February 20, 2026 • 41 mins
If you're declaring yourself as the bank of mum and dad, you'll need to have some conversations with your children about what they can afford - and what happens if that changes.
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Speaker 1 (00:05):
You're listening to the Weekend Collective podcast from News Talks b.
Speaker 2 (00:31):
Yes, welcome back to the Weekend Collective. I'm Tim Beverage,
or welcome in if you've just joined us. This is
the one roof radio show. We want your calls on
eight hundred eighty ten eighty text. When I say we
want your callse we want you to join the conversation.
So with your reckons as well. So right property, you
want to buy a house, whether it's your first home,
you might be helping your child buy home, or you're
(00:53):
getting into the investment market. One of the first things
is to figure out how much you can borrow, and
how much the bank reckons you can borrow versus how
much you think you can borrow, because sometimes I think
people have been quite freaked out when the bank will say,
well it you have this, and you go, my goodness,
that is a big loan. So looking into that whole
thing about what you can afford to spare of every
month and the possible life changes and all that sort
(01:14):
of thing. But also if you're declaring yourself as the
bank of mom and dad, you have to have some
conversations with your children about what they can afford and
what happens with if that changes? So, yeah, what are
those conversations that you have had as a parent with
your children when it comes to lending them money to
get started or maybe even just saying, look, you can
(01:34):
put the loan under our name. What are the conversations
you've had? And if you're on the other side of
that equation, if you are the children of parents who
become your sort of benefactors, then you know, how how
did you approach that? How did you set those rules
and work out because you know, all of a sudden
you've got your older parents who've lent you some money,
and the last thing you want to do is get
(01:55):
yourself in a situation where you know things haven't turned
out so well. So anyway, we want to know your
thoughts and your stories. On eight hundred and eight ten
eighty text nine two and joining us. He is managing
director of Opez Mortgages. His name is Pete Peter Pete Norris,
and he's with us for the one roof radio show
(02:16):
good a Pete here you.
Speaker 3 (02:17):
Yeah, good good, Thanks for having hey.
Speaker 2 (02:19):
How often how common is the bank of mum and Dad?
Speaker 4 (02:22):
Oh?
Speaker 3 (02:23):
Super common, very very common for particularly for first time
buyers get into your first places becomes harder and harder
as property values increase and interest rates play their part
as well. So banker mum and dad comes into play
more regularly than you think.
Speaker 2 (02:37):
How now it's so easy to say banker mum and dad.
It's like I just got a bank of mum and dad.
That's great, But how complete plex is it in the
mortgage scene when you are organizing, you know, borrowing, because
you would have to you know, the bank has to
know how everything's been guaranteed and land and everything. I mean,
if you've or can can parents some parents just go listen,
(02:59):
you need a couple of hundred thousand that's in your
bank account bomb where you go, well, yeah.
Speaker 3 (03:03):
I mean some can, right. So there's multiple different ways
that Bankamuma dad can come into play. They could give
you cash like you've just said do, or they could
put up their house as collateral to effectively increase your
equity going into it. Or they could guarantee your loan.
But what the bank's looking for is they're wanting to
(03:24):
know that if your parents are guaranteeing that debt, that
they can also afford it, right, Because sometimes parents they
may not be working, they may not have that income
source that they wanted to get themselves into that position,
and so them being a guarantee might not be that easy.
So there's multiple ways that can work.
Speaker 2 (03:39):
How where does it sit in your role as a
you know, as a mortgage advisor, do parents need to
get separate advice on this stuff because you know, the
consequences of something going wrong can be pretty serious.
Speaker 3 (03:55):
Yeah, definitely. The role of a mortgage advisor in that
space is to is to You've got two sets of clients.
You've got the parents as the bank of mom and dad,
and you've got the kids as the as the borrow
the main borrowers, and making sure that both parties are
protected through their process is important.
Speaker 2 (04:10):
So if the parents aren't working, so if they're retired,
and that would be reasonably common. I imagine that the
parents are actually retired, so they've got no income, but
they've got one hundred percent equity. How does that work?
I guess the question of the children's income is the
big pivotal thing, isn't it.
Speaker 4 (04:25):
Yeah?
Speaker 3 (04:25):
Absolutely, So what we would look to do is we'd
look to minimize the parents exposure, so we would minimize
the amount of debt that is on the parents home
in order to get them out of it as quickly
as possible, and maybe it must have been using two banks,
So one bank for the parents home and one bank
for the new property for the kids, so that.
Speaker 2 (04:44):
Like two actual different commercial banks.
Speaker 3 (04:47):
Yeah, two completely different banks, so that the parent's exposure
is just with one bank and that way, once that
debt's gone, they're out of it, rather than them guaranteeing
effectively the whole loan.
Speaker 2 (04:58):
Okay, you can't set that up separately with one bank
or that the bank wouldn't make that easy.
Speaker 3 (05:05):
Wouldn't be wanting to separate that across secure?
Speaker 2 (05:07):
Okay does that affect? I mean, but that's still seem
is that still problematic with the bank. For even if
you've got two separate banks, each wants to know what
the others sort of?
Speaker 3 (05:20):
Oh, absolutely, you've still got to You've still got to
make sure that both banks are aware of what's going on.
But you want to make sure that each bank, the
bank that has the kids home, doesn't have security over
the parents home as well, just to protect the parents,
to make sure that if they're you know, they've worked
hard their whole life to get into the position where
they can help their kids. Yeah, you want to make
sure that they get out of that as quickly as possible.
Speaker 2 (05:39):
Ah, well, that's probably a good I mean not wanting
to to suddenly do an advertisement for you guys, but
but that is a very good reason why you'd have
a broker. You wouldn't just talk to a bank. In fact,
you'd almost be you, you'd almost be to me, it
seems almost compulsory you did go through a broker, wouldn't you.
Speaker 3 (05:54):
Yeah, absolutely in that space. As I said, you want
to make sure the parents are getting good advice to.
Speaker 2 (05:58):
What are the so, what are the How does it
work when when you're using the bank of mum and dad,
how does it work in terms of paying off them? So,
if you've got so you've got two different banks obviously
every I mean, the kids probably want to pay off
mum and dad's support in whichever what's given. But let's
that's the security over their home. How does it work
(06:20):
out in terms of paying it off? Because if it's
separate banks, the bank that's leaning to the kids is
not interested in how fast they're paying off the other bank.
They want their money as well.
Speaker 3 (06:30):
How does it work, Yeah, definitely. So that's where that
advice piece comes in and making sure that the parents
loan is paid off quickly. So what you might do
is you might minimize their repayments that are going on
to the loan where the kid's property is and inflate
the payments that are going off the parents loan to
get rid of the parents loan as fast as possible.
Speaker 2 (06:46):
So, right, you do a thirty year mortgage on one
and a ten year mortgage on the other.
Speaker 3 (06:50):
Potentially, Yeah, something like that.
Speaker 2 (06:51):
Yeah, Okay, what sort of conversations do you get? Do
you end up getting caught up in the thick of
it when it's when you're talking about parents and kids
learning and conversations when everyone wants to play nice and
you're doing because you love you children. But then there's
the common sense, in the cold light of day, we
have to have some serious conversations.
Speaker 3 (07:10):
How do you Yeah? Do you know what? It's interesting
It really depends on the parents background. If you find
that one of them has a bit of a business background,
then it's quite common that they'll take a bit more
of a business mindset into that transaction, so they might
set up a bit more of a formal agreement, whereas
someone that doesn't maybe have a business background, we'll just
(07:31):
go in there more in a handshake agreement. And so
the role of the advisor is to actually make sure
that you're having those conversations. But it's quite common to
have parents set up sort of formal arrangements and have
it all documented and then of course they're getting legal
advice in the background.
Speaker 2 (07:45):
Well, some parents, I mean, I've heard I have heard
of arrangements where it's not as it's not as charitable
as you think, because the parents want if they for instance,
if the parents are lending money, well they of course
maybe they need that income anyway, if they've got if
they're lending money to their kids, they might be charging
a rate of interest because they might just give them money,
(08:09):
but make it a loan, a secured loan that's as
opposed to just having security on your existing property.
Speaker 3 (08:16):
Yeah, exactly, when it can be a great way for
parents to it's actually yeah, I mean they could they
could give the kids some money and charge that interest
and there works a bit a cash flow for them.
Speaker 2 (08:26):
Actually, that seems because there's a part of there's a
part of you that sort of thinks, oh, that's about
cold and ruthless of mum and dad. But then again,
if they need income, then that's actually doesn't seem like
the dumbest thing. Of course, if they're if they're if
they've got the cash to spare, I guess. But if
they unless they're loaded, they probably do need a return
(08:46):
for that money they've contray, exactly.
Speaker 3 (08:47):
And yeah, unless you are loaded and you can just
let goard to hundred ku early on, then then you
kind of need that revenue and so to good way
to get it to win win.
Speaker 2 (08:55):
Yeah, Hey, just before we carry on with this, I
meant I meant to mention this at the start because
we had the o CR announcement this week and the
first appearance of Anna Bremen the well, not the first appearance,
but it's her first announcement of the cash rate one.
Were you surprised and what did you make of the
whole shebang?
Speaker 3 (09:12):
Not surprising terms of the outcome, the staying put at
the two point two five, I think that's the right call.
But I thought she made herself seem pretty sensible, a
bit more conservative than the previous one, had a few
less cracks at the media, and.
Speaker 2 (09:26):
She didn't have any cracks at Yeah.
Speaker 3 (09:30):
Yeah, so I thought she set herself up well and
gave I think market a little bit of confidence.
Speaker 2 (09:36):
Yeah, what do you make of it for the future
going ahead, because I mean some people were saying economists
are saying, well, you know, they're worried that she might
not recognize she might be the last time they went
late and hard, and she was asked that. In fact,
I think Tony Alexandra and maybe even brad Olsen was
saying questioning whether that was a possibility. But I heard
her being challenged about that, she said, well, we will
(09:57):
respond to the data as it comes in. I thought
she sort of sounded quite cool, calm and collected on that.
Speaker 3 (10:03):
Yeah, I totally agree with that for that, Yeah, for
a much calmer approach. I think that we'll see, as
I said, the market respond, and we already have seen
them respond. So much about what happens post ocia announcement
is what's said as opposed to what's done and how
it's said, and I think that we've seen I can
respond already.
