May 7, 2025 • 36 mins
The boys discuss the government schemes that can actually help you get into the market and start building wealth.
Find out:
• Why someone earning $90,000 with HECS debt takes home approximately $5,200 less annually than someone without.
• What you can do if your HECS debt is stopping you from buying a property.
• Info on the federal government's investment of $182 million in NSW infrastructure to enable 25,000 new homes.
• Suburbs like Goulburn will benefit owner-occupiers priced out of Canberra.
If you need help with your home loans, refinancing, or purchasing your first home, visit us at www.itsimple.com.au.
Follow us for more property news and mortgage advice!
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DISCLAIMER This podcast contains general financial information only. That means the information does not take into account your objectives, financial situation, or needs. Because of that, you should consider if the information is appropriate to you and your needs before acting on it.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
the issue with ignoring hex debt is it's still
a debt, it still has interest.
I hate the fact that they'repunishing kids okay for it, and
I hate the fact that I know Iknow personally firsthand people
under the age of 30 that aretrying to make it okay, that are
trying to build wealth andthey're trying to create an
(00:20):
opportunity for themselves, andthey're getting punished is this
good news for people trying toget on the popular ladder, or is
it just good news for investors?
Speaker 2 (00:26):
what's your opinion?
Speaker 1 (00:27):
I think that you're an investor.
You're looking for two thingscash flow and capital growth.
Go look at apartments in mumbai2016.
They cost 800 grand 2025 850they didn't grow that much.
Speaker 2 (00:43):
Obviously, housing policy it's a big issue right
now.
Do you think that this issomething that will actually
help people get into homessooner?
Speaker 1 (00:53):
So I'm of the personal opinion that Welcome to
the Finance Show with Joe.
Speaker 2 (01:02):
He's Joe, I'm just some schmo named Michael, and
today we're actually going to betalking about a couple of
things more so about first-timebuyers and younger people and
how that helps them in themarket, Because Jim Chalmers,
our federal treasurer, he hasliterally told lenders to ignore
hex and help debts when doingtheir debt calculations, which
is huge, because last year theygot rid of that crazy indexation
(01:26):
rate.
That happened when, because itwas the indexation was based on
inflation, was it or CPI orsomething like that?
Speaker 1 (01:32):
It was based on inflation prior to them bringing
it down to a different rate.
Speaker 2 (01:37):
It's a different rate now, but anyway that went down.
So they're really trying toimprove first-time buyers'
capacity really, because I wouldsay that's probably the
majority of people who have ahex debt right now.
Am I correct in saying that?
Speaker 1 (01:47):
You are correct in saying that.
Very interesting that he's comeout and said this and,
regardless of what he's saying,you shouldn't account for it and
you should base theindividual's income on the
income.
That's not how the fuckingworld works, jim.
I'm sorry to say this, but Iwould love to be able to ignore
hex debt to be able to helpindividual borrowers.
(02:10):
The issue with ignoring hexdebt is it's still a debt.
It still has interest.
It's no longer that 0.1interest that it used to be.
I think last year was threepercent the year before was like
six, it was something stupidright, so to say oh no, we're
going to ignore this debtcompletely.
It's uh, it's not going tohappen.
(02:31):
It's an empty promise.
The it's the.
The treasurer has come out tosay this to win favor amongst
young people.
However, I will add that thelenders calculated incorrectly,
so I almost got fired atMacquarie for this.
I'm just going to highlight thisargument that I had eight years
(02:51):
ago.
Okay, okay, it was myself, 20people from credit, everyone in
the direct team and everyone inthe private team, and I put my
hand up and I said why are wenot including Hex in monthly
expenses?
And it started a riot.
It started a two-hour argumentof why we should not be included
(03:12):
HECS debt in living expenses.
Okay, because this is notsomething that the individuals
at uni have control over.
At the time, it was notsomething that had a high
interest rate.
We saw, a couple of years ago,people paying like 6% or
whatever it was, on their HECSdebt.
Back then, back in 2018, it was0.1%, so it was a bit of
(03:35):
monthly expenditure that itwasn't a debt to a car, it
wasn't a personal loan.
It was something to help themin their education yeah, in
their education.
Speaker 2 (03:44):
Yeah, and the careers hopefully.
Speaker 1 (03:47):
A hundred percent.
I had the head of credit say tome I'm going to check every
single one of your files movingforward.
I'm like why.
I want to understand why wecannot include this in the
weekly expenses.
The problem also with a lot oflenders is, for some reason I
don't know if they've allupdated it, but some of them
have included a buffer on Hexdebt.
Speaker 2 (04:07):
That was another one of the things he was like get
rid of that buffer.
Speaker 1 (04:10):
Yeah.
So, regardless of whatever theinterest rate was, they were
adding 2% or 3% on top of thatOf whatever your Hex repayments
are.
They're saying, nah, 3% more.
So instead of them paying a,what was it?
3.99%, sure, something lastyear.
Nah, you're not paying 3.99% onyour $70,000 Hex debt, You're
(04:31):
paying 7%.
People were unable to affordproperty because of that buffer
rate.
So I'm of the personal opinionthat Hex it does need to be
included, because somebodythat's paying Hex and someone
that's not paying Hex if you'remaking $90,000 a year and you
(04:53):
are paying Hex, your take-homesalary is $2,500 a fortnight.
That's correct.
If you are not paying Hex, it's$2,700 a fortnight.
Yeah, so it's about $ afortnight.
Yeah, so it's about 200 bucksyeah, so it's 200 difference,
200 difference.
Multiply that by 26 fortnight26 fortnights, 5200 a year.
(05:14):
Yeah, okay to say oh, no, don'tinclude the hex debt.
No, no, you have to include thehex debt.
If somebody has an extra 5200 ayear to spend… Increases their
borrowing capacity.
That is an increase of about Idon't know, $100,000 or so if
they get rid of their HECS debt.
I can't remember the exactfigures, but it's something
(05:35):
stupid, yeah, to just say toinclude it in the monthly living
expenses, because it's notsupposed to be a rate that
spikes up, goes down, and if yousee on a payslip, the amount
(05:57):
that you pay back to Hex is notdependent on what the interest
that they charge is, it'sdependent on your salary.
Yeah, yeah, yeah.
So if you've got a $40,000 Hexdebt okay, for example and
you're making $90,000 a year,you're paid $200 a week Fortnite
, sorry.
If you've got an $80,000 Hexdebt and you're earning $90,000
(06:17):
a year, you're paid $200 aFortnite.
Yeah, and obviously and it goesover and over $200 a fortnight,
yeah, and it goes over, andover $250,000 Hex debt, you're
still paid $200 a fortnight.
Speaker 2 (06:27):
Yeah.
Speaker 1 (06:27):
Yeah.
So the way that they'recalculating it is incorrect.
The way the banks assessed itis completely incorrect.
I'm on Jim Chalmers' side forone small portion of it,
no-transcript.
But I'm going to add that thisis how they should calculate it.
Don't calculate it based onwhat their interest rate is or
(06:49):
what the month of the.
Don't calculate it based onthat.
Don't include a buffer on hex.
You're already punishing theyouth enough.
People that are 30 and underare already struggling to be
able to purchase a property andthen you're going to turn around
and say to them oh no, no, no,guess what.
Oldie Mc, old old over therewho purchased his property in
1980 and paid off his onethousand dollar hex balance when
(07:10):
he, five years after uni or hegot it for free or he got it for
free, he's completely fine.
Yeah, okay, but the personthat's just gone to uni, done it
tough for four years, relocatedeverything.
No, no, no, we're going topunish them for it.
Yeah, guess what oldie mc oldold is going to look at the
apartment that you know theyoung kid wants to buy and say,
oh, that's a good investment Iwas gonna say yeah yeah, that's
(07:31):
gonna make me 600 bucks a week.
I love that and then the otherkid is gonna go, but I wanted
that house I wanted to livethere.
I wanted to live there.
I wanted to get out of there.
Speaker 2 (07:39):
I don't want to be paying someone rent, so this is
where we're at rent-a-festy, butthen you don't have the money.
Speaker 1 (07:44):
Yeah, there's so many things, so I'm going to be a
bit rage-baity right now.
Yeah, no, and I'm just going tohighlight it.
You can't ignore it.
But you also have to factor itin.
You have to factor in how muchhex do they pay based on their
income level?
It's fucking dumb.
Speaker 2 (08:07):
That makes sense as well, because, well, like you
said, it's it's it's a hugedifference.
Because it's it's it's interestin a sense, but it's not pay
like again, you don't pay moreif you don't earn more.
Speaker 1 (08:17):
So, yeah, I'm gonna give you the the best fucking
example.
Listen to how passionate I amright now because I'm so
agitated I didn't know this hexthing would get him going like
this.
Speaker 2 (08:28):
I fucking hate it, I hate I hate hex.
Speaker 1 (08:31):
I think I think the way that the lenders assess it
is stupid.
I think the way that thegovernment assesses it is stupid
.
I hate the fact that they'repunishing kids okay for it.
And I hate the fact that I know, I know personally firsthand
people under the age of 30 thatare trying to make it okay, that
are trying to build wealth andthey're trying to create an
(08:51):
opportunity for themselves, andthey're getting punished yeah,
and it especially sucks too,because they were told that
going to uni was a way to, to doit like to, to earn heaps of
money and get ahead in life mykids becoming a plumber?
no doubt, no doubt.
