in there.
Speaker 2:So there's a lot of people that still have sort of pulled in their living expenses but declaring hardship. It's a strange one that, and COVID was an interesting time as well. We had people that had a lot of money sitting in the bank or they had a redraw and they declared hardship, thinking they might lose their job. They didn't, but they didn't want to change their lifestyle or their expenses.
Speaker 1:Yeah, be honest with yourself on that stuff. Yeah for sure. I want to get to the mistakes. So we talked about this at the top. This is going to be one of the most important decisions you'll make. It's a 30-year decision. There aren't many decisions with this kind of timeframe. You would have seen all these mistakes the predictable, the preventable ones so I want to ask you a question that kind of inverts this to help really pull out the knowledge and insights and the patterns that you've seen. We love this concept of inversion right. So just turn the thing around, find out what not to do so you figure out what you can actually do and what's really, really matters. So the question I've got for you here is if I wanted to make my life miserable, lose all my money or using debt the completely wrong way, what would I do?
Speaker 2:Credit cards, credit cards, credit cards, personal loans brand new cards, brand new cards, brand new cards they would probably be the main ones just personal, crappy debt.
Speaker 1:Yeah, let's quickly distinguish I know that this is probably very obvious to most people, but let's do it anyway what is bad debt and what is useful debt. Let's just say useless and useful debt.
Speaker 2:Yeah, I would say useless is exactly that credit cards, personal loans but the personal loans are usually there to consolidate the credit cards and then the credit cards didn't get paid out. So they ramp up again and then they've got a personal loan and credit card debt, car loans. I know it's hard. Obviously we live in Australia, so cars are a big part of people's image as well. But you could buy a 70 grand car or you could buy a 20K car. So I think even the money that's spent on cars. If people say they don't have any money, I'm like well, you're driving around in a 70K car, you could have done a 20.
Speaker 1:Yeah, let's take the first point, as I answer my question, as load up on useless debt. That's the first thing you'd do wrong. What else would you do wrong?
Speaker 2:Even the buy now, pay later. It's created this culture of I want it now, I'll pay for it later, which is really, I suppose, the old lay by, but a lot of young people have these and it is creating a I want it now, I don't get paid till next week, so it's just holding off the inevitable of down the track that can potentially snowball as well. Bad debts also your normal bills. If you're getting behind with your phone bills, or your electricity bills and things like that, well, that's all bad debt too.
Speaker 1:Yeah, so these are all bad debt. I'm also keen to really understand how people use useful debt the wrong way too, though. So when you see mistakes being made, I do want a mortgage, it makes sense for you to get a mortgage, but I'm doing it the wrong way. I'm doing it the wrong time. What are the big mistakes you're seeing when people are coming through with that?
Speaker 2:Yeah, okay. So with mortgages it would be continually consolidating debt after debt after debt. So it's all about debt like the bad debt going on to the good debt.
Speaker 2:So people might be going really well on their loan. They've been. They took out a 30 year loan term. You know they're down to 25 years and then they extend and put a car on it and consolidate that into the equity of their own home brand new car and then they keep paying the same repayments on their mortgage that they were paying approximately. So they only pay the mortgage repayment.
Speaker 2:So a lot of times we talk to clients about if you're putting a car loan on there, you need to pay an extra payment, otherwise it's really going to impact the term of your mortgage or the repayments. So I think consolidation of bad debt into mortgages so and this is something that's become really when I say popular, it's just become a lot of the norm where somebody might be paying their loan down. As I said, they've got 25 years and they're extending it back to 30 because of a car, instead of keeping it 25 years, putting the car on and paying additional to pay it down, because you can buy a car loan separately or you can take it onto the mortgage. So I think that's a big one.
Speaker 1:We're starting to see a real pattern here. Yeah, and the pattern I'm going to label it, you tell me from wrong is people just don't want to swallow the bitter pill. Yeah, they don't want to take the short term.
Speaker 2:Yeah, I want it now I'll deal with it later.
Speaker 1:Yeah Cool, all right, so that's the big one. You see sort of rolling bad debt into the mortgage and then the ripple effect of that being extending that loan term. Does that also impact your ability to get better rates later if you are trying to refinance? If they see that?