Speaker 2 (10:20):
So oh, by the way, you can text your feedback
and I'll give us a call on your feedback on that.
But while we are talking about the bank of Mum
and Dad as well, because it's all interest rates. It
all hinges around the cost of money and what you
can afford. Give us a call on eight hundred and
eighty ten eighty. Actually I don't, I'll dive straight into
the texts here Pete. So there's a text from Marsia saying,
(10:41):
I'm being the bank of mum and Dad for my son.
But what can I do if they break up and
she takes half? And I can't Oh, oh, this is
a tricky one. I don't read the first part of
this text. So he says, what kind of if they
break up and she takes half? And it says and
I can't bring it up because they're so in love.
(11:05):
But I'm older and wiser, and I know things are
never guaranteed. I mean, you know, it's all very well
to celebrate love, but what do people do in that situation? Because, yeah,
you're right, it might be you know, Sarah's mum and
dad who are lending for Sarah and Dave, but you
know they're not sure about Dave.
Speaker 3 (11:25):
I think in that sense, it doesn't matter how how
sure of it you are, You've got to go into
it eyes wide open. And if you're lending someone money,
make sure you get those agreements in place, right, and.
Speaker 2 (11:36):
What sort of agreements do you actually get and how
does that look?
Speaker 3 (11:39):
So most of the time, if one parent is lending
the money in for a couple, then that respective child
would get that money out first in the event of
a sale or a separation or something like that.
Speaker 2 (11:50):
And you just simply legal to assure that.
Speaker 3 (11:53):
And that's for me. I would say, that's essential, and
actually the banks would almost.
Speaker 2 (11:57):
Okay, So it's not actually that complicated. So it sounds
like Mars hasn't gone through with that yet.
Speaker 3 (12:03):
Yeah, No, just get the legal vice to make sure
there's a lawyer included, because a good lawyer will insist on.
Speaker 2 (12:08):
That, because yeah, I mean, the other thing is that
the only thing that gets split in half is the equity.
Is that what you actually own separate to what you owe.
So it shouldn't be a hard one to split that
one out.
Speaker 3 (12:20):
Mars, No, exactly, his child should get the money bakfast.
Speaker 2 (12:23):
Maybe what Mars is worried about how to have the conversation.
Just make a joke of it. Just say, by the way,
you could make a joke. I reckon. What you do
is so he's worried about his son. All he could
do is he could say, look, I'm protecting my money
just in case my son turns out to be a
rap bag. There you go. Then you're not blaming anyone,
(12:44):
well though you might have anyway, What's how have you
managed the whole conversation around either borrowing money from your
mum and dad or lending money? If you are mum
and dad to your kids, you've got any questions on
how to structure it? Any questions around that? Peter Norris,
Pete Norris, He's managing director of Opez Mortgages, will be
(13:04):
taking your calls in just a moment. It's nineteen and
a half past four. News Talk said b. This is
the wonder of radio show. My guest is Peter and
Iris's managing director of Ope's Mortgages and the bank of
Mum and Dad. Your experiences, your questions, give us a call.
I weight one hundred and eighty ten eighty Greg.
Speaker 4 (13:20):
Hello, Yeah, Hi Tim, How are you good? Thanks?
Speaker 5 (13:24):
Oh?
Speaker 4 (13:24):
Sorry, I catch your It's Pete. It's Pete, Pete, Pete sorry, Pete. Hey,
Look about twelve years ago I had a horrible m
split up with my wife and suddenly found myself a
follow father had to sell the house to get rid
of the business, and suddenly found myself with no money.
First time I haven't had a house. So I was
(13:44):
very lucky that my parents could afford to give me
a deposit on a new house. But the way we
do that, there is a legal notes against the house
for the eighty thousand dollars of If I sell the
house then they get the eighty thousand dollars back. And
because we had two I've got two sisters, and as
they died before I sort of sell it, then the
(14:05):
eighty thousand dollars comes off the well, if it makes sense.
So I'm so lucky to have parents that could afford that.
Because this is twelve years ago. Just before the house
passed was week mad, you know, and we're only talking
a four hundred thousand dollars house. And if they hadn't
done it for me, I don't know where I'd be today.
You know, I'll be atternally grateful to my parents for that.
Speaker 2 (14:26):
What was the conversation who brought it up? Was it
a conversation where you approached them or they said, look,
you know we want to help grieve. You know, we've
got to get you back on your feet and get
in going again.
Speaker 4 (14:36):
What happened a bit of both, so they could see
that I was, you know, suddenly my wife essentially left,
and because I had the custody of the two boys,
and it was it was really difficult. There's no way
I could save a deposit. I was actually still playing
off some of the debt in the old business that
I hit to wind up. So they could see that
I was struggling. So we just had we had a
(14:59):
Sunday meal one night, and we sort of the subject
came up and and you know, how are you going?
And U going a little bit and yeah, I don't
know how I'm going to be up to afford a house.
And then they sort of suggested that maybe this is
a way around it, so I didn't ask if such. Yeah.
So so again, just can't tell you how grateful I
had my mom and dad.
Speaker 2 (15:20):
How much are they? Sorry? Did you say they're still around?
Speaker 6 (15:23):
Yeah?
Speaker 4 (15:23):
Still around?
Speaker 5 (15:24):
Yep? Yep?
Speaker 2 (15:25):
And how and how how has it panned out? Can
you see you bought it before everything went mad? So
are you how things going now?
Speaker 4 (15:32):
Oh?
Speaker 5 (15:32):
You're great?
Speaker 4 (15:32):
So We're still in the house. It was an old
it was the only house that we could afford on
the block. It was a truck are rapper and number
hand him in. So I'm ten years into a five
year innovation. You can image. You can imagine have a
new wife these days too, and we have a now
a little girl at home, so still living in the
same house.
Speaker 3 (15:53):
And have you managed to buy the pay your parents back?
Speaker 4 (15:57):
No? No, so I still couldn't because then my wife
actually gone back to do an education degree. So we're
on one wage these days. Mum and dad had made
clear that they don't need the money, okay, so it.
Speaker 2 (16:07):
Can I mean, it can be sorted out in the
fullness of time.
Speaker 4 (16:10):
Which exactly exactly if we do sell the house and
they immediately get that money back which is a legal document,
or if they pass away it gets taken off.
Speaker 2 (16:20):
You know what, I think your parents, your parents have
done exactly what every parent really wants to be in
a position to do for their kids, isn't it. I
mean it's you know, and to.
Speaker 4 (16:29):
Be honest, because they've done this for me, there's a
chance that I might be able to do this for
my kids now too. Yeah, you know they gave me
such a hand up that it's source generational money only
saves about eighty thousand dollars, but you know the house
is some revalue since oh well.
Speaker 2 (16:43):
That was twenty percent of a four hundred thousand dollars house.
I mean, you know you're away.
Speaker 4 (16:49):
Yeah, exactly right, you're right, so good stuff. I'm very fortunate.
So I hope other people as lucky own.
Speaker 2 (16:56):
Yeah, I'm good on you, Greg, Thanks for thanks for
your call, mate, all the best. Actually, we've got a
text here just before for an next call. It a
quick question lending to children. I'm not sure if this
is from a parent or from a anyway, it says,
I presume it's a lower interest rate. Well, what approach
the parents take to charging interest to their kids? To
(17:18):
the children?
Speaker 3 (17:20):
That's It'd be different for every parent, but generally most
parents will be looking to get something around what they
would get if they put on a term depositor, or.
Speaker 2 (17:30):
Unless they've got so much money that they don't care,
in which case they're you know, and nothing.
Speaker 3 (17:36):
Yeah, exactly exactly, but somewhere around either that. The floating
rate or similar fixed rates would be pretty common for
most parents to want it you know, a fear return.
Speaker 2 (17:46):
Actually that that's actually probably better than you'd get at
the bank anyway, isn't it. So if you're getting the
if you're lending it as a mortgage, yaw, I can
never remember which is which the mortgage as a mortgage,
as a lender, who's the mortgage, who's the always it's
always round the other way, I remember. I think the
mortgage is the bank, isn't it? And the mortgage jaw
is Oh god, I can't remember anyway.
Speaker 3 (18:09):
I just want to know that you confuse me.
Speaker 2 (18:14):
But anyway, it's the that would almost be better than
being in the bank. Actually you sort of it's a
win win unless you know.
Speaker 3 (18:20):
Yeah, well, I mean I should not blur this into
accounting any any form of accounting. But the interest you
earn on the it's income, yeah, on the term deposit
would be taxed. Whereas that if you potentially sit it
up in a way where you don't pay on the
loan to your.
Speaker 2 (18:38):
Kids, how would you set that up?
Speaker 3 (18:40):
Well, like I said, I don't want to blur into.
Speaker 2 (18:41):
Account Okay, okay, what about says, yeah, you lend the
money to the kids, it's palable on demand. That keeps
it safe from a kid's partner, can be called up
anytime or never, says Jane, Well, that's a tricky one, actually,
I don't think. I mean that's I don't think that's
an ideal situation where it's repalable on demand, because I
(19:04):
mean that that would be I don't know. I just
feel it needs to be a loan that's made and
everyone understands that it's not on someone's whim that this
gets called up.
Speaker 3 (19:14):
Yeah. Absolutely, the legal advice is really the way to
go that having a legal document, the one that the
last caller mentioned in terms of maybe having the parent
have a caveat or something over the property so that
they have some form of security as well as a
really sensible way to do it. Yeah, it gets a
little bit more complicated when there's multiple kids involved as well.
He mentioned he had a couple of siblings. So then
(19:36):
if the parents do it for one, do they have
to do it for the others? And so then you've
got to work out, well, if you can afford to
do eighty k for one, can the parents afford to
two hundred and forty k in total for three? So
then it gets a bit blurry as well, so those
legal things are even more important.
Speaker 2 (19:50):
Well, actually probably, And the other thing that's important is
the conversations, isn't it Because there might be you know,
there's one sibling who is more needy and the others
are fine. Because you know, life's not even, and some
siblings can be very comfortably off and others might need
the help. Then you need to have a conversation so
everyone's gosh, because this sort of stuff can drive wedges
(20:11):
and family if you don't get it right.
Speaker 1 (20:12):
Yeah.
Speaker 3 (20:13):
Absolutely, Money money talkers is sends people off their ocers.
Sometimes you think everything's going along smoothly and suddenly bring
up money, and it's.