Year 10 bang plumber.
My degree is in economics andmaths.
Do you know what you could dowith that?
It's the most generic degreeever.
(09:14):
I'm a mortgage broker now.
It is so freaking generic, ohgoodness.
So why did I go to uni and paya thirty thousand dollar hex
debt?
Yeah, for for what?
Speaker 2 (09:24):
for something something I'm I'm now business
owner.
You didn't need to go to unifor that.
I didn't need to go to uni forit.
Speaker 1 (09:30):
I didn't Do you know how long it takes to become a
mortgage broker, a qualifiedmortgage broker?
A couple of months.
I wish it's a two day course.
I said a couple of months, it'sa two-day course.
Speaker 2 (09:42):
I asked that a couple of months.
Speaker 1 (09:44):
It's a two-day course to become a qualified mortgage
broker.
Damn, and all of thesecompanies.
I'm rambling, liam.
I'm sorry, put it on the editroom floor.
It is a two-day course to beable to handle somebody's life
savings.
It's a two-day course to beable to create a mortgage for
someone.
It is a two-day course to beable to earn that high of a
commission, all of it.
(10:05):
I didn't need my degree ineconomics and maths.
It's good that I have itbecause I can look at things and
problem solve them quitequickly.
Speaker 2 (10:13):
Your brain is now wired to think a different way,
which?
Speaker 1 (10:16):
is beneficial.
But to become a mortgage broker, it's a two-day course and I
can guarantee you.
I can guarantee you the top 30%mortgage brokers I'm not
talking the top 5%.
The top 30% mortgage brokersare earning a lot more than 100%
of the economists out there,Guaranteed.
Anyways, back to what I wassaying.
(10:36):
Fuck, what was I saying?
Speaker 2 (10:38):
I don't even know anymore, but I'm taking it back.
Speaker 1 (10:42):
So this is back to my example.
I had a client last year Okay,love this client.
Kn my example.
I had a client last year Okay,love this client, known them for
15 years.
Okay, I see them every day atthe gym, four in the morning.
Okay, they're working out.
They approach me and they go.
Hey, I want to purchase anotherinvestment property.
Fantastic, had a look at theirjob Owning good money.
They've got their Hex debt leftover.
(11:08):
Fantastic, and they've gottheir property.
They've got a red brickapartment over in Genali.
Okay, property's growing invalue.
They want to refinance.
They want to purchase anotherinvestment With the Hex debt
$40,000 Hex debt.
The maximum that they couldborrow was $399,000.
Speaker 2 (11:24):
Which isn't getting you anything.
Speaker 1 (11:25):
Not only that, their mortgage was more than that
because of the increase ininterest rates, oh yep.
Okay, yep, okay.
Without the hex debt, theycould borrow $500,000.
Which might get you anapartment somewhere.
Make that make sense.
You've got $40,000 in hex debt,so their overall debt level was
$440,000.
But if we got rid of the HECSdebt, they could borrow $500,000
(11:48):
.
Speaker 2 (11:48):
So there's, a $60,000 increase.
Speaker 1 (11:52):
Their HECS balance didn't go down because of these
stupid interest rates.
Because if they were makingrepayments based off what the
interest rate was and theprincipal and everything, okay,
they could eventually pay thatHECS debt off.
But all they're doing is justpaying interest because they've
changed the way that HECS debtis assessed by the government
and because of the wage levels.
So instead of us saying, hey,can you stay put and wait until
(12:15):
the interest rates come down, wecreated the opportunity for
them.
We said to the lender hey,we're actually going to
refinance them and we're goingto pay out their HECS debt.
Here is the b pay slip for youto go and pay out the hex debt
forty thousand dollar balance.
Then, all of a sudden they'vegot sixty thousand dollars in
equity.
Yeah, they could purchase aninvestment property making money
(12:36):
stamp duty and guess what?
their take-home income was evenhigher as well.
They increased their cash flow.
Yeah, they increased their cashflow by getting rid of that hex
debt.
I think that we increased thecash flow by like $3,000 as well
, so there was $63,000 betteroff.
It's amazing.
So when I get people say to meshould I pay my hex balance off,
(13:00):
is it going to give me a betterborrowing solution?
Yes, yeah, if you have themeans to pay off your, pay it
off.
Speaker 2 (13:10):
Yeah, okay, okay, because it's going to open up a
world of opportunity for you,even if, even if all it does is
improve cash flow worth itimproves cash flow.
Speaker 1 (13:19):
It improves your borrowing capabilities, it
improves your opportunity.
This two's $200 a fortnightOkay, it doesn't sound like a
lot like in the grand scheme ofthings, it's the little things.
$200 a fortnight is $5,200 ayear.
$5,200 a year, that's a holidayto New Zealand.
(13:40):
Maybe you need a mental break.
Camera equipment upskillingyourself, starting your own
business, creating a side hustle$5,200, ailling yourself,
starting your own business,creating a side hustle $5,200 a
year could definitely go towardsthat.
Yeah, invest in yourself.
Investing in yourself yeah, soroundabout, long way to give you
an answer.
Pay off the hex, yeah, okay.
And an answer to the banks aswell.
(14:01):
Hey, guess what?
Change the way that you assessit.
It's not based on interest, itis based on it's not a normal
loan.
Speaker 2 (14:08):
Yeah, it's not it's not a normal loan it is not
which has benefits and drawbacks, as we've just explained.
Yeah, now speaking of benefitsand drawbacks and where to put
your money that's an amazingsegue.
So after my uh 20 minute rant,there are 25,000 homes set to be
built in New South Wales, andit's not literally the houses
(14:29):
being built, it's a lot ofinfrastructure stuff, which
isn't sexy yes, it is, but it isessential Now, and this is just
New South Wales.
This is part of the overallfederal government's housing
support program.
You remember that 1.2 millionhomes thing?
Yeah, this is part of that.
Speaker 1 (14:45):
Nice.
Speaker 2 (14:46):
There's $182 million being invested in New South
Wales in these suburbs.
So Kempsey $45 million,goulburn $27 million, griffith
$10 million, cessnock $22million, moruya $4 million,
parramatta $10 million,schofield $13 million and
Dulwich Hill $6.2 million.
And that's all forinfrastructure, basically New
(15:13):
roads, water treatment,stormwater stuff, those kinds of
things.
Not sexy but it does unlockpotential for new homes.
Speaker 1 (15:16):
That's amazing.
Speaker 2 (15:17):
Is this good news for people trying to get on the
popular ladder, or is it justgood news for investors?
What's your opinion?
Speaker 1 (15:22):
It's good news for both, and the reason I want to
highlight it's good news forboth is the suburbs that are
being taken on.
Number one is Goulburn.
Canberra has become tooexpensive to live in.
Too many roundabouts.
Speaker 2 (15:34):
You've got to pay to upkeep them.
Speaker 1 (15:37):
But Canberra it was a hotspot.
Property grew in line withVictoria and New South Wales
over the booms.
I think the median house pricegot to like 1.2 million 1.3
million.
So a lot of people in act foundit too expensive yeah yeah, 40
(15:57):
minutes up the road on highway.
Highway driving is differentcity driving.
45 minutes up the road on ahighway, you have have Goulburn.
You're buying for a third ofthat price.
Speaker 2 (16:07):
Yeah, and you get the big ram.
So, you get that too, cut thatout.
Speaker 1 (16:18):
Goulburn, for example .
I've seen a lot of my ownclients purchasing Goulburn.
Speaker 2 (16:25):
Okay.
Speaker 1 (16:26):
Property's going up in value there.
It's a great spot.
This investment is probablygoing to unlock more land down
there.
Yeah, you have a lot ofgovernment workers actually
finding it easier to drive fromcertain parts of Goulburn into
Canberra than from purchasingsomewhere on one of the outer
(16:48):
suburbs of Canberra and thendriving in.
Speaker 2 (16:50):
Yeah, okay.
Speaker 1 (16:51):
So Goulburn, I think, is going to benefit quite a lot
on both the owner-occupied andthe investor side.
Speaker 2 (16:57):
Okay, Well, I mean the government estimates say
this is going to be about 430new homes, that's fantastic.
Speaker 1 (17:04):
Yeah, a lot of Goulburn is old, a lot of it is
heritage.
By providing thatinfrastructure, it's going to
open up the market for a lot ofpeople.
Yeah, I think owner-occupiedpeople are going to benefit the
most in Goulburn 100%, becauseit's not really an investment
hotspot.
Speaker 2 (17:21):
Although, if it becomes more general knowledge,
if you're working in Can, ifthis, if it becomes more general
knowledge, um, if you're livingin or working in Canberra to
that is cheaper to live inGoulburn than Canberra itself.
Maybe we might see that change.
Speaker 1 (17:32):
Parramatta Massive winner, Massive winner
Parramatta's the second CBD.
I have have you gone to the newParramatta square.
Speaker 2 (17:41):
No, I've just been on the train in the station, so I
kind of whatever I can see outthe window.
Speaker 1 (17:45):
It looks like Sydney CBD.