Speaker 2:Well it can, because a lot of the banks at the moment will give you a better rate for risk. So in other words, if you're at 95% lend, your interest rate is not going to be as great generally as somebody that's lending 60%. So if you're at 60, 70% and then you put a car on and you're at 80, you could have got a better deal at 60% or 70% than pushing up to 80. And also, if you're putting car loans onto your mortgage, it means that you might have wanted to tap into the equity in your home to either invest or for shares, or to do debt recycling or to buy an investment property and get cash out of your existing house to put towards it. But you've eaten into the equity in your home, so then you can't tap into that for good debt.
Speaker 1:Yeah, yeah, definitely. We've sort of been talking about that as well. When, would you say, the worst time is to go into debt? And I want you to think about probably life stage, life cycle, when you've seen that, when people have just got it wrong and they're like you know what, it's probably a good decision, but the wrong time to make this decision. Are there any patterns for you on that one?
Speaker 2:It can be. I think, probably when it's the wrong decision, it might be that it just put so much pressure on people. It always happens. You know, people want to buy a house, get married, have kids, and usually a lot of that's within the same period of time. So I think those really early days, like young couples who might have had one child, they've got one that's on maternity leave and have maybe bought a house but not have enough in the bank to really back them up, so they feel like they've got to go back to work and it becomes really stressful for them. I think at that stage.
Speaker 2:So we try and say to people you know, get in while it's the two of you so that you can start smashing the debt down if you're planning on having kids, and then reduce that debt so you're not having that pressure. Nothing worse than when you've got a baby. Or you know people are having children or building a family and all you're having to think about is gosh, I've got to go back to work because I've got to pay for this mortgage and my baby's a little and I want to spend that really important time with them. So I mean we can get loans for people that are on maternity leave. We can get loans for people that have just taken maternity leave or are taking it, so there's no issues with that loan side of it. It's really making sure that they've got a good bank of money behind them to get them through that period of time though as well, so that it's not stressful. Probably the other one would be friends buying with friends.
Speaker 1:Yeah, it's not so much a life cycle, but if you have two mates that buy with each other.
Speaker 2:They're tied together until that property is gone. So if then they meet somebody and they meet somebody, then for them going and buying something separately just becomes that debt is all of their joint debt in a sense, and it impacts their borrowing capacity as well. So and it could get messy.
Speaker 1:That's interesting because there's a new incentive, isn't there? The government wants to make it easier for people that aren't in relationships to team, like I thought it was. This is a horrible idea. It's just going to add to demand, but the wrong kind of demand.
Speaker 2:Yes, well, it's interesting you say that we've had one client, so that just came out recently. They're being able to buy with a parent and a child or whatever it might be as long as their first home buyers, in a sense. But we did have two friends that came to us very recently who we were about to get a loan for, and then now they're not talking.
Speaker 1:So Imagine that happened a month after they got the loan.
Speaker 2:I know. So we're a hundred percent the strike rate on that one at the moment. So I'm a bit cautious about that, because you do see the tail end of when they have come back in the past and making sure there's legal agreements as well. So you want to make sure there's something legal and binding If I want to buy you out, if you want to buy me out, if I get a partner. You know how that works. So yeah, it can get messy.
Speaker 1:So one of the worst times to buy debt is when you think the only way you can get debt is by going into it with a friend.
Speaker 2:Your best friend. That's a red flag.
Speaker 1:Don't do that.
Speaker 2:Yeah, who's not going to be your best mate later? Yeah.
Speaker 1:So I think there's a lot of news at the moment that it's very doom and gloom at the moment. Interest rates are up and property is going to create. On all this sort of thing, how do you guide people through thinking about that sort of macro environment, monetary policy, and how much should they be thinking about, or, I guess, bringing that into their thinking, versus, if it makes sense for you this stage and you can do it, you should just do it. What's your view on that? Do you have one?
Speaker 2:Yeah, a hundred percent. I think we obviously talk about if rates go up. You know, if you buy now and if rates go up, this is what it could look like worst case scenario or not worst case, because you don't know what they might go to but from all accounts, it seems like you know 2024, now they'll be reducing, stabilizing, dropping, whatever it might be. I think having those conversations with clients is really important, but I think at the moment, for people that are getting right now, well, this is the norm. So if you can afford it right now, you're a hundred percent over people that took rates when they were two and now can't afford it.