Speaker 2 (20:22):
Do you witness that yourself? And as you know, with
the job you do as a mortgage advisor.
Speaker 3 (20:28):
Probably not so much in terms of intero sibling conversations
because we'd just be dealing with one party and I'm
sure there's a lot really goes on in the background
when there are multiple siblings.
Speaker 2 (20:37):
Do you advise the parents about that? Do you actually say, listen,
you need to make sure you've had a good conversation
with everyone in the family. Do you leave that for
them to make up their own minds? And you just
stick to your knitting.
Speaker 3 (20:45):
So our role is to make sure they're getting independent
legal advice.
Speaker 4 (20:48):
Yeah.
Speaker 3 (20:48):
What happens is as part of that advice is over
to the lawyer.
Speaker 2 (20:52):
Okay, okay, so I'm not sure we like the pablon
demand thing, but anyway, talk to a lawyer. Now there's
another one here, Tim. We gave our kids two hundred
thousand dollars each for their first no strings attached. Didn't
want any legalities to get involved as its family. Okay,
we're pretty well off so it was possible, but we
still felt it. Well. Yes, thanks for sharing that, Doug.
(21:17):
I know what to add to that.
Speaker 3 (21:18):
Good on your Doug. You've obviously worked hard, done well.
Speaker 2 (21:20):
Yeah. Hey, the other question is around the whole borrowing
thing that I wanted to talk about. Is regardless of
whether it's a banker of mum and dad, the question
about how much you can borrow. Obviously, if you can
get a mortgage of your own to buy the house
that you want, you don't need the bank of mum
and dad unless they just in the position where they
can just give you some money to make it easier.
(21:42):
But the thing that struck me when we first started
looking and This is going back a little while was
finding out how much money the bank would lend us.
It didn't frighten me. It really made my eyes widen
because I couldn't believe what they thought we could afford.
And working out this is how much the bank will
lend versus how much you really you know, how do
(22:04):
you approach that with sis?
Speaker 3 (22:06):
Yeah? How much? How much people can afford? As really
comes down to two things. One is what the banks
is they can afford, and one is what real life
says that they can afford. And if they're not demonstrating
that they can service the more ridge or or having
regular savings. And you've got to have that conversation because
the bank will come to you and say, at the moment,
based on where bank policy and interest rates and everything is,
(22:29):
you can borrow sort of six or seven times your
income potentially even more, which is quite a bit.
Speaker 2 (22:35):
If you're double income. Yeah, that's a huge amount. And
how often do you find people max themselves out as
card they need to have every cent that the bank
will end.
Speaker 3 (22:48):
Thankfully, Thankfully, with our clients, we don't see that also often,
but we are having those conversations with them regularly, and
you know, sometimes they will really push themselves. But then
you've got to figure out what happens off interest rates.
It's all well and good that interest rates now you know,
loads of mid fours, But what happens if they get
back to where they were two years ago at seven?
Speaker 4 (23:08):
Yeah?
Speaker 2 (23:09):
Well, I remember years ago a friend game of the advice,
and I don't know if it would have changed very
much for me if I had to borrow again, but
he said, look, you should always budget to be able
to pay back eight percent, which sort of maybe takes
into account the fact that you might want to have
a life outside of just paying your mortgage off. Yeah,
what do you do.
Speaker 3 (23:28):
You definitely I think that being able to withstand interest
rates going up.
Speaker 2 (23:33):
Yeah, what's the bank test rate these days?
Speaker 3 (23:36):
Between six and a half and seven percent? Okay, Whereas
back when, you know, not that long ago, when interest
rates were seven, they were testing at nine. So those
test rates have fallen quite a bit.
Speaker 2 (23:45):
I'm always amazed that the test rates changed so much.
I would have thought that because the test rates dropped
at one stage, but it seems that they were sort
of so attached to the to the fortunes of their
ocr which doesn't make sense to me. Shouldn't it the
test rate be the worst case scenario if the bank
want to protect.
Speaker 3 (24:02):
Its Yeah, it's a good argument. The stress test. The
idea of a test rate is to stress if interest
rates go up, but you're really at the moment they're
stressing at a rate that was not that long ago.
Speaker 2 (24:13):
The rate I know. That's why I don't understand. Well.
In other words, that's an example of why you wouldn't
want to trust just the banks stress test rate that
you might.
Speaker 3 (24:23):
Want to check, you know, stress it yourself. Yeah, definitely.
Speaker 5 (24:26):
Yeah.
Speaker 2 (24:26):
What are the things that people fail to take into
account when it's when it comes to budgeting for these things?
Or is it a feeling? You know? Other tools for
doing a really effective budget on how much you can afford?
Are they pretty good these days?
Speaker 3 (24:37):
No, There's a lot more that comes into buying a
house than just the loan repayment. I think sometimes the
mistake is you look at the loan repayment and say, well,
the interest rates five percent, I can afford that. We're
all good, But one is what happened? Different streates increase,
You've got a factor that in, but then there's more
costs that come along with owning a house than just
simply the interest or of the home, loan, cost rates, insurance, maintenance.
(24:58):
What happens of you know, you spring a leak and
you get a plumb around and suddenly you need some
continue to climb.
Speaker 2 (25:06):
Yeah, look, we love you, love your calls. Eight hundred
eighty ten eighty. We've been talking about the bank of
Mum and dad. Primarily what conversations did you have with
your parents or with your children if you were using
that mechanism to help one of one or the other
of you get into a house on eight hundred eighty
ten eighty. But also what did you how did you
go about working out how much you could borrow versus
(25:29):
how much the bank would actually let you borrow? And
were they two different figures, because I'd imagine for many
people they'd be like, well, you know what, some people
to get into a house, they need every cent in
the bank will lend them, which means, you know, it's
it's going to be tough going eight hundred eighty ten
eighty text nine two nine two. We'd love to hear
from you. It's twenty five minutes to five. This news
(25:49):
talks to beyond tim beverage with Pete and Irris talking
about the bank of Mum and Dad and actually you've
had quite a few texts just about the whole payable
on demand. This person says tim pable on demand means
that if you split up, your parents would get paid
back after the bank before you split any profit. But
you've got a better way. It's basically what is that
The usual terms.
Speaker 3 (26:09):
Are, Yeah, I mean the most common way we see
is it's payable if the property is sold.
Speaker 2 (26:13):
So if the property is sold, then that's job done.
So if they split up on the property, I guess, okay,
here's a different version of that. If and this is
where the legal gets in. And I know that that
you don't want to get too legal things. But if
the property isn't sold, but the other the other person
has got under you know, the separation agreement, gets to
(26:35):
keep the house. That's when you I guess you'd need
to have a clause that if the relationship breaks up,
you just say it's repayable instantly off the.
Speaker 3 (26:45):
Yeah, I think all of this comes back to just
a right have something in place.
Speaker 2 (26:51):
Yeah, that's right. But the payable I mean it is
I mean, there is a nuance in that, so yes,
get legal advice from these things, of course, Nigel High.
Speaker 5 (26:59):
Hi, how are you? Yeah? Actually given my kids my
as my younger one, I gave him two hundred and
fifty K allowing him to buy a house. This was
about ten years ago. He'd saved over a hundred thousand himself,
and I was pretty disappointed, you know, that he'd saved
all this money. So then you.
Speaker 2 (27:21):
Were disappointed that he'd saved money.
Speaker 5 (27:24):
Well, no, disappointed that the houses he couldn't buy into.
Oh he'd saved one hundred and thirty. But he wasn't
a high income earner.
Speaker 2 (27:31):
Oh okay, so the banks would only lend him so much.
And you so you stepped in.
Speaker 5 (27:36):
So I stepped in, and then of course we have
this horrible world that's changed us. I have another son
who's lives with a young lady. So that's all become
and I've said, look, not a worries. It comes out
of my assets or a state. And he's at the
moment decided to rent and just take the money when
(27:59):
I finally go. And that's fine with me because really
having an opportunity to step up, why and I've seen
it so often in my family. People hold on to
their money right to the bitter end, and of course
by that time their children are in their late fifties
or sixties, and they actually needed it earlier. So and
(28:26):
to go along with the other one, my son, with
the all those strange interest rates going all over the place,
I did exactly that. I took out his mortgage and
paid him the same rate that I would have got
at the bet.
Speaker 2 (28:44):
Charged in the same rate.
Speaker 5 (28:45):
Yeah, charged him well less tax obviously, So he's very happy,
and I'm very happy. I still get the same return.
And we were new it every six months.
Speaker 2 (28:55):
So as long so have you given you? Basically you've
given children different amounts of money in different ways. So
one's taken at the by house, the other one's just
going to rent. You'd be concerned about the one who's
just renting, wouldn't you just taking the money?
Speaker 3 (29:08):
Well, he hasn't got the money. He said that he's
going to take that.
Speaker 5 (29:12):
Yeah, he just doesn't have the focus on raising a deposit.
And I'm not just sort of going to go give
money away because to buy a house you need a
bit of hurt money. I mean, I remember back in
the old twenty two percent interest rates. First mortgage, second mortgage,
third mortgage. You had to work hard.
Speaker 2 (29:33):
That's punishing back then, wasn't It was that in the eighties.
Speaker 5 (29:36):
That was nineteen when we're buy our first house nineteen
eighty two, and we had three mortgages. The first one
was twenty two, the next one was nineteen, and the
next one I think was something a bit higher than that. Look,
it's all crazy times, but to me it's simple enough,
as if your child works hard to get a deposit
(30:00):
or attempt to deposit, help them out. But in my
wills I've got and my wife's will, we actually have
a dedicated spot that the other son is not let out.
He gets the first amount and both sons know and
they're quite comfortable.
Speaker 4 (30:17):
Yeah.
Speaker 3 (30:18):
I think you've raise a really good point that parents
who are in in ther kids money, they want to
make sure the kids are good for it, you know,
make sure that they're demonstrating some good habits and as well,
if they haven't demonstrated any habits of saving or looking
after themselves, then maybe maybe giving them some money not
the way to do it.
Speaker 2 (30:33):
They've got to be a bit of hurt money.
Speaker 3 (30:35):
Yeah, Like thet.
Speaker 5 (30:36):
It's always going to be some hurt money and that
makes a very strong and strong person who pays back
their mortgage. It looks after the house and my youngest
so many I said, look, if you don't make it
as your money goes first, I get my money back.
Speaker 2 (30:53):
Yeah. Well, you're probably doing them a favor too, because
easy come, easy go is not a cliche for no
good reason.