Speaker 2 (17:48):
Oh yeah, it definitely does.
If I'm not paying attention, Ithink I'm in central sometimes.
Speaker 1 (17:51):
Yeah, it is phenomenal.
If they want to invest in it,make it the second city, make it
the second part of Sydney.
They've done a great job.
Speaker 2 (18:00):
Well, they've got yeah, they've got that light
rail now as well.
Speaker 1 (18:07):
So previously about light rail now as well.
Yeah, so previously, paramatahad an issue with oversupply of
apartments.
Yeah, yeah, what thisinfrastructure project is going
to do is it's going to open up alot of travel between paramata,
cbd and sydney, cbd andpotentially other suburbs, and
it will allow paramata to becomemore of a hub and it will
provide ease of access forpeople, yeah, who need to work
in that area, and paramount is apretty convenient location it's
(18:28):
fantastic yeah, so this is um.
Speaker 2 (18:30):
This will enable estimate estimated to enable 15
000 homes it's fucking sick umscofields.
Speaker 1 (18:37):
Same as the other stuff I was talking about before
.
Yeah, you know an 86 meterbridge yeah, I'm not.
Speaker 2 (18:44):
I'm guessing it goes over the hawksbury or something
like that, Because I live nearSchofields and I'm not really
sure where that bridge issupposed to go.
But that $13 million issupposed to enable 235 new homes
.
Speaker 1 (18:54):
Dulwich Hill 7,800 new homes.
That's huge.
So Dulwich Hill next toMarrickville Enmore, I feel like
it's all in that area in andaround the inner west yeah, the
inner west is all heritage yeah,which is, I think.
Speaker 2 (19:10):
So, what they're doing.
They actually, as opposed tothe other ones.
They're actually doing atransport tunnel under old
canterbury road, yeah, and thatis then supposed to link each
side of the road in differentsuburbs, where they can.
I'm guessing the heritage isn'tthat prevalent, or maybe
they've already knocked down, ormaybe they're just changing the
zoning.
I'm not really sure.
I don't really know how the7,800 new homes thing will fit.
Speaker 1 (19:34):
It's going to be apartments.
Surely right, it has to be.
It's going to be 20 lots ofapartments.
Each block is going to have Godknows how many, but that's
actually better for owneroccupiers than investors.
Now, it's a decent spot to livein.
We spoke about it countlesstimes on the show yeah if you
want to buy and make money, gofor something that's got land.
(19:56):
If you want to buy somewherethat you want to live, go and
buy an apartment.
Yeah, okay, because apartmentslow upkeep, you don't have to go
mow the grass, you've got topay strata.
Nobody likes to pay strata, butthat is the cost that you pay
for that sort of convenience.
My opinion is, the biggestbenefit for Double Chill is
actually going to be people thatare looking to purchase
(20:17):
unoccupied properties, asopposed to potential investors.
When you're an investor, you'relooking for two things cash
flow and capital growth.
Yeah, how did I forget?
that um but you're looking forthose two things, go look at
apartments in bombay 2016 thatcost 800 grand 2025 850.
(20:39):
They didn't grow that much okayokay, go look at apartments in
paramount 10 years ago, 700k.
10 years later, 770, somethingalong yeah, yeah, yeah, so it's.
Speaker 2 (20:51):
You're not seeing.
I mean the apartments inaustralia.
Never see that explosive growth.
They don't land prop likehouses they don't.
But apartments are great fordepreciation and they're great
for cash flow yeah, or you justwant, like rent, if you can get
that thing positively gearedyeah, yeah, or they're great to
live in yeah, and personally Ithink I'm an apartment dude.
Speaker 1 (21:12):
Yeah, you see, yeah, you like apartments, you like
the ease of living, you don'twant to be jumping outside, I
don't want to drive I don't wantto drive, that is that is
exactly what I wanted to hear.
Yeah, so dullwood, chill that7800 uh new homes project.
Yeah, that is made for you.
(21:32):
You don't want to drive too far.
You want to have the ease ofaccess to the city?
Yeah, to other locations, okay,and you want a low maintenance
lifestyle.
Speaker 2 (21:43):
Yeah, essentially I hate mowing grass.
Speaker 1 (21:46):
So Dulwich Hill is going to be made for those young
Australians Now.
Will it grow in value becauseof its proximity to the city?
Yes, yeah, okay, but is itgoing to explode in value like a
house, land, duplexes, thosesorts of things?
No.
So I think the owner occupiersthe youth.
(22:06):
You and your fiancé, you wantsomewhere to live close to the
city.
This is going to be a greatoption for you.
That sort of area.
Our videographer, liam, this isgoing to be an option for him
if he wants to live close toSydney CBD.
My wife and I, if we were 10years younger, we would probably
be looking at delwich hill.
(22:26):
We would be looking at thatarea because it's central, it's
close to family you know there'sdayudes everywhere like we'd be
fine, it's a it's.
It's an important thing.
It's an important thing.
So, rather than thinking of itas an investment, it's going to
definitely be an occupier areaand I think that is the best way
to look at that.
So, yeah, you have to look atthe suburbs.
Is it going to definitely be anowner-occupier area?
And I think that is the bestway to look at that.
(22:47):
So you have to look at thesuburbs.
Is it going to be good for theowner-occupiers or the investors
.
Dulwich Hill, it's all going tobe vertical moving.
It's going to be great for theowner-occupiers Schofields.
It's going to be great for theinvestors because that's
unlocking a whole new area,different land, and that's going
to create connection ease ofaccess.
(23:07):
That's going to be great forsomebody that's looking to
invest and make money in capitalgrowth yeah, that makes sense.
Speaker 2 (23:12):
That makes a lot of sense, yeah, so, by the way,
this advice is all general innature.
All right, well, did I give it?
Okay, regardless.
It's there now, all right.
Well, that's, that's great,that is good news.
So this, not to get toopolitical, but it's there now,
all right.
Well, that's, that's great,that is good news.
So this, not to get toopolitical, but it's like,
obviously, housing policy, it'sa big issue right now.
Do you think that this issomething that will actually
(23:35):
help people get into homessooner?
Speaker 1 (23:38):
yes later.
Yeah, like actually effectivepolicy the only thing I'm
worried about is we're banningforeign investment for two years
.
Speaker 2 (23:45):
Oh the foreign investor ban yeah.
Speaker 1 (23:47):
On existing properties.
Speaker 2 (23:49):
Well, they're just going to buy this up, yeah.
Speaker 1 (23:51):
That's the only thing I'm worried about.
However, we have seen a lot ofChinese investors.
They've exited Australia, notcompletely, no, no, no, just
lesser rate, yeah, but they'relooking at markets like Dubai,
saudi Arabia, qatar, you know,where foreign investment tax is
a lot lower and you know.
Speaker 2 (24:11):
Populations are smaller and they're not really
crying about housing crises andstuff.
Speaker 1 (24:13):
But you're also seeing a lot more capital growth
.
Yeah, yeah, people are movingto those countries in droves,
like, especially, digital nomads.
They are picking up, they'regoing to Dubai.
They don't have to pay tax,they can set up a visa the
golden visa and live there for10 years and essentially have a
thriving company and connectwith a lot of people who are
(24:33):
looking for similaropportunities yeah, that can
make sense and the funny thingabout dubai is there's no dull
bludgers.
You work there.
Yeah, you have to make money orthey literally kick you out of
the country.
Oh you, you live here andyou're not working out like it's
people.
Police will come and knock onyour door and kick you out of
the country.
Oh my god it's a, it's a verystrange place oh well, bloody
(24:54):
hell.
Speaker 2 (24:54):
I've only been to the airport.
That is all I can say about it.
Speaker 1 (24:58):
To wrap that up, yeah , I'm hoping, because they're
new properties, we won't see toomuch of a foreign investment
boom.
You will see a little bitbecause their market is limited.
But depending on the area,speak to, I want to say, a
buyer's agent.
Don't speak to a real estateagent.
They'll sell you anything, yeah.
Speaker 2 (25:16):
Go to a buyer's agent .
Speaker 1 (25:17):
Speak to a good buyer's agent.
They'll put you in a goodposition and go from there.
Speaker 2 (25:21):
Okay, Well, that sounds great.
Well, going from there, let'sdo our favorite segment of the
show the client profile.
I won't throw you a curveballthis time.
This is a far more reasonableone.
All right, so we've got Debbieand she saved a 20% deposit and
has approached you to get helpfor a loan for a property that
she's already got her eye on.
So while in the process ofgetting pre-approval from a
(25:42):
lender, Debbie finds out theproperty that she wanted has
actually already sold and she'snow spent a solid amount of her
deposit on luxury items likeGucci handbags.
I actually overheard this.
Joey once did this.
Now she still wants to buy aproperty, but with a reduced
deposit.
But she doesn't actually wantto go for a cheaper property,
she wants to keep it at the samelevel.
How would you guide Debbie?
Speaker 1 (26:03):
I'm honest with my clients and I'm transparent.
I'm going to tell her thatshe's just fucked herself.
Yeah, you ruined it, Like she'sactually I'm not going to say
it in those words, but she'sessentially gone and ruined
quite a few things.
Because, number one now wecan't see if she's a responsible
spender.
