The $7,000 ‘set and forget’ mistake

Are you still on the same home loan you signed up for years ago? 

 You could be paying thousands more than you need to and not even know it.

 In this episode, our host Adam Schaal sits down with Ankit Kaushik, a broker at Locale Financial, to unpack one of the most common (and costly) mistakes Australian homeowners make: doing nothing with their mortgage.

They break down exactly what refinancing is, why your loyalty to your lender could be quietly costing you up to $7,000 a year, and why so many people put it off despite the clear financial upside.

We cover:

• The real benefits of refinancing, from lower repayments to accessing equity
• The "loyalty tax" and how staying with your current lender can quietly drain your wallet
• The barriers that stop people from refinancing (and why most of them aren't as real as you think)
• How to take action today and start saving

Whether you're a first-time homeowner or a seasoned investor, this episode could be the nudge that saves you thousands.

Don't set and forget your mortgage, aim to set and optimise it.

 Locale Financial | Expert mortgage broking for everyday Australians.

 Don’t forget to like, comment, and subscribe for more!

 ABOUT ADAM SCHAAL 

Adam Schaal is the Founder and Director of Locale Property Group, a leading name in Australia’s property and construction industry. With decades of experience and billions in property transactions, he’s known for his integrity, leadership, and commitment to transparent, client-focused service. Adam is passionate about helping people achieve their property goals through honesty, expertise, and long-term relationships.

 See more from Adam: 

LinkedIn: https://www.linkedin.com/in/adam-schaal/

Website: 

• https://localefinancial.com.au/        
• https://localehomes.com.au/
• https://localewealth.com.au/

 ABOUT ANKIT KAUSHIK 

Ankit’s path into broking is backed by a solid foundation in accounting and residential lending, along with a people-first approach shaped by his early career in customer service and sales. He’s a University of Wollongong commerce graduate (with distinction), holding a Cert IV in Finance Broking. Known for his approachable and detail-driven style, Ankit makes home finance feel clear and stress-free, especially for first-time buyers navigating the unknown.

 ABOUT OWN IT Your Property Partner

Real stories. Real lessons. Real talk. 

Buying your first home, upgrading, or investing? It’s a big move and you don’t have to go it alone. 

 Hosted by Adam Schaal, the founder of Locale Property Group, Own It is where we discuss property journeys, wins, mistakes, mindset shifts, and everything in between. No jargon. Just honest, empowering conversations that shed light on all things property.  

 To know more about Own It Your Property Partner, you can visit the links below:

Presented by: Locale Property Group

YouTube: https://www.youtube.com/@LocalePropertyGroup

Transcript

SPEAKER_01 0:00

I'm going to share with you three benefits of refinancing.

SPEAKER_00 0:03

Having loyalty to a bank isn't isn't wise and it's such a small purchase. We need to be doing that yearly with our home loans because that could mean thousands of dollars in your pocket every year.

SPEAKER_01 0:11

You're possibly saving $20, just a random number. You could be saving that on your home loan. Why would you want to pay a dollar extra to anyone? It's your money.

SPEAKER_00 0:37

Help clients navigate the industry with real confidence. So today we're talking to the wonderful Ancert. So Ancert uh is going to be talking about all things refinancing today. But before we get started, a few fun facts about Ankert. So Ancert uh used to love cycling until he got uh attacked by a magpie. For me, I'm pretty excited about that. That's one less cyclist on the road. Um nice story, he married his high school sweetheart, so they met in year 10, which is really cute. Um he's been in financial services for the last four years, and he studied accounting at uh in the Gong, we call it Wollongong. So um, yeah, we're excited to chat. So thank you for joining us.

SPEAKER_01 1:14

Thank you so much for having me.

SPEAKER_00 1:20

So our first segment is where is the liar? So you're gonna give me three um, I guess, situations, and you're gonna put them to me, and I've got to sniff out the liar. So over to you.