Speaker 5 (31:00):
Is that now we've all done that.
Speaker 2 (31:05):
Thanks Nigel, We'll good on you. M actually, gosh, I
mean that that is one of those things where you know,
ideal everyone wants to get an easy ride, but I'm
not sure it nearly does your favor in the long term,
does it?
Speaker 3 (31:16):
No? No, differently not. And I think that the kids
need to be going and I don't hurt money approach.
It's a really good one.
Speaker 2 (31:23):
Yeah, Mary, Hello.
Speaker 6 (31:26):
Hi, how are you good?
Speaker 2 (31:27):
Thanks?
Speaker 5 (31:28):
Hey?
Speaker 6 (31:29):
I just wanted some advice. And my son and his
partner split a bitt or nine years ago. He didn't
have the money to buy a rail. It was about
eighty five thousand, so he asked us could he borrow
some money, and so me and my husband still working,
so we said gae. So he borrowed maighty five. Then
he came back and borrowed and borrowed and borrowed and borrowed.
(31:52):
So I said to him, I've got to write this
down because you might meet somebody in the future and
where the money going. So he said yea. So I
wrote it all down and we went to a and
he came with us, and we put down to the
bottom on the condition that he sells his house. So me,
(32:13):
my husband, and my son signed it in front of
a JP. Now, he got married three years ago and
his wife is not very nice. So when we came
back from our holiday just before Christmas, we noticed his
house was up for sale. Okay, and we rang them
(32:33):
and his wife sticked and she said, you'll get nothing back.
You've got no proof, You've got nothing, and she hang up.
Speaker 2 (32:40):
Okay, Well, it sounds like you need sounds like you
need to get along to a lawyer. I think, Mary,
I'm not sure what advice we can give you on.
Speaker 3 (32:46):
Definitely sounds like a lawyer rather than I'm always broken.
Speaker 2 (32:49):
But I think if there's a house involved and there's
money involved in it's a cautionary tale that you have
to get legal advice and get your interest registered if
you want that money back.
Speaker 3 (32:59):
Yeah.
Speaker 2 (32:59):
I mean, if there's anyone listening, I think, ah, yeah,
we're not too wide. But if you can afford to
lose it, then fine. But there's that question. You might
be happy to lose it to your child, but would
you be happy to lose it to their partner who's donty?
Speaker 3 (33:11):
Yeah, that's a good point.
Speaker 2 (33:12):
Yeah, anyway, Tim payable on demand? Oh no, sorry, I've
read that one already. My husband and our I are
in our late fifties in age. We have a freehold
home value to eight hundred and thirty. We're thinking about
upgrading a home, which would require a potential mortgage of
three hundred k. We're both on good incomes. Oh, this
(33:32):
is just a mortgage question for you, Pete. Do the
banks consider age when lending?
Speaker 3 (33:38):
Yeah? Absolutely, agent stage comes into it, and ultimately, all
they're looking to make sure is that you can service
the mortgage through to retirement and then what happens after that,
how that dick get paid?
Speaker 2 (33:47):
Yeah, so they're talking about eight hundred and thirty and
they want to have a potential three hundred k.
Speaker 3 (33:54):
Yeah, I mean if they're on good I mean I
think they've also mentioned that they're on good income. So
they should be able to set it up in a
way that they pay that off before they stop working.
If they're in their fifties.
Speaker 2 (34:02):
Yep, where you go? Yeah, but yeah, go and talk
to bank or to ops mortgages. In fact, you know, right,
what else have we got? What advice do you have
about borrowing interest only for as long as a bank
will agree usually usually these days it's a max of
three years. Do people realize that on a long mortgage,
very small amounts of principle, very small amounts are repayment
(34:23):
of principle for a long time. It's just to balance
it out, isn't it. What's the different? I mean, in
the first few years of your mortgage, you just about
our interest only, aren't you?
Speaker 3 (34:31):
Yeah, for about the first ten years, I think it is.
I mean, it depends on what the purpose of the
house is. If you're buying an ownderoccupied, the banks will
limit how much you can have on interest only, and
they'll keep that quite short. Some banks are two years,
some banks are three years. If you're buying an investment property,
they'll push that up to about ten years. So it
really does depends on what the purpose of the property is.
But if it's underoccupied. You should be paying down principle
(34:53):
sooner rather than later.
Speaker 2 (34:54):
Yeah, In fact, it can be a bit of a trap. Actually,
if you have been enjoying a certain lifestyle and you're
an interest only it can be a bit of a
shock when the bank says, right, it's time to start
paying the principle.
Speaker 3 (35:03):
Well, and at the end of the end of the
interest only period, the remaining principal term is whatever the
initial one was minus the interest only so that can
be quite short and over the last couple of years
with it's pretty hard to increase that interest only term,
so it can catch you out, especially in a rising
into straight environment. So yeah, look, I mean pain damn.
Principle is not a bad thing.
Speaker 2 (35:23):
No, Right, we'll be back in a moment. The Property
of the week is next. It's in Hamilton this time,
and it's well all most about properties of the week
are special. I think we only had one which was
a bit of a dog, but it was only a
dog because it was surrounded by commercial property and we're
just curious with the value of what that house would
be once it's sold. But this one has got a
(35:44):
beautiful view of the Waikato River and we're going to
get into it in just a second. With the Property
of the week. This is the one roof Radio sho
I'm Tim Beverage. It's twelve minutes to.
Speaker 1 (35:53):
Five, the one roof property of the week on the
Weekend collective.
Speaker 2 (35:59):
Yes, one roof property of the Week. In fact, it's
been trying to work out if it itself has the
views of the Waikata River, but it is. I'll give
you the address if you want to Google it. It's
three on the one roof side. It's three oh one
River Road. There's the clue. Claudland's in Hamilton City. Now
it's five bedrooms, so plenty of space for your family
(36:19):
or your visitors as well, two bathrooms, two bathrooms, three
car garage and the house is basically three hundred square meters.
It's two ninety eight let's be just to be accurate,
land of seventeen hundred square meters and it's built in
nineteen twenty. And look, I guess as an Auckland do
you always look at the price and go man, it's
I mean, it's not cheap, but it's not super expensive either.
(36:42):
It's got an estimate of one point seven three million,
so it's it is, you know, on the on the
edge of the river, with a quite an elevated position.
It's what's described as a character home, private with it's
got a great entrance way, a beautiful driveway heading in
a beautiful leafy setting. I don't know how to describe it.
(37:03):
It's one of those sort of weather board with the
orange sort of tiles, and it's yeah, nineteen twenties. What
do you how would you describe it? Peinte op, Hang
on a second, I just switch on your microphone now.
Speaker 3 (37:15):
Yeah, I mean it's got a huge amount of character,
A really big fan of the entrance, the driveway into
that into the big old sort of almost kind of
Villarisque type problem.
Speaker 2 (37:25):
That's slightly slightly bigger, and it's certainly the way it's
been photographed. It looks very looks like a very tall house.
What do you notice when you look at a house?
What are the things you look for? Because you were
mentioning you have been looking around a little bit, But
what are the things you notice? For instance, I always
go to the I have a quick look at the outdoors,
and then I'm always interested in the kitchen. I don't
(37:48):
know why.
Speaker 3 (37:48):
Yeah, i'd say, my wife's probably more interested in the kitchen,
but it's definitely an important part of the house. You know,
when you're entertaining, having having people around the kitchen is
an important one. I'm a big fan of the high
ceilings in this one, looking at those kinds of you
know that character villa. Those big high ceilings make that
feeling big.
Speaker 2 (38:03):
It is three stories, isn't it.
Speaker 3 (38:05):
It's two stories, I think, is it?
Speaker 2 (38:06):
I'm trying that looks like down below from the external
it depends you enter on one level and it's two stories.
But then you go around the other side and it
looks like the land drops away and there's squeezed another
level in there. But I can't really you need to
go and walk around it. And let's be honest, I mean,
if you want it, interested in it? Going of a
look it is again three oh one River Road, Claudlands.
(38:29):
What did you make of the price for it?
Speaker 3 (38:31):
Wow, I'm clearly in Auckland because I thought I looked
at it and thought that's a lot of house for
one point seven Yeah, it is a lot of house.
Speaker 2 (38:38):
Water views yeah, actually, yes, correction, there is a lovely
view from one of the sort of verandahs on the
top floor. And it is a gorgeous it's a gorgeous
setting absolutely and well established trees as we know all
along the banks of the Whitecatto River there. Look with
that about just a couple of minutes to go at Pete.
What's is there a moral of a of a tail
(38:59):
when it comes to parent lending to their kids. I
think probably it came from that corner. Don't just give
it to them and expect to get it back unless
you've said you expect to get it back.
Speaker 3 (39:09):
Yeah. Absolutely, To be honest, I think it the most
started with the first message in I think the the
moral of the story is get some advice and make
sure that the parents are protecting their whatever money's going in. Yeah,
and don't expect everything to always be rosy.
Speaker 2 (39:24):
No, But like Mazza's call, you know, if you don't
think the relationship is going to last, but look, you
just need to set it up legally, because that's what
all sensible people do. If you're worried about offending people
about whether you know your son or daughter's marrying the
person that's not going to last, just dress it up
as we're going to do this legally. Because that's just
the way you do things.
Speaker 3 (39:41):
I guess, yeah, don't leave, it's a chance.
Speaker 5 (39:43):
Yeah.
Speaker 2 (39:43):
And by the way, I people want to get in
touch with you at Opia's mortgages. How do they do that?
Speaker 3 (39:48):
Oh, they can do that via Opus Mortgages, doc co,
dot and ZED would be the website and on there
you find them all the teams details.
Speaker 2 (39:54):
Excellent. Hey, good to see them mate. Thanks, thanks for
coming on. We will be back shortly because we're going
to have it. The big tech discussion continues. We see
it in the unfolding in the courtrooms with Mark Zuckerberg
giving evidence recently in the suit against Meta and the
other big companies, and we're going to talk about big
tech safety and whether, in fact social media harm is
(40:15):
inescapable unless we isolate our children. That's going to be
the topic of conversation. Dr Maniche Deva is going to
be with us. He's the co host of the One
Young Mind podcast and also a pediatrician, and he'll be
joining us shortly. It's just gone four minutes to five.
This is News Talk s EDB.