Speaker 2 (26:19):
Yeah, yeah, and banks are going to see that, banks
are going to see that.
Speaker 1 (26:32):
When we are reviewing the bank statements, we are
going to see an exorbitantamount spent at Gucci.
Then we have to question thedeposit because it's a 20%
deposit and that has now reduced.
Let's say it's a 5% or a 10%deposit.
Banks are going to want to knowgenuine savings Now because
it's no longer a 20% deposit andthat has decreased.
Her interest rate is going togo up because banks lend based
on the tier.
Yeah, the less of a deposit youhave, the higher risk you are.
Speaker 2 (26:50):
The higher risk you are, the higher interest rate
that you have to pay yeah,standard practice and on top of
that the lender's mortgageinsurance yeah, which you have
to pay if you don't have a 20deposit depending on the lender.
Speaker 1 (27:02):
Depending on the lender, yeah.
So now we've got to get thatinvolved.
There are so many issues withwhat debbie has done and I'm
going to tell her can you get arefund?
Yeah, I can send it backbecause there's a chance.
The banks are going to look atthis and they're going to think
that you are.
You are an irresponsiblespender and you don't know how
(27:24):
to control your money.
You're going to be late onrepayments.
You're going to default.
We're going to kick you out ofyour house.
Damn yeah the banks are there tomake money, not kick you out of
your house.
They don't want to end up on acurrent affair.
Yeah, this is true.
The second thing is we have tobe realistic.
We are going to review theliving expenses for the six
months prior and we're going tosee is this a monthly thing?
(27:46):
Was she just given $200,000 togo buy a property?
Yeah, and then she lost theproperty, spent $50,000 on Gucci
bags.
We're going to look into thatas well.
Yeah, and then we are alsogoing to decide whether or not
we want a borrower like this,because if we have to spend this
much time telling someone,don't be an idiot yeah, stop
(28:08):
spending the money stop spendingmoney like this, then it's
going to be a waste of our timeyeah
okay, there's 56 000 brokers inaustralia.
Okay, if you'll come to me withthis issue and you can't
control your spending and thenthe next time we speak to each
other and you tell me you'vegone and you've spent this money
(28:28):
again, I'm going to tell youI'm sorry, I can't help you.
Yeah, my advice try steps forthe advice.
Try and get a refund.
You can't get a refund?
Okay, put those bags aside.
Try and resell them or keepthem.
You're never allowed to shop atgucci again.
Give your photo, tell them toban you.
Speaker 2 (28:46):
Yep, yep, yep.
Speaker 1 (28:46):
Okay, step number two be realistic.
Okay, you've reduced yourdeposit now.
Now we have to increase yourinterest rate.
Now we have to increase.
There's a potential that youhave to pay a lot of mortgage
insurance.
There's a whole bunch of otherthings.
So guess what?
No-transcript, if we have youpre-approved, conditionally
(29:20):
approved, whatever.
We have an unconditionalpre-approval, whatever you want
to call it fully assesspre-approval.
If we have that, if we fullyassess pre-approval.
If we have that, make the offerand try and go for the property
.
Now you do always have to thinkabout a property.
Get your 10-day calling offperiod, make sure you have a
good conveyance or solicitor,but don't go and spend that
money.
(29:40):
And if you are going to buythat property, make sure you
take into account what you'reactually doing.
You are going to be fiscallyresponsible for the next 30
years to make those repaymentsto purchase a house.
Don't go blow that money onthat sort of stuff.
Blow that money on that sort ofstuff later.
I'm not against people havingnice things.
(30:01):
I like nice things.
Speaker 2 (30:02):
You see what I wear, but I am against doing it
irresponsibly yeah, okay, whenthey don't they they technically
have the money, like the figureis in their account, but they
don't really have the money.
Speaker 1 (30:16):
They don't realize I know a hundred people that can
go and buy a lamborghini.
Yeah, okay, I know 99 peoplethat can't afford the upkeep of
a Lamborghini.
So service a Lamborghini is$20,000, $30,000.
Speaker 2 (30:30):
Yeah, the insurance as well.
Speaker 1 (30:31):
Insurance is high.
You can't drive it everywhere.
It's impractical.
Speaker 2 (30:36):
You're not going to pick up your kids in school.
Speaker 1 (30:38):
It's a two-seater, you have to buy another car,
where are you going to store itLike?
There's just so many thingsthat are involved.
So you just really have tohighlight what is important,
what's not important to you.
Speaker 2 (30:54):
And I would sit down and have that conversation.
Yeah.
Speaker 1 (30:55):
What are your actual financial goals?
What do you want to achieve?
Timeline it?
It's great that you bring thisexample up because another case
study.
Last year I had a client oh man, this was a hard loan, complete
financial distress-huh gotscammed, superannuation stolen
oh, wasn't an accident, was onworkers compensation okay, and
also told the lender their bank,even though they could afford
(31:15):
their repayments.
Hey, can you pause myrepayments for a second?
which is already like raisingred flags at the lender's side
so when you pause repayments,you go on worst repayment
history status.
So you get an RHI for a year.
Oh, no, no, no.
You get the financial hardshipone, the FHI, okay.
So if you've got an FHI on yourbank status, that means that
you have to wait 12 months forthat to be cleared before you
(31:37):
can go to a major lender.
So our options are alreadylimited.
Because her only source ofincome is workers' compensation.
There's like four banks thattake that.
Oh gosh, all right, four banksthat take that.
Now, all of a sudden, that hasreduced to three.
Sorry, that has reduced to one,because she's also got the
financial hardship Okay.
So they approached me.
They said I want to refinancemy mortgage, pay out all these
(32:00):
personal debts and I want to buya Mercedes AMG.
Speaker 2 (32:03):
Why when?
Speaker 1 (32:07):
you were already drowning.
So they got scammed, divorced,all that sort of stuff.
But I said to them on the phoneand I'll never forget this
conversation I go, you go andbuy that car.
I am not approving this.
I am not sending your loan tothis lender.
I am the only person that hashelped you, after you've gone to
18 other people to try and helpyou.
(32:29):
If you want the money to clearout your personal debts, if you
want the money to be able tobuild yourself back up, sure.
But if you're going to takethat money and put it in a
Mercedes AMG something that Inow know for a fact that you
don't have the money to insurethat you don't have the money to
put petrol in, Okay, yeah, Ifyou are going to do that, I am
not going to approve this loanfor you.
(32:50):
Imagine, imagine I don't evenhave the right to approve or not
approve a loan.
But I wasn't going to submit it.
Yeah, you weren't going to helpthem.
Speaker 2 (32:56):
Yeah, imagine you're falling off a boat no fault of
your own.
Speaker 1 (33:12):
You know choppy sea, you're falling in, you're
drowning and you go chuck me abag of bricks.
Yeah, the bag of bricks willhelp.
Speaker 2 (33:14):
Yeah, like it's just when I heard them say yes, I
want to buy a mercedes amg aftereverything else this person had
been through.
You're definitely not makingmoney.
Speaker 1 (33:17):
You're not going to make money on it, you're going
to lose money and you areputting yourself under more
financial duress.
And I even I know my cars.
That particular car has issuesso like it wasn't even a good
car.
No, it was one of the lower endamjs.
It was um the a45, I think it's.
Speaker 2 (33:34):
I can never remember the numbers that are attached to
it but it was.
Speaker 1 (33:37):
It's uh, they've got issues with turbos and stuff.
She's gonna buy somethingthat's a lemon, you know,
actually they want to spend 70thousand dollars on it.
So this is, this is the.
That's exactly what I said Isaid there's a hundred chiodas
online that have the samefeatures.
You've got apple carplay,you've got all these things.
And then they turned to me andsaid but I've got divorce
(33:58):
hearings and I want to be ableto show them that I'm strong and
I go.
You show them that you arestrong, not by showing up in an
amg, not by showing up in an AMG.
Not by showing up in an AMG,but by showing up that you are
strong and that you could payyour legal fees.
We submitted it, got it allapproved.
12 months later, they have comeback.
They've made all their payments.
Okay, they managed everything.
(34:18):
They cleared out all thepersonal debts that they had
owing.
And now they've approached mefor a car.
When things are done andthey're no longer on workers
compensation, they've got a jobfull-time.
Guess what?
Okay, you want to buy yourselfa car.
Now, let's get you a car, butnot when you are under that much
duress, and that's how you win.
Speaker 2 (34:38):
At least the story has a happy ending.
Speaker 1 (34:39):
Yes, it actually does we.
We actually got them formallyapproved a few days ago.
Oh, there you go now.
This is a true story.
I can't name names, but imaginehow hard I was clicking it when
all that stuff was going down.
Speaker 2 (34:50):
Oh my God, You've been tweaking man, but yeah, as
always, guys, borrow responsibly.
Speaker 1 (34:58):
Don't drink and borrow no sorry.
Speaker 2 (35:02):
When you borrow, don't drive.
Yeah, as always, guys, if youwant somebody to help you borrow
.
Speaker 1 (35:05):
Don't drive as always , guys.
If you want somebody to helpyou borrow responsibly, what a
segue.
You can visit us atwwwitsimplecomau.
Whether you, your friend,family, you need help with your
home loans, refinancing yourloans or purchasing your first
home we're there.