SPEAKER_01 1:29

Most homeowners who took out a home loan in the last three to five years have never actually had a proper review done on their home loan. Refinancing is not just about getting a sharper interest rate, it's so much more than that. Fixing up the cash flow, setting yourself up for the future, and reducing your rate payments. If your bank hasn't already contacted you about a sharper rate, that means your rate is already competitive.

SPEAKER_00 1:54

Well, it's number three. It's a lie. Banks are there to make money and they're proactively not necessarily going out to customers to reduce rates. So spot on.

SPEAKER_01 2:02

Spot on. They do tend to give you the mortgage, which is great, but obviously they are in the end to make profit, and there's a reason why Australian banks are the most profitable, you know. So you have to be proactive, you have to keep on looking for a better deal and do a health check on the mortgage.

SPEAKER_00 2:20

So our next segment is building without the bullshit. And today we're talking about refinancing. So over to you, Anke.

SPEAKER_01 2:26

Refinancing short is basically when you replace your existing home loan with a new one, right? Uh it's not usually always just about getting a sharper rate, it's so much more than that. It's about fixing up the structure, uh, improving your cash flow, so more money in the pocket today, and it should also align with your future goals, which could be using the equity for investments or so many more reasons out there. Once you refinance, you're not paying a penalty to the bank to stay with them for the length of the loan. You're shopping the market around to see what product and loan suits you better today as compared to the one that did when you first got the loan.

SPEAKER_00 3:03

Yep.

SPEAKER_01 3:04

And as I said, it's about improving cash flow. So we Australians feel uh the difference week to week, month to month, and each dollar adds up over lifetime.

SPEAKER_00 3:15

Look, there's a there's a cost of living crisis out there at the moment, and a lot of people that probably got their loan 12, 18 months, 24 months ago, um, the pressures weren't as high. And obviously, we just had an interest rate rise. So, more than ever, I think Aussies are feeling the pinch. So, it is really important that people do out go out and I guess shop their loans around. Um, we were talking about this recently where people shop around their subscriptions with their Netflix or Prime or their phone um plan or their insurances, but people never really look into their home loan, they think it's just a set and forget. They've got a home loan that's signed it off as 30 years. That couldn't be further from the truth. It's like literally you should be shopping that around every single or every 12 months to try to get the absolute best rate and just see you know the worst case is you find out your current rate's awesome, but the best case is you find a loan that's better for you.

SPEAKER_01 4:02

100%. I couldn't agree with that anymore. Uh, things are changed now, you know. Like when your parents or your grandparents got the loan many, many years ago, the market was very different. Today, with the cost of living and the markets fluctuating so much, uh, and you are also in a better position today than you were a few years ago when you got the home loan. Your property's gone up in value, you are most likely earning more as well, and each dollar should be saved. Like, why would you want to pay even a single dollar extra to the bank when that could be coming back to your pocket?

SPEAKER_00 4:33

Absolutely. And um there, like you said back in the day, there was almost loyalty tanks uh with our parents, and I know my father's been literally with one bank his whole entire life, and it's almost a loyalty. But I don't understand why you'd be loyal to a bank because at the end of the day, they're literally the most profitable banks globally, um, and every dollar is really important to be back into everyday Aussie's pockets. So we certainly encourage people to shop it around. But like you said, it also enables more opportunity if you've got a really sharp rate and um you may be sitting on some equity if you bought a home in the last few years, you'll be able to unlock that equity and release that equity potentially to be able to help you secure a second property or a third property or wherever you may be. Um, or you can put some funds in offset, and uh that means you've got a I guess a rainy day fund there in case something in case something happens, you've got school fees or whatever, you don't necessarily want to draw down on your mortgage if you don't need to, but you may want to do a renovation, you may want to, you know, uh upgrade your car, whatever that may be. Um, or you just may want that there for when you want to buy on another property or uh go go again from a property.