Speaker 1 (40:57):
For more from the weekend collective, listen live to News
Talk SEDB weekends from three pm or follow the podcast
on iHeartRadio,
You're listening to the Weekend Collective podcast from News Talks b.
Speaker 2 (00:31):
Yes, welcome back to the Weekend Collective. I'm Tim Beverage,
or welcome in if you've just joined us. This is
the one roof radio show. We want your calls on
eight hundred eighty ten eighty text. When I say we
want your callse we want you to join the conversation.
So with your reckons as well. So right property, you
want to buy a house, whether it's your first home,
you might be helping your child buy home, or you're
(00:53):
getting into the investment market. One of the first things
is to figure out how much you can borrow, and
how much the bank reckons you can borrow versus how
much you think you can borrow, because sometimes I think
people have been quite freaked out when the bank will say,
well it you have this, and you go, my goodness,
that is a big loan. So looking into that whole
thing about what you can afford to spare of every
month and the possible life changes and all that sort
(01:14):
of thing. But also if you're declaring yourself as the
bank of mom and dad, you have to have some
conversations with your children about what they can afford and
what happens with if that changes? So, yeah, what are
those conversations that you have had as a parent with
your children when it comes to lending them money to
get started or maybe even just saying, look, you can
(01:34):
put the loan under our name. What are the conversations
you've had? And if you're on the other side of
that equation, if you are the children of parents who
become your sort of benefactors, then you know, how how
did you approach that? How did you set those rules
and work out because you know, all of a sudden
you've got your older parents who've lent you some money,
and the last thing you want to do is get
(01:55):
yourself in a situation where you know things haven't turned
out so well. So anyway, we want to know your
thoughts and your stories. On eight hundred and eight ten
eighty text nine two and joining us. He is managing
director of Opez Mortgages. His name is Pete Peter Pete Norris,
and he's with us for the one roof radio show
(02:16):
good a Pete here you.
Speaker 3 (02:17):
Yeah, good good, Thanks for having hey.
Speaker 2 (02:19):
How often how common is the bank of mum and Dad?
Speaker 4 (02:22):
Oh?
Speaker 3 (02:23):
Super common, very very common for particularly for first time
buyers get into your first places becomes harder and harder
as property values increase and interest rates play their part
as well. So banker mum and dad comes into play
more regularly than you think.
Speaker 2 (02:37):
How now it's so easy to say banker mum and dad.
It's like I just got a bank of mum and dad.
That's great, But how complete plex is it in the
mortgage scene when you are organizing, you know, borrowing, because
you would have to you know, the bank has to
know how everything's been guaranteed and land and everything. I mean,
if you've or can can parents some parents just go listen,
(02:59):
you need a couple of hundred thousand that's in your
bank account bomb where you go, well, yeah.
Speaker 3 (03:03):
I mean some can, right. So there's multiple different ways
that Bankamuma dad can come into play. They could give
you cash like you've just said do, or they could
put up their house as collateral to effectively increase your
equity going into it. Or they could guarantee your loan.
But what the bank's looking for is they're wanting to
(03:24):
know that if your parents are guaranteeing that debt, that
they can also afford it, right, Because sometimes parents they
may not be working, they may not have that income
source that they wanted to get themselves into that position,
and so them being a guarantee might not be that easy.
So there's multiple ways that can work.
Speaker 2 (03:39):
How where does it sit in your role as a
you know, as a mortgage advisor, do parents need to
get separate advice on this stuff because you know, the
consequences of something going wrong can be pretty serious.
Speaker 3 (03:55):
Yeah, definitely. The role of a mortgage advisor in that
space is to is to You've got two sets of clients.
You've got the parents as the bank of mom and dad,
and you've got the kids as the as the borrow
the main borrowers, and making sure that both parties are
protected through their process is important.
Speaker 2 (04:10):
So if the parents aren't working, so if they're retired,
and that would be reasonably common. I imagine that the
parents are actually retired, so they've got no income, but
they've got one hundred percent equity. How does that work?
I guess the question of the children's income is the
big pivotal thing, isn't it.
Speaker 4 (04:25):
Yeah?
Speaker 3 (04:25):
Absolutely, So what we would look to do is we'd
look to minimize the parents exposure, so we would minimize
the amount of debt that is on the parents home
in order to get them out of it as quickly
as possible, and maybe it must have been using two banks,
So one bank for the parents home and one bank
for the new property for the kids, so that.
Speaker 2 (04:44):
Like two actual different commercial banks.
Speaker 3 (04:47):
Yeah, two completely different banks, so that the parent's exposure
is just with one bank and that way, once that
debt's gone, they're out of it, rather than them guaranteeing
effectively the whole loan.
Speaker 2 (04:58):
Okay, you can't set that up separately with one bank
or that the bank wouldn't make that easy.
Speaker 3 (05:05):
Wouldn't be wanting to separate that across secure?
Speaker 2 (05:07):
Okay does that affect? I mean, but that's still seem
is that still problematic with the bank. For even if
you've got two separate banks, each wants to know what
the others sort of?
Speaker 3 (05:20):
Oh, absolutely, you've still got to You've still got to
make sure that both banks are aware of what's going on.
But you want to make sure that each bank, the
bank that has the kids home, doesn't have security over
the parents home as well, just to protect the parents,
to make sure that if they're you know, they've worked
hard their whole life to get into the position where
they can help their kids. Yeah, you want to make
sure that they get out of that as quickly as possible.
Speaker 2 (05:39):
Ah, well, that's probably a good I mean not wanting
to to suddenly do an advertisement for you guys, but
but that is a very good reason why you'd have
a broker. You wouldn't just talk to a bank. In fact,
you'd almost be you, you'd almost be to me, it
seems almost compulsory you did go through a broker, wouldn't you.
Speaker 3 (05:54):
Yeah, absolutely in that space. As I said, you want
to make sure the parents are getting good advice to.
Speaker 2 (05:58):
What are the so, what are the How does it
work when when you're using the bank of mum and dad,
how does it work in terms of paying off them? So,
if you've got so you've got two different banks obviously
every I mean, the kids probably want to pay off
mum and dad's support in whichever what's given. But let's
that's the security over their home. How does it work
(06:20):
out in terms of paying it off? Because if it's
separate banks, the bank that's leaning to the kids is
not interested in how fast they're paying off the other bank.
They want their money as well.
Speaker 3 (06:30):
How does it work, Yeah, definitely. So that's where that
advice piece comes in and making sure that the parents
loan is paid off quickly. So what you might do
is you might minimize their repayments that are going on
to the loan where the kid's property is and inflate
the payments that are going off the parents loan to
get rid of the parents loan as fast as possible.
Speaker 2 (06:46):
So, right, you do a thirty year mortgage on one
and a ten year mortgage on the other.
Speaker 3 (06:50):
Potentially, Yeah, something like that.
Speaker 2 (06:51):
Yeah, Okay, what sort of conversations do you get? Do
you end up getting caught up in the thick of
it when it's when you're talking about parents and kids
learning and conversations when everyone wants to play nice and
you're doing because you love you children. But then there's
the common sense, in the cold light of day, we
have to have some serious conversations.
Speaker 3 (07:10):
How do you Yeah? Do you know what? It's interesting
It really depends on the parents background. If you find
that one of them has a bit of a business background,
then it's quite common that they'll take a bit more
of a business mindset into that transaction, so they might
set up a bit more of a formal agreement, whereas
someone that doesn't maybe have a business background, we'll just
(07:31):
go in there more in a handshake agreement. And so
the role of the advisor is to actually make sure
that you're having those conversations. But it's quite common to
have parents set up sort of formal arrangements and have
it all documented and then of course they're getting legal
advice in the background.
Speaker 2 (07:45):
Well, some parents, I mean, I've heard I have heard
of arrangements where it's not as it's not as charitable
as you think, because the parents want if they for instance,
if the parents are lending money, well they of course
maybe they need that income anyway, if they've got if
they're lending money to their kids, they might be charging
a rate of interest because they might just give them money,
(08:09):
but make it a loan, a secured loan that's as
opposed to just having security on your existing property.
Speaker 3 (08:16):
Yeah, exactly, when it can be a great way for
parents to it's actually yeah, I mean they could they
could give the kids some money and charge that interest
and there works a bit a cash flow for them.
Speaker 2 (08:26):
Actually, that seems because there's a part of there's a
part of you that sort of thinks, oh, that's about
cold and ruthless of mum and dad. But then again,
if they need income, then that's actually doesn't seem like
the dumbest thing. Of course, if they're if they're if
they've got the cash to spare, I guess. But if
they unless they're loaded, they probably do need a return
(08:46):
for that money they've contray, exactly.
Speaker 3 (08:47):
And yeah, unless you are loaded and you can just
let goard to hundred ku early on, then then you
kind of need that revenue and so to good way
to get it to win win.
Speaker 2 (08:55):
Yeah, Hey, just before we carry on with this, I
meant I meant to mention this at the start because
we had the o CR announcement this week and the
first appearance of Anna Bremen the well, not the first appearance,
but it's her first announcement of the cash rate one.
Were you surprised and what did you make of the
whole shebang?
Speaker 3 (09:12):
Not surprising terms of the outcome, the staying put at
the two point two five, I think that's the right call.
But I thought she made herself seem pretty sensible, a
bit more conservative than the previous one, had a few
less cracks at the media, and.
Speaker 2 (09:26):
She didn't have any cracks at Yeah.
Speaker 3 (09:30):
Yeah, so I thought she set herself up well and
gave I think market a little bit of confidence.
Speaker 2 (09:36):
Yeah, what do you make of it for the future
going ahead, because I mean some people were saying economists
are saying, well, you know, they're worried that she might
not recognize she might be the last time they went
late and hard, and she was asked that. In fact,
I think Tony Alexandra and maybe even brad Olsen was
saying questioning whether that was a possibility. But I heard
her being challenged about that, she said, well, we will
(09:57):
respond to the data as it comes in. I thought
she sort of sounded quite cool, calm and collected on that.
Speaker 3 (10:03):
Yeah, I totally agree with that for that, Yeah, for
a much calmer approach. I think that we'll see, as
I said, the market respond, and we already have seen
them respond. So much about what happens post ocia announcement
is what's said as opposed to what's done and how
it's said, and I think that we've seen I can
respond already.
Speaker 2 (10:20):
So oh, by the way, you can text your feedback
and I'll give us a call on your feedback on that.