(35:25):
If you want to find us, we'rethere.
I'm tired, tired.
You can find us on linkedin.
You can find us on instagram.
I'm always available and, um,as always, my name is joe.
Speaker 2 (35:34):
I'm michael, you're no longer a schmo I still am a
bit of a schmo, you're gettingthere.
Speaker 1 (35:39):
We'll see you in the next episode time.
the issue with ignoring hex debt is it's still
a debt, it still has interest.
I hate the fact that they'repunishing kids okay for it, and
I hate the fact that I know Iknow personally firsthand people
under the age of 30 that aretrying to make it okay, that are
trying to build wealth andthey're trying to create an
(00:20):
opportunity for themselves, andthey're getting punished is this
good news for people trying toget on the popular ladder, or is
it just good news for investors?
Speaker 2 (00:26):
what's your opinion?
Speaker 1 (00:27):
I think that you're an investor.
You're looking for two thingscash flow and capital growth.
Go look at apartments in mumbai2016.
They cost 800 grand 2025 850they didn't grow that much.
Speaker 2 (00:43):
Obviously, housing policy it's a big issue right
now.
Do you think that this issomething that will actually
help people get into homessooner?
Speaker 1 (00:53):
So I'm of the personal opinion that Welcome to
the Finance Show with Joe.
Speaker 2 (01:02):
He's Joe, I'm just some schmo named Michael, and
today we're actually going to betalking about a couple of
things more so about first-timebuyers and younger people and
how that helps them in themarket, Because Jim Chalmers,
our federal treasurer, he hasliterally told lenders to ignore
hex and help debts when doingtheir debt calculations, which
is huge, because last year theygot rid of that crazy indexation
(01:26):
rate.
That happened when, because itwas the indexation was based on
inflation, was it or CPI orsomething like that?
Speaker 1 (01:32):
It was based on inflation prior to them bringing
it down to a different rate.
Speaker 2 (01:37):
It's a different rate now, but anyway that went down.
So they're really trying toimprove first-time buyers'
capacity really, because I wouldsay that's probably the
majority of people who have ahex debt right now.
Am I correct in saying that?
Speaker 1 (01:47):
You are correct in saying that.
Very interesting that he's comeout and said this and,
regardless of what he's saying,you shouldn't account for it and
you should base theindividual's income on the
income.
That's not how the fuckingworld works, jim.
I'm sorry to say this, but Iwould love to be able to ignore
hex debt to be able to helpindividual borrowers.
(02:10):
The issue with ignoring hexdebt is it's still a debt.
It still has interest.
It's no longer that 0.1interest that it used to be.
I think last year was threepercent the year before was like
six, it was something stupidright, so to say oh no, we're
going to ignore this debtcompletely.
It's uh, it's not going tohappen.
(02:31):
It's an empty promise.
The it's the.
The treasurer has come out tosay this to win favor amongst
young people.
However, I will add that thelenders calculated incorrectly,
so I almost got fired atMacquarie for this.
I'm just going to highlight thisargument that I had eight years
(02:51):
ago.
Okay, okay, it was myself, 20people from credit, everyone in
the direct team and everyone inthe private team, and I put my
hand up and I said why are wenot including Hex in monthly
expenses?
And it started a riot.
It started a two-hour argumentof why we should not be included
(03:12):
HECS debt in living expenses.
Okay, because this is notsomething that the individuals
at uni have control over.
At the time, it was notsomething that had a high
interest rate.
We saw, a couple of years ago,people paying like 6% or
whatever it was, on their HECSdebt.
Back then, back in 2018, it was0.1%, so it was a bit of
(03:35):
monthly expenditure that itwasn't a debt to a car, it
wasn't a personal loan.
It was something to help themin their education yeah, in
their education.
Speaker 2 (03:44):
Yeah, and the careers hopefully.
Speaker 1 (03:47):
A hundred percent.
I had the head of credit say tome I'm going to check every
single one of your files movingforward.
I'm like why.
I want to understand why wecannot include this in the
weekly expenses.
The problem also with a lot oflenders is, for some reason I
don't know if they've allupdated it, but some of them
have included a buffer on Hexdebt.
Speaker 2 (04:07):
That was another one of the things he was like get
rid of that buffer.
Speaker 1 (04:10):
Yeah.
So, regardless of whatever theinterest rate was, they were
adding 2% or 3% on top of thatOf whatever your Hex repayments
are.
They're saying, nah, 3% more.
So instead of them paying a,what was it?
3.99%, sure, something lastyear.
Nah, you're not paying 3.99% onyour $70,000 Hex debt, You're
(04:31):
paying 7%.
People were unable to affordproperty because of that buffer
rate.
So I'm of the personal opinionthat Hex it does need to be
included, because somebodythat's paying Hex and someone
that's not paying Hex if you'remaking $90,000 a year and you
(04:53):
are paying Hex, your take-homesalary is $2,500 a fortnight.
That's correct.
If you are not paying Hex, it's$2,700 a fortnight.
Yeah, so it's about $ afortnight.
Yeah, so it's about 200 bucksyeah, so it's 200 difference,
200 difference.
Multiply that by 26 fortnight26 fortnights, 5200 a year.
(05:14):
Yeah, okay to say oh, no, don'tinclude the hex debt.
No, no, you have to include thehex debt.
If somebody has an extra 5200 ayear to spend… Increases their
borrowing capacity.
That is an increase of about Idon't know, $100,000 or so if
they get rid of their HECS debt.
I can't remember the exactfigures, but it's something
(05:35):
stupid, yeah, to just say toinclude it in the monthly living
expenses, because it's notsupposed to be a rate that
spikes up, goes down, and if yousee on a payslip, the amount
(05:57):
that you pay back to Hex is notdependent on what the interest
that they charge is, it'sdependent on your salary.
Yeah, yeah, yeah.
So if you've got a $40,000 Hexdebt okay, for example and
you're making $90,000 a year,you're paid $200 a week Fortnite
, sorry.
If you've got an $80,000 Hexdebt and you're earning $90,000
(06:17):
a year, you're paid $200 aFortnite.
Yeah, and obviously and it goesover and over $200 a fortnight,
yeah, and it goes over, andover $250,000 Hex debt, you're
still paid $200 a fortnight.
Speaker 2 (06:27):
Yeah.
Speaker 1 (06:27):
Yeah.
So the way that they'recalculating it is incorrect.
The way the banks assessed itis completely incorrect.
I'm on Jim Chalmers' side forone small portion of it,
no-transcript.
But I'm going to add that thisis how they should calculate it.
Don't calculate it based onwhat their interest rate is or
(06:49):
what the month of the.
Don't calculate it based onthat.
Don't include a buffer on hex.
You're already punishing theyouth enough.
People that are 30 and underare already struggling to be
able to purchase a property andthen you're going to turn around
and say to them oh no, no, no,guess what.
Oldie Mc, old old over therewho purchased his property in
1980 and paid off his onethousand dollar hex balance when
(07:10):
he, five years after uni or hegot it for free or he got it for
free, he's completely fine.
Yeah, okay, but the personthat's just gone to uni, done it
tough for four years, relocatedeverything.
No, no, no, we're going topunish them for it.
Yeah, guess what oldie mc oldold is going to look at the
apartment that you know theyoung kid wants to buy and say,
oh, that's a good investment Iwas gonna say yeah yeah, that's
(07:31):
gonna make me 600 bucks a week.
I love that and then the otherkid is gonna go, but I wanted
that house I wanted to livethere.
I wanted to live there.
I wanted to get out of there.
Speaker 2 (07:39):
I don't want to be paying someone rent, so this is
where we're at rent-a-festy, butthen you don't have the money.
Speaker 1 (07:44):
Yeah, there's so many things, so I'm going to be a
bit rage-baity right now.
Yeah, no, and I'm just going tohighlight it.
You can't ignore it.
But you also have to factor itin.
You have to factor in how muchhex do they pay based on their
income level?
It's fucking dumb.
Speaker 2 (08:07):
That makes sense as well, because, well, like you
said, it's it's it's a hugedifference.
Because it's it's it's interestin a sense, but it's not pay
like again, you don't pay moreif you don't earn more.
Speaker 1 (08:17):
So, yeah, I'm gonna give you the the best fucking
example.
Listen to how passionate I amright now because I'm so
agitated I didn't know this hexthing would get him going like
this.
Speaker 2 (08:28):
I fucking hate it, I hate I hate hex.
Speaker 1 (08:31):
I think I think the way that the lenders assess it
is stupid.
I think the way that thegovernment assesses it is stupid
.
I hate the fact that they'repunishing kids okay for it.
And I hate the fact that I know, I know personally firsthand
people under the age of 30 thatare trying to make it okay, that
are trying to build wealth andthey're trying to create an
(08:51):
opportunity for themselves, andthey're getting punished yeah,
and it especially sucks too,because they were told that
going to uni was a way to, to doit like to, to earn heaps of
money and get ahead in life mykids becoming a plumber?
no doubt, no doubt.
Year 10 bang plumber.
My degree is in economics andmaths.
Do you know what you could dowith that?
It's the most generic degreeever.
(09:14):
I'm a mortgage broker now.
It is so freaking generic, ohgoodness.