SPEAKER_01 5:35

Changing the structure is a big thing, right? You don't have an offset right now, you get the offset, you borrow some extra money, you put it back into the offset. The beauty of offset is you're not paying interest to the bank on the said money which is back into the offset. Yes. So if you were to borrow, for example, $50,000 for a rainy day fund, you may have plans in the future. You put that $50k back to the offset, you're not paying interest on that money.

SPEAKER_00 5:57

No.

SPEAKER_01 5:58

And you've got access to those funds.

SPEAKER_00 6:00

Look, my partner and I have done this, and we had that there, and obviously with the business and just with life and complexities and bills, the amount of times that we've used it, and it's been we duck into it and then we put it back in a month or two later, but it's been an incredible safety net there. And you're not necessarily reliant on um credit cards which have got a really high interest rate as well. So it is a really smart move for someone to have that there, and also people that are looking to build a property portfolio, it's very smart to have every single bit of capital as you as much as you can, extract it out, put it into an offset, because that gives you freedom and flexibility to do what you want to do when you need to do it.

SPEAKER_01 6:33

Exactly, exactly.

SPEAKER_00 6:35

Recent ABS data shows that uh about 640,000 Aussies um refinanced last year, and that's a 20% increase from previous years. What's interesting about that, 64% of them actually change lender, um, which tells me people aren't waiting for their bank to call, like we said earlier. Um, they're actively shopping around. That means, in simple terms, 640,000 people refinanced, roughly 2.8 to 3 million people that did not refinance. So that means about 80% of mortgage holders are just sitting, um, remaining loyal to a bank and aren't refinancing, which is pretty crazy because there's most of the time money left on the table. So whilst the headlines say we have record refinancing activity, the biggest story is the vast majority of people really aren't refinancing, which they should be. Um, also in the last quarter, pretty much from an all-lending perspective, 17% of loans for that quarter were investors. And that's probably why we have said an uplift. Obviously, we've seen some really incredible uh property growth across Australia, and a lot of people are now capitalizing on that and releasing equity and going again. So there's probably more people that probably can capitalise on their current equity. They've got lazy equity essentially sitting there, and they could be buying another investment property, um, and they can use that to help pay down their mortgage sooner, whatever that may be. Um, but there is a significant amount of opportunity for people there that is sitting on an interest rate that's probably not where it needs to be, and potentially equity with which they could use to capitalize on.

SPEAKER_01 8:04

Exactly what we plan on doing. You know, not just a sharper rate, we want to reassess your borrowing capacity as of today, let you know what is the available equity that you could use from the property whilst potentially, you know, planning the future. If you want to buy a property in a year or two's time, we've we ideally don't want to wait until the end of two years. We want to plan ahead, make sure you are on the right pathway, on the right product that's gonna help you with those investment renovations or you know, these kind of things in the future.

SPEAKER_00 8:32

Nice. So, Enko, can you tell us the benefits of refinancing?

SPEAKER_01 8:37

Uh, people think of refinance and they think it's about getting a lower interest rate. Yes, that is a part of it, but that's not the whole story. I'm gonna share with you three benefits of refinancing. So, benefit number one, improving the cash flow. Cash flow is what we feel week to week, month to month, and these small difference in repayments, they add up to a lot over a year or over the lifetime of the mortgage, right? Uh this cash flow difference, more money back to your pocket, could be used for insurance, for your regro, for mortgage payments, or you know, just having more money back into your pocket, maybe for your uh traveling fund. So these kind of things they add up to a lot.

SPEAKER_00 9:18

Nice. Do you have an example of a recent client situation that you've worked with?

SPEAKER_01 9:22

Glad you asked. Uh, we had a couple who had purchased a property three years ago. Yep. Clearly, the market's changed since then. They're now earning more money whilst paying slightly higher interest rate due to the changes in the market. We were able to refinance the home loan, restructure it, and we are able to put a few hundred dollars back into their pocket each month.