But while we are talking about the bank of Mum
and Dad as well, because it's all interest rates. It
all hinges around the cost of money and what you
can afford. Give us a call on eight hundred and
eighty ten eighty. Actually I don't, I'll dive straight into
the texts here Pete. So there's a text from Marsia saying,
(10:41):
I'm being the bank of mum and Dad for my son.
But what can I do if they break up and
she takes half? And I can't Oh, oh, this is
a tricky one. I don't read the first part of
this text. So he says, what kind of if they
break up and she takes half? And it says and
I can't bring it up because they're so in love.
(11:05):
But I'm older and wiser, and I know things are
never guaranteed. I mean, you know, it's all very well
to celebrate love, but what do people do in that situation? Because, yeah,
you're right, it might be you know, Sarah's mum and
dad who are lending for Sarah and Dave, but you
know they're not sure about Dave.
Speaker 3 (11:25):
I think in that sense, it doesn't matter how how
sure of it you are, You've got to go into
it eyes wide open. And if you're lending someone money,
make sure you get those agreements in place, right, and.
Speaker 2 (11:36):
What sort of agreements do you actually get and how
does that look?
Speaker 3 (11:39):
So most of the time, if one parent is lending
the money in for a couple, then that respective child
would get that money out first in the event of
a sale or a separation or something like that.
Speaker 2 (11:50):
And you just simply legal to assure that.
Speaker 3 (11:53):
And that's for me. I would say, that's essential, and
actually the banks would almost.
Speaker 2 (11:57):
Okay, So it's not actually that complicated. So it sounds
like Mars hasn't gone through with that yet.
Speaker 3 (12:03):
Yeah, No, just get the legal vice to make sure
there's a lawyer included, because a good lawyer will insist on.
Speaker 2 (12:08):
That, because yeah, I mean, the other thing is that
the only thing that gets split in half is the equity.
Is that what you actually own separate to what you owe.
So it shouldn't be a hard one to split that
one out.
Speaker 3 (12:20):
Mars, No, exactly, his child should get the money bakfast.
Speaker 2 (12:23):
Maybe what Mars is worried about how to have the conversation.
Just make a joke of it. Just say, by the way,
you could make a joke. I reckon. What you do
is so he's worried about his son. All he could
do is he could say, look, I'm protecting my money
just in case my son turns out to be a
rap bag. There you go. Then you're not blaming anyone,
(12:44):
well though you might have anyway, What's how have you
managed the whole conversation around either borrowing money from your
mum and dad or lending money? If you are mum
and dad to your kids, you've got any questions on
how to structure it? Any questions around that? Peter Norris,
Pete Norris, He's managing director of Opez Mortgages, will be
(13:04):
taking your calls in just a moment. It's nineteen and
a half past four. News Talk said b. This is
the wonder of radio show. My guest is Peter and
Iris's managing director of Ope's Mortgages and the bank of
Mum and Dad. Your experiences, your questions, give us a call.
I weight one hundred and eighty ten eighty Greg.
Speaker 4 (13:20):
Hello, Yeah, Hi Tim, How are you good? Thanks?
Speaker 5 (13:24):
Oh?
Speaker 4 (13:24):
Sorry, I catch your It's Pete. It's Pete, Pete, Pete sorry, Pete. Hey,
Look about twelve years ago I had a horrible m
split up with my wife and suddenly found myself a
follow father had to sell the house to get rid
of the business, and suddenly found myself with no money.
First time I haven't had a house. So I was
(13:44):
very lucky that my parents could afford to give me
a deposit on a new house. But the way we
do that, there is a legal notes against the house
for the eighty thousand dollars of If I sell the
house then they get the eighty thousand dollars back. And
because we had two I've got two sisters, and as
they died before I sort of sell it, then the
(14:05):
eighty thousand dollars comes off the well, if it makes sense.
So I'm so lucky to have parents that could afford that.
Because this is twelve years ago. Just before the house
passed was week mad, you know, and we're only talking
a four hundred thousand dollars house. And if they hadn't
done it for me, I don't know where I'd be today.
You know, I'll be atternally grateful to my parents for that.
Speaker 2 (14:26):
What was the conversation who brought it up? Was it
a conversation where you approached them or they said, look,
you know we want to help grieve. You know, we've
got to get you back on your feet and get
in going again.
Speaker 4 (14:36):
What happened a bit of both, so they could see
that I was, you know, suddenly my wife essentially left,
and because I had the custody of the two boys,
and it was it was really difficult. There's no way
I could save a deposit. I was actually still playing
off some of the debt in the old business that
I hit to wind up. So they could see that
I was struggling. So we just had we had a
(14:59):
Sunday meal one night, and we sort of the subject
came up and and you know, how are you going?
And U going a little bit and yeah, I don't
know how I'm going to be up to afford a house.
And then they sort of suggested that maybe this is
a way around it, so I didn't ask if such. Yeah.
So so again, just can't tell you how grateful I
had my mom and dad.
Speaker 2 (15:20):
How much are they? Sorry? Did you say they're still around?
Speaker 6 (15:23):
Yeah?
Speaker 4 (15:23):
Still around?
Speaker 5 (15:24):
Yep? Yep?
Speaker 2 (15:25):
And how and how how has it panned out? Can
you see you bought it before everything went mad? So
are you how things going now?
Speaker 4 (15:32):
Oh?
Speaker 5 (15:32):
You're great?
Speaker 4 (15:32):
So We're still in the house. It was an old
it was the only house that we could afford on
the block. It was a truck are rapper and number
hand him in. So I'm ten years into a five
year innovation. You can image. You can imagine have a
new wife these days too, and we have a now
a little girl at home, so still living in the
same house.
Speaker 3 (15:53):
And have you managed to buy the pay your parents back?
Speaker 4 (15:57):
No? No, so I still couldn't because then my wife
actually gone back to do an education degree. So we're
on one wage these days. Mum and dad had made
clear that they don't need the money, okay, so it.
Speaker 2 (16:07):
Can I mean, it can be sorted out in the
fullness of time.
Speaker 4 (16:10):
Which exactly exactly if we do sell the house and
they immediately get that money back which is a legal document,
or if they pass away it gets taken off.
Speaker 2 (16:20):
You know what, I think your parents, your parents have
done exactly what every parent really wants to be in
a position to do for their kids, isn't it. I
mean it's you know, and to.
Speaker 4 (16:29):
Be honest, because they've done this for me, there's a
chance that I might be able to do this for
my kids now too. Yeah, you know they gave me
such a hand up that it's source generational money only
saves about eighty thousand dollars, but you know the house
is some revalue since oh well.
Speaker 2 (16:43):
That was twenty percent of a four hundred thousand dollars house.
I mean, you know you're away.
Speaker 4 (16:49):
Yeah, exactly right, you're right, so good stuff. I'm very fortunate.
So I hope other people as lucky own.
Speaker 2 (16:56):
Yeah, I'm good on you, Greg, Thanks for thanks for
your call, mate, all the best. Actually, we've got a
text here just before for an next call. It a
quick question lending to children. I'm not sure if this
is from a parent or from a anyway, it says,
I presume it's a lower interest rate. Well, what approach
the parents take to charging interest to their kids? To
(17:18):
the children?
Speaker 3 (17:20):
That's It'd be different for every parent, but generally most
parents will be looking to get something around what they
would get if they put on a term depositor, or.
Speaker 2 (17:30):
Unless they've got so much money that they don't care,
in which case they're you know, and nothing.
Speaker 3 (17:36):
Yeah, exactly exactly, but somewhere around either that. The floating
rate or similar fixed rates would be pretty common for
most parents to want it you know, a fear return.
Speaker 2 (17:46):
Actually that that's actually probably better than you'd get at
the bank anyway, isn't it. So if you're getting the
if you're lending it as a mortgage, yaw, I can
never remember which is which the mortgage as a mortgage,
as a lender, who's the mortgage, who's the always it's
always round the other way, I remember. I think the
mortgage is the bank, isn't it? And the mortgage jaw
is Oh god, I can't remember anyway.
Speaker 3 (18:09):
I just want to know that you confuse me.
Speaker 2 (18:14):
But anyway, it's the that would almost be better than
being in the bank. Actually you sort of it's a
win win unless you know.
Speaker 3 (18:20):
Yeah, well, I mean I should not blur this into
accounting any any form of accounting. But the interest you
earn on the it's income, yeah, on the term deposit
would be taxed. Whereas that if you potentially sit it
up in a way where you don't pay on the
loan to your.
Speaker 2 (18:38):
Kids, how would you set that up?
Speaker 3 (18:40):
Well, like I said, I don't want to blur into.
Speaker 2 (18:41):
Account Okay, okay, what about says, yeah, you lend the
money to the kids, it's palable on demand. That keeps
it safe from a kid's partner, can be called up
anytime or never, says Jane, Well, that's a tricky one, actually,
I don't think. I mean that's I don't think that's
an ideal situation where it's repalable on demand, because I
(19:04):
mean that that would be I don't know. I just
feel it needs to be a loan that's made and
everyone understands that it's not on someone's whim that this
gets called up.
Speaker 3 (19:14):
Yeah. Absolutely, the legal advice is really the way to
go that having a legal document, the one that the
last caller mentioned in terms of maybe having the parent
have a caveat or something over the property so that
they have some form of security as well as a
really sensible way to do it. Yeah, it gets a
little bit more complicated when there's multiple kids involved as well.
He mentioned he had a couple of siblings. So then
(19:36):
if the parents do it for one, do they have
to do it for the others? And so then you've
got to work out, well, if you can afford to
do eighty k for one, can the parents afford to
two hundred and forty k in total for three? So
then it gets a bit blurry as well, so those
legal things are even more important.
Speaker 2 (19:50):
Well, actually probably, And the other thing that's important is
the conversations, isn't it Because there might be you know,
there's one sibling who is more needy and the others
are fine. Because you know, life's not even, and some
siblings can be very comfortably off and others might need
the help. Then you need to have a conversation so
everyone's gosh, because this sort of stuff can drive wedges
(20:11):
and family if you don't get it right.
Speaker 1 (20:12):
Yeah.
Speaker 3 (20:13):
Absolutely, Money money talkers is sends people off their ocers.
Sometimes you think everything's going along smoothly and suddenly bring
up money, and it's.
Speaker 2 (20:22):
Do you witness that yourself? And as you know, with
the job you do as a mortgage advisor.