So why did I go to uni and paya thirty thousand dollar hex
debt?
Yeah, for for what?
Speaker 2 (09:24):
for something something I'm I'm now business
owner.
You didn't need to go to unifor that.
I didn't need to go to uni forit.
Speaker 1 (09:30):
I didn't Do you know how long it takes to become a
mortgage broker, a qualifiedmortgage broker?
A couple of months.
I wish it's a two day course.
I said a couple of months, it'sa two-day course.
Speaker 2 (09:42):
I asked that a couple of months.
Speaker 1 (09:44):
It's a two-day course to become a qualified mortgage
broker.
Damn, and all of thesecompanies.
I'm rambling, liam.
I'm sorry, put it on the editroom floor.
It is a two-day course to beable to handle somebody's life
savings.
It's a two-day course to beable to create a mortgage for
someone.
It is a two-day course to beable to earn that high of a
commission, all of it.
(10:05):
I didn't need my degree ineconomics and maths.
It's good that I have itbecause I can look at things and
problem solve them quitequickly.
Speaker 2 (10:13):
Your brain is now wired to think a different way,
which?
Speaker 1 (10:16):
is beneficial.
But to become a mortgage broker, it's a two-day course and I
can guarantee you.
I can guarantee you the top 30%mortgage brokers I'm not
talking the top 5%.
The top 30% mortgage brokersare earning a lot more than 100%
of the economists out there,Guaranteed.
Anyways, back to what I wassaying.
(10:36):
Fuck, what was I saying?
Speaker 2 (10:38):
I don't even know anymore, but I'm taking it back.
Speaker 1 (10:42):
So this is back to my example.
I had a client last year Okay,love this client.
Kn my example.
I had a client last year Okay,love this client, known them for
15 years.
Okay, I see them every day atthe gym, four in the morning.
Okay, they're working out.
They approach me and they go.
Hey, I want to purchase anotherinvestment property.
Fantastic, had a look at theirjob Owning good money.
They've got their Hex debt leftover.
(11:08):
Fantastic, and they've gottheir property.
They've got a red brickapartment over in Genali.
Okay, property's growing invalue.
They want to refinance.
They want to purchase anotherinvestment With the Hex debt
$40,000 Hex debt.
The maximum that they couldborrow was $399,000.
Speaker 2 (11:24):
Which isn't getting you anything.
Speaker 1 (11:25):
Not only that, their mortgage was more than that
because of the increase ininterest rates, oh yep.
Okay, yep, okay.
Without the hex debt, theycould borrow $500,000.
Which might get you anapartment somewhere.
Make that make sense.
You've got $40,000 in hex debt,so their overall debt level was
$440,000.
But if we got rid of the HECSdebt, they could borrow $500,000
(11:48):
.
Speaker 2 (11:48):
So there's, a $60,000 increase.
Speaker 1 (11:52):
Their HECS balance didn't go down because of these
stupid interest rates.
Because if they were makingrepayments based off what the
interest rate was and theprincipal and everything, okay,
they could eventually pay thatHECS debt off.
But all they're doing is justpaying interest because they've
changed the way that HECS debtis assessed by the government
and because of the wage levels.
So instead of us saying, hey,can you stay put and wait until
(12:15):
the interest rates come down, wecreated the opportunity for
them.
We said to the lender hey,we're actually going to
refinance them and we're goingto pay out their HECS debt.
Here is the b pay slip for youto go and pay out the hex debt
forty thousand dollar balance.
Then, all of a sudden they'vegot sixty thousand dollars in
equity.
Yeah, they could purchase aninvestment property making money
(12:36):
stamp duty and guess what?
their take-home income was evenhigher as well.
They increased their cash flow.
Yeah, they increased their cashflow by getting rid of that hex
debt.
I think that we increased thecash flow by like $3,000 as well
, so there was $63,000 betteroff.
It's amazing.
So when I get people say to meshould I pay my hex balance off,
(13:00):
is it going to give me a betterborrowing solution?
Yes, yeah, if you have themeans to pay off your, pay it
off.
Speaker 2 (13:10):
Yeah, okay, okay, because it's going to open up a
world of opportunity for you,even if, even if all it does is
improve cash flow worth itimproves cash flow.
Speaker 1 (13:19):
It improves your borrowing capabilities, it
improves your opportunity.
This two's $200 a fortnightOkay, it doesn't sound like a
lot like in the grand scheme ofthings, it's the little things.
$200 a fortnight is $5,200 ayear.
$5,200 a year, that's a holidayto New Zealand.
(13:40):
Maybe you need a mental break.
Camera equipment upskillingyourself, starting your own
business, creating a side hustle$5,200, ailling yourself,
starting your own business,creating a side hustle $5,200 a
year could definitely go towardsthat.
Yeah, invest in yourself.
Investing in yourself yeah, soroundabout, long way to give you
an answer.
Pay off the hex, yeah, okay.
And an answer to the banks aswell.
(14:01):
Hey, guess what?
Change the way that you assessit.
It's not based on interest, itis based on it's not a normal
loan.
Speaker 2 (14:08):
Yeah, it's not it's not a normal loan it is not
which has benefits and drawbacks, as we've just explained.
Yeah, now speaking of benefitsand drawbacks and where to put
your money that's an amazingsegue.
So after my uh 20 minute rant,there are 25,000 homes set to be
built in New South Wales, andit's not literally the houses
(14:29):
being built, it's a lot ofinfrastructure stuff, which
isn't sexy yes, it is, but it isessential Now, and this is just
New South Wales.
This is part of the overallfederal government's housing
support program.
You remember that 1.2 millionhomes thing?
Yeah, this is part of that.
Speaker 1 (14:45):
Nice.
Speaker 2 (14:46):
There's $182 million being invested in New South
Wales in these suburbs.
So Kempsey $45 million,goulburn $27 million, griffith
$10 million, cessnock $22million, moruya $4 million,
parramatta $10 million,schofield $13 million and
Dulwich Hill $6.2 million.
And that's all forinfrastructure, basically New
(15:13):
roads, water treatment,stormwater stuff, those kinds of
things.
Not sexy but it does unlockpotential for new homes.
Speaker 1 (15:16):
That's amazing.
Speaker 2 (15:17):
Is this good news for people trying to get on the
popular ladder, or is it justgood news for investors?
What's your opinion?
Speaker 1 (15:22):
It's good news for both, and the reason I want to
highlight it's good news forboth is the suburbs that are
being taken on.
Number one is Goulburn.
Canberra has become tooexpensive to live in.
Too many roundabouts.
Speaker 2 (15:34):
You've got to pay to upkeep them.
Speaker 1 (15:37):
But Canberra it was a hotspot.
Property grew in line withVictoria and New South Wales
over the booms.
I think the median house pricegot to like 1.2 million 1.3
million.
So a lot of people in act foundit too expensive yeah yeah, 40
(15:57):
minutes up the road on highway.
Highway driving is differentcity driving.
45 minutes up the road on ahighway, you have have Goulburn.
You're buying for a third ofthat price.
Speaker 2 (16:07):
Yeah, and you get the big ram.
So, you get that too, cut thatout.
Speaker 1 (16:18):
Goulburn, for example .
I've seen a lot of my ownclients purchasing Goulburn.
Speaker 2 (16:25):
Okay.
Speaker 1 (16:26):
Property's going up in value there.
It's a great spot.
This investment is probablygoing to unlock more land down
there.
Yeah, you have a lot ofgovernment workers actually
finding it easier to drive fromcertain parts of Goulburn into
Canberra than from purchasingsomewhere on one of the outer
(16:48):
suburbs of Canberra and thendriving in.
Speaker 2 (16:50):
Yeah, okay.
Speaker 1 (16:51):
So Goulburn, I think, is going to benefit quite a lot
on both the owner-occupied andthe investor side.
Speaker 2 (16:57):
Okay, Well, I mean the government estimates say
this is going to be about 430new homes, that's fantastic.
Speaker 1 (17:04):
Yeah, a lot of Goulburn is old, a lot of it is
heritage.
By providing thatinfrastructure, it's going to
open up the market for a lot ofpeople.
Yeah, I think owner-occupiedpeople are going to benefit the
most in Goulburn 100%, becauseit's not really an investment
hotspot.
Speaker 2 (17:21):
Although, if it becomes more general knowledge,
if you're working in Can, ifthis, if it becomes more general
knowledge, um, if you're livingin or working in Canberra to
that is cheaper to live inGoulburn than Canberra itself.
Maybe we might see that change.
Speaker 1 (17:32):
Parramatta Massive winner, Massive winner
Parramatta's the second CBD.
I have have you gone to the newParramatta square.
Speaker 2 (17:41):
No, I've just been on the train in the station, so I
kind of whatever I can see outthe window.
Speaker 1 (17:45):
It looks like Sydney CBD.
Speaker 2 (17:48):
Oh yeah, it definitely does.
If I'm not paying attention, Ithink I'm in central sometimes.
Speaker 1 (17:51):
Yeah, it is phenomenal.
If they want to invest in it,make it the second city, make it
the second part of Sydney.
They've done a great job.
Speaker 2 (18:00):
Well, they've got yeah, they've got that light
rail now as well.