SPEAKER_00 9:39

Nice.

SPEAKER_01 9:40

Nothing fla flashy, but you know that a few hundred dollars a month goes towards the groceries, regio, their traveling money, so these things do make a difference.

SPEAKER_00 9:49

So no doubt if they purchased a few years ago, they'd be in a far better position. Their line-to-value ratio would be far better.

SPEAKER_01 9:55

For most homeowners, it's not about theoretical savings, it's actually about the money that you feel back in your pocket each month.

SPEAKER_00 10:02

100%. Uh every little bit matters in this cost of living crisis. But um, if you don't mind running through obviously a few hundred bucks a month, what does that mean from a borrowing capacity point of view? So if they were to maybe release some equity um and then potentially buy an investment property with that equity, what does a couple hundred bucks mean from a borrowing capacity point of view?

SPEAKER_01 10:22

Let me come back to this example for this young couple who bought three years ago. The property's gone up by a couple hundred thousand dollars. They had started with a five percent deposit, meaning they had a five percent equity. Now they have got more than twenty-five-thirty percent equity in the property. This extra equity is allowing uh them to A get a sharper rate, B, be able to show a higher borrowing capacity to the bank. In this instance, they were able to use a hundred thousand dollars of their freedom equity for the future plans.

SPEAKER_00 10:48

Nice.

SPEAKER_01 10:50

Benefit number two, fixing up your loan structure. See, many loans are set up fast, not optimally. People normally stay on the default products that they got a few years ago, which clearly is not aligning with the set equity they have today and with their current financial position as well. So hence why we restructure the loan, maybe adding an offset facility, which gives them more flexibility with their long-term plans and you know, just putting more money back into the pocket of everyday Aussies.

SPEAKER_00 11:20

Nice. What about people that maybe like at a real what's a what's a common example when you probably talk about Keystart and they use Keystart as a vehicle? Yeah. So do you mind give us an example of a customer on why they would look at this and what structures give us a really common example of why customers are making changes and what sort of structures they're moving to?

SPEAKER_01 11:37

Well, given we are sitting in Western Australia right now, uh, we have a state-based lender here in Western Australia, Keystart. It allows home ownership with just a 2% deposit without charging you the insurance. So you are borrowing 98% of the property value in a rising market where the property has grown up in value, they're now able to use the equity to switch to another bank, get a much sharper interest rate whilst getting an offset and borrowing a little bit extra money to put it back to the offset just for you know who knows what's going to happen in the future.

SPEAKER_00 12:06

Absolutely. K Start's an incredible product and it's just a really good leg out for a lot of people and it saves LMI, which could be anywhere from $20,000 to $30,000. Um, but yeah, you're paying a higher interest rate.

SPEAKER_01 12:17

Yes.

SPEAKER_00 12:17

But if you uh capitalize on the no lender's mortgage insurance of whatever $20,000, $30, $40,000 that you're saving, then obviously be in your property for 12 months, refinance out, go to a sharper interest rate, like you said. You don't pay lenders mortgage insurance because you may be under that um 80% cap. And essentially you've got into home ownership with the minimal amount of deposit and the lowest amount of cost. So it's a really good vehicle to get in by a key start, and then when you've got the capability to refire out and end up with a with a mainstream lender on a sharp rate.

SPEAKER_01 12:45

Like, where else would it be possible to do a 750 house and land package with just $10,000 from your pocket? Yeah, including the first one's grand.

SPEAKER_00 12:53

Yeah.

SPEAKER_01 12:53

You build the property, you get the equity growth, and then yeah, boom. You can go to any bank out there, sharpest rate out there, and you know, you just you have you've avoided the hard time of saving all this money across six, seven, eight months, year or maybe two years. Correct. Use ten and a half grand, ten thousand dollars.