Speaker 3 (20:28):
Probably not so much in terms of intero sibling conversations
because we'd just be dealing with one party and I'm
sure there's a lot really goes on in the background
when there are multiple siblings.
Speaker 2 (20:37):
Do you advise the parents about that? Do you actually say, listen,
you need to make sure you've had a good conversation
with everyone in the family. Do you leave that for
them to make up their own minds? And you just
stick to your knitting.
Speaker 3 (20:45):
So our role is to make sure they're getting independent
legal advice.
Speaker 4 (20:48):
Yeah.
Speaker 3 (20:48):
What happens is as part of that advice is over
to the lawyer.
Speaker 2 (20:52):
Okay, okay, so I'm not sure we like the pablon
demand thing, but anyway, talk to a lawyer. Now there's
another one here, Tim. We gave our kids two hundred
thousand dollars each for their first no strings attached. Didn't
want any legalities to get involved as its family. Okay,
we're pretty well off so it was possible, but we
still felt it. Well. Yes, thanks for sharing that, Doug.
(21:17):
I know what to add to that.
Speaker 3 (21:18):
Good on your Doug. You've obviously worked hard, done well.
Speaker 2 (21:20):
Yeah. Hey, the other question is around the whole borrowing
thing that I wanted to talk about. Is regardless of
whether it's a banker of mum and dad, the question
about how much you can borrow. Obviously, if you can
get a mortgage of your own to buy the house
that you want, you don't need the bank of mum
and dad unless they just in the position where they
can just give you some money to make it easier.
(21:42):
But the thing that struck me when we first started
looking and This is going back a little while was
finding out how much money the bank would lend us.
It didn't frighten me. It really made my eyes widen
because I couldn't believe what they thought we could afford.
And working out this is how much the bank will
lend versus how much you really you know, how do
(22:04):
you approach that with sis?
Speaker 3 (22:06):
Yeah? How much? How much people can afford? As really
comes down to two things. One is what the banks
is they can afford, and one is what real life
says that they can afford. And if they're not demonstrating
that they can service the more ridge or or having
regular savings. And you've got to have that conversation because
the bank will come to you and say, at the moment,
based on where bank policy and interest rates and everything is,
(22:29):
you can borrow sort of six or seven times your
income potentially even more, which is quite a bit.
Speaker 2 (22:35):
If you're double income. Yeah, that's a huge amount. And
how often do you find people max themselves out as
card they need to have every cent that the bank
will end.
Speaker 3 (22:48):
Thankfully, Thankfully, with our clients, we don't see that also often,
but we are having those conversations with them regularly, and
you know, sometimes they will really push themselves. But then
you've got to figure out what happens off interest rates.
It's all well and good that interest rates now you know,
loads of mid fours, But what happens if they get
back to where they were two years ago at seven?
Speaker 4 (23:08):
Yeah?
Speaker 2 (23:09):
Well, I remember years ago a friend game of the advice,
and I don't know if it would have changed very
much for me if I had to borrow again, but
he said, look, you should always budget to be able
to pay back eight percent, which sort of maybe takes
into account the fact that you might want to have
a life outside of just paying your mortgage off. Yeah,
what do you do.
Speaker 3 (23:28):
You definitely I think that being able to withstand interest
rates going up.
Speaker 2 (23:33):
Yeah, what's the bank test rate these days?
Speaker 3 (23:36):
Between six and a half and seven percent? Okay, Whereas
back when, you know, not that long ago, when interest
rates were seven, they were testing at nine. So those
test rates have fallen quite a bit.
Speaker 2 (23:45):
I'm always amazed that the test rates changed so much.
I would have thought that because the test rates dropped
at one stage, but it seems that they were sort
of so attached to the to the fortunes of their
ocr which doesn't make sense to me. Shouldn't it the
test rate be the worst case scenario if the bank
want to protect.
Speaker 3 (24:02):
Its Yeah, it's a good argument. The stress test. The
idea of a test rate is to stress if interest
rates go up, but you're really at the moment they're
stressing at a rate that was not that long ago.
Speaker 2 (24:13):
The rate I know. That's why I don't understand. Well.
In other words, that's an example of why you wouldn't
want to trust just the banks stress test rate that
you might.
Speaker 3 (24:23):
Want to check, you know, stress it yourself. Yeah, definitely.
Speaker 5 (24:26):
Yeah.
Speaker 2 (24:26):
What are the things that people fail to take into
account when it's when it comes to budgeting for these things?
Or is it a feeling? You know? Other tools for
doing a really effective budget on how much you can afford?
Are they pretty good these days?
Speaker 3 (24:37):
No, There's a lot more that comes into buying a
house than just the loan repayment. I think sometimes the
mistake is you look at the loan repayment and say, well,
the interest rates five percent, I can afford that. We're
all good, But one is what happened? Different streates increase,
You've got a factor that in, but then there's more
costs that come along with owning a house than just
simply the interest or of the home, loan, cost rates, insurance, maintenance.
(24:58):
What happens of you know, you spring a leak and
you get a plumb around and suddenly you need some
continue to climb.
Speaker 2 (25:06):
Yeah, look, we love you, love your calls. Eight hundred
eighty ten eighty. We've been talking about the bank of
Mum and dad. Primarily what conversations did you have with
your parents or with your children if you were using
that mechanism to help one of one or the other
of you get into a house on eight hundred eighty
ten eighty. But also what did you how did you
go about working out how much you could borrow versus
(25:29):
how much the bank would actually let you borrow? And
were they two different figures, because I'd imagine for many
people they'd be like, well, you know what, some people
to get into a house, they need every cent in
the bank will lend them, which means, you know, it's
it's going to be tough going eight hundred eighty ten
eighty text nine two nine two. We'd love to hear
from you. It's twenty five minutes to five. This news
(25:49):
talks to beyond tim beverage with Pete and Irris talking
about the bank of Mum and Dad and actually you've
had quite a few texts just about the whole payable
on demand. This person says tim pable on demand means
that if you split up, your parents would get paid
back after the bank before you split any profit. But
you've got a better way. It's basically what is that
The usual terms.
Speaker 3 (26:09):
Are, Yeah, I mean the most common way we see
is it's payable if the property is sold.
Speaker 2 (26:13):
So if the property is sold, then that's job done.
So if they split up on the property, I guess, okay,
here's a different version of that. If and this is
where the legal gets in. And I know that that
you don't want to get too legal things. But if
the property isn't sold, but the other the other person
has got under you know, the separation agreement, gets to
(26:35):
keep the house. That's when you I guess you'd need
to have a clause that if the relationship breaks up,
you just say it's repayable instantly off the.
Speaker 3 (26:45):
Yeah, I think all of this comes back to just
a right have something in place.
Speaker 2 (26:51):
Yeah, that's right. But the payable I mean it is
I mean, there is a nuance in that, so yes,
get legal advice from these things, of course, Nigel High.
Speaker 5 (26:59):
Hi, how are you? Yeah? Actually given my kids my
as my younger one, I gave him two hundred and
fifty K allowing him to buy a house. This was
about ten years ago. He'd saved over a hundred thousand himself,
and I was pretty disappointed, you know, that he'd saved
all this money. So then you.
Speaker 2 (27:21):
Were disappointed that he'd saved money.
Speaker 5 (27:24):
Well, no, disappointed that the houses he couldn't buy into.
Oh he'd saved one hundred and thirty. But he wasn't
a high income earner.
Speaker 2 (27:31):
Oh okay, so the banks would only lend him so much.
And you so you stepped in.
Speaker 5 (27:36):
So I stepped in, and then of course we have
this horrible world that's changed us. I have another son
who's lives with a young lady. So that's all become
and I've said, look, not a worries. It comes out
of my assets or a state. And he's at the
moment decided to rent and just take the money when
(27:59):
I finally go. And that's fine with me because really
having an opportunity to step up, why and I've seen
it so often in my family. People hold on to
their money right to the bitter end, and of course
by that time their children are in their late fifties
or sixties, and they actually needed it earlier. So and
(28:26):
to go along with the other one, my son, with
the all those strange interest rates going all over the place,
I did exactly that. I took out his mortgage and
paid him the same rate that I would have got
at the bet.
Speaker 2 (28:44):
Charged in the same rate.
Speaker 5 (28:45):
Yeah, charged him well less tax obviously, So he's very happy,
and I'm very happy. I still get the same return.
And we were new it every six months.
Speaker 2 (28:55):
So as long so have you given you? Basically you've
given children different amounts of money in different ways. So
one's taken at the by house, the other one's just
going to rent. You'd be concerned about the one who's
just renting, wouldn't you just taking the money?
Speaker 3 (29:08):
Well, he hasn't got the money. He said that he's
going to take that.
Speaker 5 (29:12):
Yeah, he just doesn't have the focus on raising a deposit.
And I'm not just sort of going to go give
money away because to buy a house you need a
bit of hurt money. I mean, I remember back in
the old twenty two percent interest rates. First mortgage, second mortgage,
third mortgage. You had to work hard.
Speaker 2 (29:33):
That's punishing back then, wasn't It was that in the eighties.
Speaker 5 (29:36):
That was nineteen when we're buy our first house nineteen
eighty two, and we had three mortgages. The first one
was twenty two, the next one was nineteen, and the
next one I think was something a bit higher than that. Look,
it's all crazy times, but to me it's simple enough,
as if your child works hard to get a deposit
(30:00):
or attempt to deposit, help them out. But in my
wills I've got and my wife's will, we actually have
a dedicated spot that the other son is not let out.
He gets the first amount and both sons know and
they're quite comfortable.
Speaker 4 (30:17):
Yeah.
Speaker 3 (30:18):
I think you've raise a really good point that parents
who are in in ther kids money, they want to
make sure the kids are good for it, you know,
make sure that they're demonstrating some good habits and as well,
if they haven't demonstrated any habits of saving or looking
after themselves, then maybe maybe giving them some money not
the way to do it.
Speaker 2 (30:33):
They've got to be a bit of hurt money.
Speaker 3 (30:35):
Yeah, Like thet.
Speaker 5 (30:36):
It's always going to be some hurt money and that
makes a very strong and strong person who pays back
their mortgage. It looks after the house and my youngest
so many I said, look, if you don't make it
as your money goes first, I get my money back.
Speaker 2 (30:53):
Yeah. Well, you're probably doing them a favor too, because
easy come, easy go is not a cliche for no
good reason.
Speaker 5 (31:00):
Is that now we've all done that.