Speaker 1 (18:07):
So previously about light rail now as well.
Yeah, so previously, paramatahad an issue with oversupply of
apartments.
Yeah, yeah, what thisinfrastructure project is going
to do is it's going to open up alot of travel between paramata,
cbd and sydney, cbd andpotentially other suburbs, and
it will allow paramata to becomemore of a hub and it will
provide ease of access forpeople, yeah, who need to work
in that area, and paramount is apretty convenient location it's
(18:28):
fantastic yeah, so this is um.
Speaker 2 (18:30):
This will enable estimate estimated to enable 15
000 homes it's fucking sick umscofields.
Speaker 1 (18:37):
Same as the other stuff I was talking about before
.
Yeah, you know an 86 meterbridge yeah, I'm not.
Speaker 2 (18:44):
I'm guessing it goes over the hawksbury or something
like that, Because I live nearSchofields and I'm not really
sure where that bridge issupposed to go.
But that $13 million issupposed to enable 235 new homes
.
Speaker 1 (18:54):
Dulwich Hill 7,800 new homes.
That's huge.
So Dulwich Hill next toMarrickville Enmore, I feel like
it's all in that area in andaround the inner west yeah, the
inner west is all heritage yeah,which is, I think.
Speaker 2 (19:10):
So, what they're doing.
They actually, as opposed tothe other ones.
They're actually doing atransport tunnel under old
canterbury road, yeah, and thatis then supposed to link each
side of the road in differentsuburbs, where they can.
I'm guessing the heritage isn'tthat prevalent, or maybe
they've already knocked down, ormaybe they're just changing the
zoning.
I'm not really sure.
I don't really know how the7,800 new homes thing will fit.
Speaker 1 (19:34):
It's going to be apartments.
Surely right, it has to be.
It's going to be 20 lots ofapartments.
Each block is going to have Godknows how many, but that's
actually better for owneroccupiers than investors.
Now, it's a decent spot to livein.
We spoke about it countlesstimes on the show yeah if you
want to buy and make money, gofor something that's got land.
(19:56):
If you want to buy somewherethat you want to live, go and
buy an apartment.
Yeah, okay, because apartmentslow upkeep, you don't have to go
mow the grass, you've got topay strata.
Nobody likes to pay strata, butthat is the cost that you pay
for that sort of convenience.
My opinion is, the biggestbenefit for Double Chill is
actually going to be people thatare looking to purchase
(20:17):
unoccupied properties, asopposed to potential investors.
When you're an investor, you'relooking for two things cash
flow and capital growth.
Yeah, how did I forget?
that um but you're looking forthose two things, go look at
apartments in bombay 2016 thatcost 800 grand 2025 850.
(20:39):
They didn't grow that much okayokay, go look at apartments in
paramount 10 years ago, 700k.
10 years later, 770, somethingalong yeah, yeah, yeah, so it's.
Speaker 2 (20:51):
You're not seeing.
I mean the apartments inaustralia.
Never see that explosive growth.
They don't land prop likehouses they don't.
But apartments are great fordepreciation and they're great
for cash flow yeah, or you justwant, like rent, if you can get
that thing positively gearedyeah, yeah, or they're great to
live in yeah, and personally Ithink I'm an apartment dude.
Speaker 1 (21:12):
Yeah, you see, yeah, you like apartments, you like
the ease of living, you don'twant to be jumping outside, I
don't want to drive I don't wantto drive, that is that is
exactly what I wanted to hear.
Yeah, so dullwood, chill that7800 uh new homes project.
Yeah, that is made for you.
(21:32):
You don't want to drive too far.
You want to have the ease ofaccess to the city?
Yeah, to other locations, okay,and you want a low maintenance
lifestyle.
Speaker 2 (21:43):
Yeah, essentially I hate mowing grass.
Speaker 1 (21:46):
So Dulwich Hill is going to be made for those young
Australians Now.
Will it grow in value becauseof its proximity to the city?
Yes, yeah, okay, but is itgoing to explode in value like a
house, land, duplexes, thosesorts of things?
No.
So I think the owner occupiersthe youth.
(22:06):
You and your fiancé, you wantsomewhere to live close to the
city.
This is going to be a greatoption for you.
That sort of area.
Our videographer, liam, this isgoing to be an option for him
if he wants to live close toSydney CBD.
My wife and I, if we were 10years younger, we would probably
be looking at delwich hill.
(22:26):
We would be looking at thatarea because it's central, it's
close to family you know there'sdayudes everywhere like we'd be
fine, it's a it's.
It's an important thing.
It's an important thing.
So, rather than thinking of itas an investment, it's going to
definitely be an occupier areaand I think that is the best way
to look at that.
So, yeah, you have to look atthe suburbs.
Is it going to definitely be anowner-occupier area?
And I think that is the bestway to look at that.
(22:47):
So you have to look at thesuburbs.
Is it going to be good for theowner-occupiers or the investors
.
Dulwich Hill, it's all going tobe vertical moving.
It's going to be great for theowner-occupiers Schofields.
It's going to be great for theinvestors because that's
unlocking a whole new area,different land, and that's going
to create connection ease ofaccess.
(23:07):
That's going to be great forsomebody that's looking to
invest and make money in capitalgrowth yeah, that makes sense.
Speaker 2 (23:12):
That makes a lot of sense, yeah, so, by the way,
this advice is all general innature.
All right, well, did I give it?
Okay, regardless.
It's there now, all right.
Well, that's, that's great,that is good news.
So this, not to get toopolitical, but it's there now,
all right.
Well, that's, that's great,that is good news.
So this, not to get toopolitical, but it's like,
obviously, housing policy, it'sa big issue right now.
Do you think that this issomething that will actually
(23:35):
help people get into homessooner?
Speaker 1 (23:38):
yes later.
Yeah, like actually effectivepolicy the only thing I'm
worried about is we're banningforeign investment for two years
.
Speaker 2 (23:45):
Oh the foreign investor ban yeah.
Speaker 1 (23:47):
On existing properties.
Speaker 2 (23:49):
Well, they're just going to buy this up, yeah.
Speaker 1 (23:51):
That's the only thing I'm worried about.
However, we have seen a lot ofChinese investors.
They've exited Australia, notcompletely, no, no, no, just
lesser rate, yeah, but they'relooking at markets like Dubai,
saudi Arabia, qatar, you know,where foreign investment tax is
a lot lower and you know.
Speaker 2 (24:11):
Populations are smaller and they're not really
crying about housing crises andstuff.
Speaker 1 (24:13):
But you're also seeing a lot more capital growth
.
Yeah, yeah, people are movingto those countries in droves,
like, especially, digital nomads.
They are picking up, they'regoing to Dubai.
They don't have to pay tax,they can set up a visa the
golden visa and live there for10 years and essentially have a
thriving company and connectwith a lot of people who are
(24:33):
looking for similaropportunities yeah, that can
make sense and the funny thingabout dubai is there's no dull
bludgers.
You work there.
Yeah, you have to make money orthey literally kick you out of
the country.
Oh you, you live here andyou're not working out like it's
people.
Police will come and knock onyour door and kick you out of
the country.
Oh my god it's a, it's a verystrange place oh well, bloody
(24:54):
hell.
Speaker 2 (24:54):
I've only been to the airport.
That is all I can say about it.
Speaker 1 (24:58):
To wrap that up, yeah , I'm hoping, because they're
new properties, we won't see toomuch of a foreign investment
boom.
You will see a little bitbecause their market is limited.
But depending on the area,speak to, I want to say, a
buyer's agent.
Don't speak to a real estateagent.
They'll sell you anything, yeah.
Speaker 2 (25:16):
Go to a buyer's agent .
Speaker 1 (25:17):
Speak to a good buyer's agent.
They'll put you in a goodposition and go from there.
Speaker 2 (25:21):
Okay, Well, that sounds great.
Well, going from there, let'sdo our favorite segment of the
show the client profile.
I won't throw you a curveballthis time.
This is a far more reasonableone.
All right, so we've got Debbieand she saved a 20% deposit and
has approached you to get helpfor a loan for a property that
she's already got her eye on.
So while in the process ofgetting pre-approval from a
(25:42):
lender, Debbie finds out theproperty that she wanted has
actually already sold and she'snow spent a solid amount of her
deposit on luxury items likeGucci handbags.
I actually overheard this.
Joey once did this.
Now she still wants to buy aproperty, but with a reduced
deposit.
But she doesn't actually wantto go for a cheaper property,
she wants to keep it at the samelevel.
How would you guide Debbie?
Speaker 1 (26:03):
I'm honest with my clients and I'm transparent.
I'm going to tell her thatshe's just fucked herself.
Yeah, you ruined it, Like she'sactually I'm not going to say
it in those words, but she'sessentially gone and ruined
quite a few things.
Because, number one now wecan't see if she's a responsible
spender.
Speaker 2 (26:19):
Yeah, yeah, and banks are going to see that, banks
are going to see that.
Speaker 1 (26:32):
When we are reviewing the bank statements, we are
going to see an exorbitantamount spent at Gucci.
Then we have to question thedeposit because it's a 20%
deposit and that has now reduced.
Let's say it's a 5% or a 10%deposit.
Banks are going to want to knowgenuine savings Now because
it's no longer a 20% deposit andthat has decreased.