Speaker 2:So but again, I think it really comes down to people changing their lifestyle and we're so used to having this pretty and especially, you know, the cash from COVID that was left and people traveling and wanting to do overseas holidays, and I think we're saying recently that restaurants and cafes money is still being spent there. They're not reducing as far as I know. So people are still out and about. I know at our work we've got a whole lot of women and every day there's a probably a package of clothing coming to the door or Uber Eats. I think stop eating.
Speaker 1:Is that the workaround? Is it Send it to my work, not my home? So I've had it. I often tell my wife about that one.
Speaker 2:I love it. I go sneaking in the back door. I'm blaming them for the rates. Like I said, it's your issue. You stop spending money on Uber Eats and clothing getting delivered.
Speaker 1:CBA's research shows it's all the over 65 spending more because they got no mortgage. They love it.
Speaker 2:That's right. Maybe they need to hand it to the kids as an early inheritance. We're seeing more of that too actually. Exactly yeah.
Speaker 1:One here for you on fixed and variable right. So for me it's kind of a financial principle that you get paid for volatility over time. So if your ability to handle uncertainty, you really usually get a return on that and you should expect a higher return than dealing with less uncertainty. Now when you're talking about dealing with a variable weight, you're basically saying, oh, ride the rates wherever they go Now, over time it would make sense that you would pay less over the last of a loan because things are cyclical. But what does the actual research show? And what have you actually seen? Is it better, like, if you're really just trying to maximize or minimize the amount you're going to pay, do you just say look, go, variable, ride the roller coaster, you'll be just fine? I know it's a very personal decision, but if I'm trying to optimize for the least, what do you do?
Speaker 2:Really good question. So if I said to you, go variable and rates went through the roof, then I'm in trouble. If I say to you, lock it in and rates drop, I'm in trouble. So unfortunately I can't advise on that one. Look, from what I've heard, studies show that the banks always went on fixed. I don't know there's something within the industry.
Speaker 1:we've always heard they went on fixed. Yeah, that makes sense.
Speaker 2:I've got nothing to back that up. I didn't do the study, I just heard it. But I think what's probably really important about that is we see a lot of people that go if rates rise, I can't deal with it, so I'll lock it in. And even if that rate was higher the fixed rate was higher than the variable they'll take the higher rate because they just want certainty, and I think that's a lot of. It is about having the certainty, knowing that I'm okay If rates go up for the next four years, I'm done, doesn't matter.
Speaker 1:You know it's funny is I remember that you quoted me on a fixed rate. When we got into mine I was like, oh, that's a fairly long way up, isn't it? I'll just I'll ride them. And I was like, if I lock that in? No, no, no that wasn't you. That was me going. Yeah, it's not going to go that far, I'll figure it out Even between now and then. Then just races went, boom. I was like well, I did model for them to change. But like this far, this fast, pretty unprecedented.
Speaker 1:It's been a bit of a shock, but yeah, it is interesting.
Speaker 2:Yeah, it is, it is. And again, crystal ball. We know as much as you, without Terry, like rates weren't supposed to rise until next year, remember? So hopefully we get a surprise next year.
Speaker 1:Yeah, that's what I say. The same people that are telling you that rates are going to be higher for longer, or the same people that told you they're going to be lower for longer.
Speaker 2:Yeah, totally.
Speaker 1:So, Raoul, how would you get the best out of your broker? If you're working with a broker, what is the best thing you can do to get the best out of them?
Speaker 2:Definitely everything upfront. So all of the information, no matter if you sort of think that it might not be important. You know things about previous credit or what you're looking at doing we really clear about what you're looking to achieve.
Speaker 2:I'll also ask your broker what sort of services they do offer, like, what does your broker do for you? Is it just the loan or is it part of the buying process as well? I think there's a very big difference between brokers these days. So definitely finding out what your broker can do for you to help you in the buying process be organized. So if you're putting an application in and you need documents, the faster like as soon as documents come into us they're straight to the bank, but sometimes it might be and I get it. I'm probably the same sometimes with my own stuff, because my own stuff comes last, but just being really timely with stuff that's needed for the bank, because the banks have queues sometimes and the longer you're sitting in that queue, the longer it's going to take. So the quicker you can get things back to them, the better.