Speaker 2 (31:05):
Thanks Nigel, We'll good on you. M actually, gosh, I
mean that that is one of those things where you know,
ideal everyone wants to get an easy ride, but I'm
not sure it nearly does your favor in the long term,
does it?
Speaker 3 (31:16):
No? No, differently not. And I think that the kids
need to be going and I don't hurt money approach.
It's a really good one.
Speaker 2 (31:23):
Yeah, Mary, Hello.
Speaker 6 (31:26):
Hi, how are you good?
Speaker 2 (31:27):
Thanks?
Speaker 5 (31:28):
Hey?
Speaker 6 (31:29):
I just wanted some advice. And my son and his
partner split a bitt or nine years ago. He didn't
have the money to buy a rail. It was about
eighty five thousand, so he asked us could he borrow
some money, and so me and my husband still working,
so we said gae. So he borrowed maighty five. Then
he came back and borrowed and borrowed and borrowed and borrowed.
(31:52):
So I said to him, I've got to write this
down because you might meet somebody in the future and
where the money going. So he said yea. So I
wrote it all down and we went to a and
he came with us, and we put down to the
bottom on the condition that he sells his house. So me,
(32:13):
my husband, and my son signed it in front of
a JP. Now, he got married three years ago and
his wife is not very nice. So when we came
back from our holiday just before Christmas, we noticed his
house was up for sale. Okay, and we rang them
(32:33):
and his wife sticked and she said, you'll get nothing back.
You've got no proof, You've got nothing, and she hang up.
Speaker 2 (32:40):
Okay, Well, it sounds like you need sounds like you
need to get along to a lawyer. I think, Mary,
I'm not sure what advice we can give you on.
Speaker 3 (32:46):
Definitely sounds like a lawyer rather than I'm always broken.
Speaker 2 (32:49):
But I think if there's a house involved and there's
money involved in it's a cautionary tale that you have
to get legal advice and get your interest registered if
you want that money back.
Speaker 3 (32:59):
Yeah.
Speaker 2 (32:59):
I mean, if there's anyone listening, I think, ah, yeah,
we're not too wide. But if you can afford to
lose it, then fine. But there's that question. You might
be happy to lose it to your child, but would
you be happy to lose it to their partner who's donty?
Speaker 3 (33:11):
Yeah, that's a good point.
Speaker 2 (33:12):
Yeah, anyway, Tim payable on demand? Oh no, sorry, I've
read that one already. My husband and our I are
in our late fifties in age. We have a freehold
home value to eight hundred and thirty. We're thinking about
upgrading a home, which would require a potential mortgage of
three hundred k. We're both on good incomes. Oh, this
(33:32):
is just a mortgage question for you, Pete. Do the
banks consider age when lending?
Speaker 3 (33:38):
Yeah? Absolutely, agent stage comes into it, and ultimately, all
they're looking to make sure is that you can service
the mortgage through to retirement and then what happens after that,
how that dick get paid?
Speaker 2 (33:47):
Yeah, so they're talking about eight hundred and thirty and
they want to have a potential three hundred k.
Speaker 3 (33:54):
Yeah, I mean if they're on good I mean I
think they've also mentioned that they're on good income. So
they should be able to set it up in a
way that they pay that off before they stop working.
If they're in their fifties.
Speaker 2 (34:02):
Yep, where you go? Yeah, but yeah, go and talk
to bank or to ops mortgages. In fact, you know, right,
what else have we got? What advice do you have
about borrowing interest only for as long as a bank
will agree usually usually these days it's a max of
three years. Do people realize that on a long mortgage,
very small amounts of principle, very small amounts are repayment
(34:23):
of principle for a long time. It's just to balance
it out, isn't it. What's the different? I mean, in
the first few years of your mortgage, you just about
our interest only, aren't you?
Speaker 3 (34:31):
Yeah, for about the first ten years, I think it is.
I mean, it depends on what the purpose of the
house is. If you're buying an ownderoccupied, the banks will
limit how much you can have on interest only, and
they'll keep that quite short. Some banks are two years,
some banks are three years. If you're buying an investment property,
they'll push that up to about ten years. So it
really does depends on what the purpose of the property is.
But if it's underoccupied. You should be paying down principle
(34:53):
sooner rather than later.
Speaker 2 (34:54):
Yeah, In fact, it can be a bit of a trap. Actually,
if you have been enjoying a certain lifestyle and you're
an interest only it can be a bit of a
shock when the bank says, right, it's time to start
paying the principle.
Speaker 3 (35:03):
Well, and at the end of the end of the
interest only period, the remaining principal term is whatever the
initial one was minus the interest only so that can
be quite short and over the last couple of years
with it's pretty hard to increase that interest only term,
so it can catch you out, especially in a rising
into straight environment. So yeah, look, I mean pain damn.
Principle is not a bad thing.
Speaker 2 (35:23):
No, Right, we'll be back in a moment. The Property
of the week is next. It's in Hamilton this time,
and it's well all most about properties of the week
are special. I think we only had one which was
a bit of a dog, but it was only a
dog because it was surrounded by commercial property and we're
just curious with the value of what that house would
be once it's sold. But this one has got a
(35:44):
beautiful view of the Waikato River and we're going to
get into it in just a second. With the Property
of the week. This is the one roof Radio sho
I'm Tim Beverage. It's twelve minutes to.
Speaker 1 (35:53):
Five, the one roof property of the week on the
Weekend collective.
Speaker 2 (35:59):
Yes, one roof property of the Week. In fact, it's
been trying to work out if it itself has the
views of the Waikata River, but it is. I'll give
you the address if you want to Google it. It's
three on the one roof side. It's three oh one
River Road. There's the clue. Claudland's in Hamilton City. Now
it's five bedrooms, so plenty of space for your family
(36:19):
or your visitors as well, two bathrooms, two bathrooms, three
car garage and the house is basically three hundred square meters.
It's two ninety eight let's be just to be accurate,
land of seventeen hundred square meters and it's built in
nineteen twenty. And look, I guess as an Auckland do
you always look at the price and go man, it's
I mean, it's not cheap, but it's not super expensive either.
(36:42):
It's got an estimate of one point seven three million,
so it's it is, you know, on the on the
edge of the river, with a quite an elevated position.
It's what's described as a character home, private with it's
got a great entrance way, a beautiful driveway heading in
a beautiful leafy setting. I don't know how to describe it.
(37:03):
It's one of those sort of weather board with the
orange sort of tiles, and it's yeah, nineteen twenties. What
do you how would you describe it? Peinte op, Hang
on a second, I just switch on your microphone now.
Speaker 3 (37:15):
Yeah, I mean it's got a huge amount of character,
A really big fan of the entrance, the driveway into
that into the big old sort of almost kind of
Villarisque type problem.
Speaker 2 (37:25):
That's slightly slightly bigger, and it's certainly the way it's
been photographed. It looks very looks like a very tall house.
What do you notice when you look at a house?
What are the things you look for? Because you were
mentioning you have been looking around a little bit, But
what are the things you notice? For instance, I always
go to the I have a quick look at the outdoors,
and then I'm always interested in the kitchen. I don't
(37:48):
know why.
Speaker 3 (37:48):
Yeah, i'd say, my wife's probably more interested in the kitchen,
but it's definitely an important part of the house. You know,
when you're entertaining, having having people around the kitchen is
an important one. I'm a big fan of the high
ceilings in this one, looking at those kinds of you
know that character villa. Those big high ceilings make that
feeling big.
Speaker 2 (38:03):
It is three stories, isn't it.
Speaker 3 (38:05):
It's two stories, I think, is it?
Speaker 2 (38:06):
I'm trying that looks like down below from the external
it depends you enter on one level and it's two stories.
But then you go around the other side and it
looks like the land drops away and there's squeezed another
level in there. But I can't really you need to
go and walk around it. And let's be honest, I mean,
if you want it, interested in it? Going of a
look it is again three oh one River Road, Claudlands.
(38:29):
What did you make of the price for it?
Speaker 3 (38:31):
Wow, I'm clearly in Auckland because I thought I looked
at it and thought that's a lot of house for
one point seven Yeah, it is a lot of house.
Speaker 2 (38:38):
Water views yeah, actually, yes, correction, there is a lovely
view from one of the sort of verandahs on the
top floor. And it is a gorgeous it's a gorgeous
setting absolutely and well established trees as we know all
along the banks of the Whitecatto River there. Look with
that about just a couple of minutes to go at Pete.
What's is there a moral of a of a tail
(38:59):
when it comes to parent lending to their kids. I
think probably it came from that corner. Don't just give
it to them and expect to get it back unless
you've said you expect to get it back.
Speaker 3 (39:09):
Yeah. Absolutely, To be honest, I think it the most
started with the first message in I think the the
moral of the story is get some advice and make
sure that the parents are protecting their whatever money's going in. Yeah,
and don't expect everything to always be rosy.
Speaker 2 (39:24):
No, But like Mazza's call, you know, if you don't
think the relationship is going to last, but look, you
just need to set it up legally, because that's what
all sensible people do. If you're worried about offending people
about whether you know your son or daughter's marrying the
person that's not going to last, just dress it up
as we're going to do this legally. Because that's just
the way you do things.
Speaker 3 (39:41):
I guess, yeah, don't leave, it's a chance.
Speaker 5 (39:43):
Yeah.
Speaker 2 (39:43):
And by the way, I people want to get in
touch with you at Opia's mortgages. How do they do that?
Speaker 3 (39:48):
Oh, they can do that via Opus Mortgages, doc co,
dot and ZED would be the website and on there
you find them all the teams details.
Speaker 2 (39:54):
Excellent. Hey, good to see them mate. Thanks, thanks for
coming on. We will be back shortly because we're going
to have it. The big tech discussion continues. We see
it in the unfolding in the courtrooms with Mark Zuckerberg
giving evidence recently in the suit against Meta and the
other big companies, and we're going to talk about big
tech safety and whether, in fact social media harm is
(40:15):
inescapable unless we isolate our children. That's going to be
the topic of conversation. Dr Maniche Deva is going to
be with us. He's the co host of the One
Young Mind podcast and also a pediatrician, and he'll be
joining us shortly. It's just gone four minutes to five.
This is News Talk s EDB.
Speaker 1 (40:57):
For more from the weekend collective, listen live to News
Talk SEDB weekends from three pm or follow the podcast
on iHeartRadio,
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