Her interest rate is going togo up because banks lend based
on the tier.
Yeah, the less of a deposit youhave, the higher risk you are.
Speaker 2 (26:50):
The higher risk you are, the higher interest rate
that you have to pay yeah,standard practice and on top of
that the lender's mortgageinsurance yeah, which you have
to pay if you don't have a 20deposit depending on the lender.
Speaker 1 (27:02):
Depending on the lender, yeah.
So now we've got to get thatinvolved.
There are so many issues withwhat debbie has done and I'm
going to tell her can you get arefund?
Yeah, I can send it backbecause there's a chance.
The banks are going to look atthis and they're going to think
that you are.
You are an irresponsiblespender and you don't know how
(27:24):
to control your money.
You're going to be late onrepayments.
You're going to default.
We're going to kick you out ofyour house.
Damn yeah the banks are there tomake money, not kick you out of
your house.
They don't want to end up on acurrent affair.
Yeah, this is true.
The second thing is we have tobe realistic.
We are going to review theliving expenses for the six
months prior and we're going tosee is this a monthly thing?
(27:46):
Was she just given $200,000 togo buy a property?
Yeah, and then she lost theproperty, spent $50,000 on Gucci
bags.
We're going to look into thatas well.
Yeah, and then we are alsogoing to decide whether or not
we want a borrower like this,because if we have to spend this
much time telling someone,don't be an idiot yeah, stop
(28:08):
spending the money stop spendingmoney like this, then it's
going to be a waste of our timeyeah
okay, there's 56 000 brokers inaustralia.
Okay, if you'll come to me withthis issue and you can't
control your spending and thenthe next time we speak to each
other and you tell me you'vegone and you've spent this money
(28:28):
again, I'm going to tell youI'm sorry, I can't help you.
Yeah, my advice try steps forthe advice.
Try and get a refund.
You can't get a refund?
Okay, put those bags aside.
Try and resell them or keepthem.
You're never allowed to shop atgucci again.
Give your photo, tell them toban you.
Speaker 2 (28:46):
Yep, yep, yep.
Speaker 1 (28:46):
Okay, step number two be realistic.
Okay, you've reduced yourdeposit now.
Now we have to increase yourinterest rate.
Now we have to increase.
There's a potential that youhave to pay a lot of mortgage
insurance.
There's a whole bunch of otherthings.
So guess what?
No-transcript, if we have youpre-approved, conditionally
(29:20):
approved, whatever.
We have an unconditionalpre-approval, whatever you want
to call it fully assesspre-approval.
If we have that, if we fullyassess pre-approval.
If we have that, make the offerand try and go for the property
.
Now you do always have to thinkabout a property.
Get your 10-day calling offperiod, make sure you have a
good conveyance or solicitor,but don't go and spend that
money.
(29:40):
And if you are going to buythat property, make sure you
take into account what you'reactually doing.
You are going to be fiscallyresponsible for the next 30
years to make those repaymentsto purchase a house.
Don't go blow that money onthat sort of stuff.
Blow that money on that sort ofstuff later.
I'm not against people havingnice things.
(30:01):
I like nice things.
Speaker 2 (30:02):
You see what I wear, but I am against doing it
irresponsibly yeah, okay, whenthey don't they they technically
have the money, like the figureis in their account, but they
don't really have the money.
Speaker 1 (30:16):
They don't realize I know a hundred people that can
go and buy a lamborghini.
Yeah, okay, I know 99 peoplethat can't afford the upkeep of
a Lamborghini.
So service a Lamborghini is$20,000, $30,000.
Speaker 2 (30:30):
Yeah, the insurance as well.
Speaker 1 (30:31):
Insurance is high.
You can't drive it everywhere.
It's impractical.
Speaker 2 (30:36):
You're not going to pick up your kids in school.
Speaker 1 (30:38):
It's a two-seater, you have to buy another car,
where are you going to store itLike?
There's just so many thingsthat are involved.
So you just really have tohighlight what is important,
what's not important to you.
Speaker 2 (30:54):
And I would sit down and have that conversation.
Yeah.
Speaker 1 (30:55):
What are your actual financial goals?
What do you want to achieve?
Timeline it?
It's great that you bring thisexample up because another case
study.
Last year I had a client oh man, this was a hard loan, complete
financial distress-huh gotscammed, superannuation stolen
oh, wasn't an accident, was onworkers compensation okay, and
also told the lender their bank,even though they could afford
(31:15):
their repayments.
Hey, can you pause myrepayments for a second?
which is already like raisingred flags at the lender's side
so when you pause repayments,you go on worst repayment
history status.
So you get an RHI for a year.
Oh, no, no, no.
You get the financial hardshipone, the FHI, okay.
So if you've got an FHI on yourbank status, that means that
you have to wait 12 months forthat to be cleared before you
(31:37):
can go to a major lender.
So our options are alreadylimited.
Because her only source ofincome is workers' compensation.
There's like four banks thattake that.
Oh gosh, all right, four banksthat take that.
Now, all of a sudden, that hasreduced to three.
Sorry, that has reduced to one,because she's also got the
financial hardship Okay.
So they approached me.
They said I want to refinancemy mortgage, pay out all these
(32:00):
personal debts and I want to buya Mercedes AMG.
Speaker 2 (32:03):
Why when?
Speaker 1 (32:07):
you were already drowning.
So they got scammed, divorced,all that sort of stuff.
But I said to them on the phoneand I'll never forget this
conversation I go, you go andbuy that car.
I am not approving this.
I am not sending your loan tothis lender.
I am the only person that hashelped you, after you've gone to
18 other people to try and helpyou.
(32:29):
If you want the money to clearout your personal debts, if you
want the money to be able tobuild yourself back up, sure.
But if you're going to takethat money and put it in a
Mercedes AMG something that Inow know for a fact that you
don't have the money to insurethat you don't have the money to
put petrol in, Okay, yeah, Ifyou are going to do that, I am
not going to approve this loanfor you.
(32:50):
Imagine, imagine I don't evenhave the right to approve or not
approve a loan.
But I wasn't going to submit it.
Yeah, you weren't going to helpthem.
Speaker 2 (32:56):
Yeah, imagine you're falling off a boat no fault of
your own.
Speaker 1 (33:12):
You know choppy sea, you're falling in, you're
drowning and you go chuck me abag of bricks.
Yeah, the bag of bricks willhelp.
Speaker 2 (33:14):
Yeah, like it's just when I heard them say yes, I
want to buy a mercedes amg aftereverything else this person had
been through.
You're definitely not makingmoney.
Speaker 1 (33:17):
You're not going to make money on it, you're going
to lose money and you areputting yourself under more
financial duress.
And I even I know my cars.
That particular car has issuesso like it wasn't even a good
car.
No, it was one of the lower endamjs.
It was um the a45, I think it's.
Speaker 2 (33:34):
I can never remember the numbers that are attached to
it but it was.
Speaker 1 (33:37):
It's uh, they've got issues with turbos and stuff.
She's gonna buy somethingthat's a lemon, you know,
actually they want to spend 70thousand dollars on it.
So this is, this is the.
That's exactly what I said Isaid there's a hundred chiodas
online that have the samefeatures.
You've got apple carplay,you've got all these things.
And then they turned to me andsaid but I've got divorce
(33:58):
hearings and I want to be ableto show them that I'm strong and
I go.
You show them that you arestrong, not by showing up in an
amg, not by showing up in an AMG.
Not by showing up in an AMG,but by showing up that you are
strong and that you could payyour legal fees.
We submitted it, got it allapproved.
12 months later, they have comeback.
They've made all their payments.
Okay, they managed everything.
(34:18):
They cleared out all thepersonal debts that they had
owing.
And now they've approached mefor a car.
When things are done andthey're no longer on workers
compensation, they've got a jobfull-time.
Guess what?
Okay, you want to buy yourselfa car.
Now, let's get you a car, butnot when you are under that much
duress, and that's how you win.
Speaker 2 (34:38):
At least the story has a happy ending.
Speaker 1 (34:39):
Yes, it actually does we.
We actually got them formallyapproved a few days ago.
Oh, there you go now.
This is a true story.
I can't name names, but imaginehow hard I was clicking it when
all that stuff was going down.
Speaker 2 (34:50):
Oh my God, You've been tweaking man, but yeah, as
always, guys, borrow responsibly.
Speaker 1 (34:58):
Don't drink and borrow no sorry.
Speaker 2 (35:02):
When you borrow, don't drive.
Yeah, as always, guys, if youwant somebody to help you borrow
.
Speaker 1 (35:05):
Don't drive as always , guys.
If you want somebody to helpyou borrow responsibly, what a
segue.
You can visit us atwwwitsimplecomau.
Whether you, your friend,family, you need help with your
home loans, refinancing yourloans or purchasing your first
home we're there.
(35:25):
If you want to find us, we'rethere.
I'm tired, tired.
You can find us on linkedin.
You can find us on instagram.
I'm always available and, um,as always, my name is joe.
Speaker 2 (35:34):
I'm michael, you're no longer a schmo I still am a
bit of a schmo, you're gettingthere.
Speaker 1 (35:39):
We'll see you in the next episode time.
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Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.