Speaker 1:Yeah, love it. Hey, this has been really, really helpful to go through this with you. I've just got a couple more questions, more so on advice for a couple of different types of folks in the market at the moment, or looking at getting into the market or sort of really thinking about this decision. How would you advise or what would you say to the folks who are worried that right now is a bad time? I really do want to get into my home, I really want to do it to get a mortgage and take some debt out and get involved in this, but I think it's a bad time. What would you say to that person?
Speaker 2:I actually feel like it's one of the best times at the moment. So this is probably the most when I say stable, that it's been for quite a long time and we haven't seen a huge jump. We definitely haven't seen a drop, not where we are at the moment, and there's plenty of demand. So we're finding first-time buyers that are going out at the moment are pretty quick to pick up properties, which is great. We've got a lot of people up sizing as well. I'm actually finding it's a really good time for buyers. I feel like it's buyers market at the moment and you've got a lot of investors in the past that might have over extended or they might have a few investment properties and they've made obviously good money off those. So they're getting rid of those at the moment and it's again more on the market. So more stock or more supply? I think yep, 100%, and now's a great time to get in. I would say.
Speaker 1:I'd tell you what, if I had and we weren't just going all in on the business at the moment and I had an extra 100 grand I'd be doing that.
Speaker 2:I know, are you getting all itchy feet?
Speaker 1:I seriously am. We were going to talk about in the episodes to come. But you look at the drivers of demand. They haven't gotten worse, I've gotten more, and then we're at the top of this interest rate cycle, or at pretty close to the top. The only material way that they can go is down, and so if prices are here now, where are prices going to be?
Speaker 2:Absolutely. We've got total shortage of housing. You're looking at rentals and the builders that have sort of disappeared and less homes are being built, but we've got a larger population and just increasing, so people are going to live somewhere.
Speaker 1:And if you're the kind of person that can get a loan now you don't have the competition that you did have you actually just waltz in, have your pick of the crop and you know that if you are making 10-year decisions, you can actually feel pretty confident in that. If you're trying to trade property, you're always going to deal with it.
Speaker 2:Yeah, there's something you just said there about getting in and maybe 10 years, but it doesn't have to be your forever home. So if you can't afford to buy this home over here, but you can do this one here and you're comfortable in that, you can always turn it into an investment down the track or you can sell it at up-size if you need to, when you're in a better position or at a higher you know, more income or whatever it might be. So it doesn't have to be forever home, it just needs to be. You just need to get in.
Speaker 1:Love that. What about for the people that are feeling the pinch right? So for the folks that board in, the rates have gone up. We work with a bunch of these guys and it's across the board. You know. Everything's got more expensive, not just the mortgage. Food is an absolute joke. What's your advice to these folks? I've got my mortgage and now I'm feeling the pinch.
Speaker 2:Yeah, so hopefully the mortgage broker or who they're dealing with, so you can do re-pricing on your loan. So a lot of times, if you've had your loan for even more than six months, generally even a year, then you're paying higher than you should be. So you can look at refinancing, trying to get a better deal. If things are tight, you can. Sometimes, if affordability in the bank size is still there, you can sometimes revert your loan, if things are really tight, to an interest-only loan, which is just meaning you're paying minimum but you're keeping up with your payments. You can put a hold on your mortgage if you needed to, depending on how dramatic things were. The banks will let you do.
Speaker 2:Even though you might not be in hardship, you can potentially do a hardship application and they might do interest-only for you for a period of time or stop payments for you for a short period of time so that you can bank up some cash. They sometimes will put it onto the end of the loan, though, so you're paying it back at some stage. Definitely, checking you're normal everyday bills as well. There's lots of companies that can help you. We've got access to one as well where they can actually save you money on your existing bills. So whether it be check your insurances, just rechecking all of those things, your phone bills, that sort of stuff, and trying to reduce costs where you can, there's a lot of culling that you can just do within your own household generally.
Speaker 1:What about perspective too? Just sort of zooming out right, because we're pretty good at zooming in on and just it's like what is now is what it will always be. So the pressure, the pinch that we're feeling right now, it's almost like we're kind of going well, it's going to be like this forever, and we catastrophize it when reality is like it is cyclical, it's just like rates go up, rates come down. How do you give folks that kind of perspective?