SPEAKER_00 13:08

Get in the market, you can't outsave the market. So yeah, people are worried about the slightly higher interest rate, but when you look at the higher interest rate over whatever it may be, twelve to eighteen months, it might be five to ten thousand dollars more that they've paid in interest as a maximum. Um, but they've saved twenty to thirty thousand dollars in lenders' mortgage insurance, and they've also got into a market, into a rising market where they maybe made fifty to two hundred thousand dollars in equity as well. So no matter which way you skin it, yeah, it's the best solution. And you shouldn't be looking at interest rate, you should be looking at how fast you can get into the market.

SPEAKER_01 13:38

Benefit number three, setting yourself up for the future. Refinance generally should be done before a problem arises. So you are well prepared in advance and you may have future goals, right? Buying a new property. Uh refinancing today, going to a lender that allows you to use your equity in the future without charging you any penalties is the right way to go.

SPEAKER_00 14:00

Absolutely. We see this scenario quite a bit, and there could be people that are looking to plan a family and they may be dropping down an income. Um they're like, hey, I want the certainty of potentially a fixed rate in this period of time. And it's like, great, we can refinance, look at that. And whilst there's pros and cons of fixed rates, some people just want that surety, so they go down that path knowing that you know one's gonna drop out of work, Bub's gonna come along, and they have a set, essentially a set cost. Thanks for the female's efficient. Yeah, correct. So there's scenarios, multiple scenarios for this, um, but also, like you said, people wanting to invest and um getting themselves into a position where they know they can get maximum capital from a lender, because like we said earlier, it's all about how much capital you can get versus what interest rate you can get. Um, because when you can get multiple properties working for you in a buoyant market, you're gonna get capital growth, and that's how you get ahead. So really important that you look at the structures and you're not constantly nitpicking trying to find the absolute cheapest rate, it's about a lender that's gonna give you, I guess, a vehicle to be able to scale your portfolio or let you live a life you want to live.

SPEAKER_01 15:00

Exactly. Spot on like once we do the valuations on a brand new property or an established property, each bank has a different risk appetite and they're gonna give you a different valuation. It's not a huge difference, but there is difference in valuation that you get from each of the banks whilst they're all offering different interest rates. Correct. So it's not just about choosing the lender that's offering you the sh cheapest interest rate, it's about using a lender that's gonna align with the future plans.

SPEAKER_00 15:25

Absolutely.

SPEAKER_01 15:25

Giving you the right valuation, the right interest rate, whilst giving you access to use your equity for your future.

SPEAKER_00 15:32

Absolutely. An example of that would be looking at three different banks, and your property, the bank's all value of property, or two banks' value of property is six hundred thousand, and another bank values it at $700,000. That essentially means you've got another $100,000 in equity that you can release to purchase another home, which could mean you could either buy a home or not buy another home. So it's pretty important. Even if the interest rate was 0.25% higher, that lender, they've given you an extra hundred grand to go out and spend to get back into the market and buy another property. So interest rate's not important in that situation. It's who's going to give you the best valuation. So very important, we don't look at just rate, it's the whole structure.

SPEAKER_01 16:06

Hence why we like to tailor each product, each solution as for your needs.

SPEAKER_00 16:10

Nice.

SPEAKER_01 16:10

Someone's for someone it's about being able to buy a new property. So for someone it's about being able to use their equity. For someone, it's about I just want to retire as soon as I can. The goal is not to solve today's problem, the goal is to avoid any problem that may arise in the future. Refinancing is not a sign that something is going wrong. It's a sign that someone is being proactive with their money.

SPEAKER_00 16:32

Absolutely. Um it's smart to continually assess your financial situation and having loyalty to a bank isn't isn't wise. Like we shop around everything, and I'm at Kohl's trying to find the best value milk, and it's such a small purchase, we need to be doing that yearly with our home loans because that could mean thousands of dollars in your pocket every year.

SPEAKER_01 16:48

Spot on, people go to Aldi, they go to SpudShare to buy groceries for cheaper, right? You're possibly saving $20, just a random number. You could be saving that on your home loan. And why would you want to pay a dollar extra to anyone? It's your money.