Speaker 2:I think it's around being really optimistic as well about the following year ahead, Like it has been a really tough 13, 14 months with rates rising, and it's a shock, but it's because it's happened every single month and it's happened over a really short period of time, which I've only seen probably. I've seen one other time in this industry and that was around the credit crisis, when rates flew up. I think we got up to about 9.5% and then within a month or two, they crash back down and then from that stage it's been dropping ever since until now. So I think, just making sure that the affordability is there the further now, not worrying about what's happening in the future and you can't control what's going on anyway so you've just got to deal with what you've got at the moment, but I don't have doom and gloom for 2024.
Speaker 2:Ford, I think it's going to be a really good year, and especially for property, and hopefully rates drop again. So and again going through what you were saying before worst case scenario what will you sell? Worst case scenario you lose your job. Okay, you'll get another.
Speaker 1:You'd hope so yeah, at this episode recently, we said everything you fear is based on one idea, which is whatever happens, I can't handle it. And I'll say exactly what I said in that episode. If you're listening to my voice right now, literally everything in your life that's happened to you you've handled, so there's zero evidence you can't handle it.
Speaker 2:Yeah, totally I love that, that's great.
Speaker 1:This is important, right? So last one here for you, and this is probably more a bit of a selfish one for me I mean, really working with you and just seeing the business that you've built, I consider it, you, to be a real exemplar and a model for us, and we're in this phase where we're sort of really aggressively investing and growing, and you've probably been here and done this right. So this is a question for you, but it's actually just as much for me and anybody else in business who wants to build something worthwhile. What advice would you give your younger self as a business person?
Speaker 2:Say yes to the things that scare you.
Speaker 2:I think it's the only way, and I still do that now. You know, I always say I've got this motto where it's really around, people will ask me to do things like this. Today, you know, will you do it? Yes, 100%, I'll do it. And then later I'm like but I think, by saying yes, it just wouldn't be a position where you have to follow through and you have to do it. So there's many things over the years that I've been asked to do and I just say yes, and there's things I never thought I would have done.
Speaker 2:I remember getting up and speaking in front of a crowd a long, long time ago and I was petrified. And now I do. You know, like the great debates on the loan market stage at the conference amongst I don't even debate, I don't even know how to debate, but as much as I hate it, I also love it as well, because it's challenging myself. So you grow more. Therefore, I grow as a leader for the business and for our team, which means that that helps my staff as well. Doesn't matter how scared you are, just go. Yes, I think that's probably one, and the other would be get the right people around you, or have good mentors, or good, even mentors, but people that you can reach out to to ask different questions, and it might be about HR, or it might be around techs, or it might be around you know, your book work or whatever it might be. But having the right people and if they're not the right people, don't hold on to that Like, try and find somebody really quickly that can help you and that you gel well with.
Speaker 1:Yeah, amazing. Hey, thank you so much. This has been such a good conversation and I said to you at the start of this I would love to get like this episode, to be something where you're like literally everything I have to share in this face is all condensed to this one episode. Just listen to it. How did we go? Do you reckon we got there? I?
Speaker 2:think we did pretty well. I think there's so much to cover in this, isn't? There, I know you've got lots more to go, lots more podcasts, but hopefully people get something out of it and it's been great too, Thank you.
Speaker 1:Give us a quick handoff. Where can people find more out about yourself and loan market and the good work that you guys do?
Speaker 2:Oh look, if you just Google loan market Geelong, we will come up. You'll see our reviews and how good we are with our clients, and hopefully you can be one of them too. There's lots of amazing mortgage brokers around, so we can work all around Australia too, so which is great now after having everything done remotely, so it doesn't matter how far or wide we can be available to help you with any questions you have.
Speaker 1:I think that's the best thing about COVID right. It's just normalised that you can actually work with anyone anywhere, so you find the best people, not just the people in your location.
Speaker 2:Yeah, absolutely yeah.
Speaker 1:Amazing. Thank you so much, Sarah. I really appreciate it and hope to talk to you soon.
Speaker 2:Thanks, harry, have a good one, cheers.