SPEAKER_00 17:01

So, how much are people missing out on by not refinancing?

SPEAKER_01 17:04

Frankly speaking, people are leaving money on the table. If they're sticking to the same bank on the same product that they got a couple years ago, right? I'll share a recent example. One of our clients, they wanted to do an $850 house and land package a year-ish ago. Um they went standard 2% major bank, paid the lenders' mortgage insurance, the rate's sitting at 7.5%. We were able to use the fact that the property's gone up by so much in the value, recently got the keys to the property, and we have now been able to save them at least $7,000 a year. So there's reports out there that clearly suggest that there's 1.2 million Australians that have not done a refinance since they've got their property. Even if we consider a bare minimum thousand dollars saving across a year's time for each of those homeowners, we're talking about an untapped market of $1.2 billion in saving that goes back to the pocket of everyday Aussies.

SPEAKER_00 17:58

And I think banks this works to their benefit because most people don't check. And let's be honest, Aussie banks, uh, they're literally the most profitable banks globally, and there's over a billion dollars sitting there that is basically being taken from everyday Aussies that could be in their pocket, and that's like literally the bare minimum. So um super important that people are just more over this and um really fighting the good fight, making sure that making sure they're shopping around and getting the best rate.

SPEAKER_01 18:23

Exactly. And as we have touched base on this, banks would never ever contact you to offer you a shopper rate. Hey, Mr. Customer, we can actually offer you $500 a year discount on your mortgage. Why would they do that, right?

SPEAKER_00 18:35

Yeah, absolutely. They just don't. Um look, we've we've done it in the past with plenty of clients, and we get nothing out of this, but um we call the bank and see that there's been an interest rate drop or some new products have come out, and we'll call the current lender that with and go, hey, XYZ client um has a loan with you. Are you able to sharpen up the rate? Otherwise, we're going to pull the loan and put it take it somewhere else. And within you know a day they come back to you pretty bloody quickly and go, bang, they discount the rate because I know they may lose that client. So even just calling up your bank and saying, Can I get a new interest rate? You may even get something as well. So it's really important you're just all over it. And we don't necessarily tell you you have to change loans every time. We may say, Stay with this current lender right now, this is the best product for you. But I'm gonna call them up and try sharpen the rate for you, and often that happens. But next year we're gonna look to refinance because you're gonna have more equity and whatever that might be, and XYZ product's gonna be best suited for you, and then we refi you out in 12 months or 24 months down the track. So that's the importance of having a broker that genuinely cares. It's not just about making a quick buck every time they turn you into a into a new product, it's about having someone there so the whole like the I guess the whole lifetime of your property journey.

SPEAKER_01 19:43

Exactly. We want to be your partners for life, you know, we want to help you pay off this mortgage as soon as you can without missing out on real savings. Like, as you said, you will if you won't call the bank, you will never get the discount.

SPEAKER_00 19:57

So we're talking about loyalty tax uh earlier, and it's pretty sad to see that lenders always got some sort of promotion out there, really sharp rates or maybe a cashback if you refinance, but they don't share that love to the clients that they already have. So we say that every day that people are just sitting on these really crappy interest rates and essentially picking up the phone or refinancing them to get a better interest rate. So it really doesn't pay to be loyal and just sit there and not chop around. So Roy Morgan has done some research on this. Majority of Aussies sit with the same bank or bank with the same bank for anywhere from 17 to 20 years. So that means most Aussies just aren't changing their bank for the majority of their lifetime or their working career. So it's really important that you're not just sitting there being loyal, it's you know, turning over stones, talking to brokers, and making sure that you are shopping around because banks don't pass on those savings unless you ask. So the risk of not refinancing, and people think there may be a risk to refinancing, and hey, they might not get approved or they might pick the wrong product. But let's be honest, the real risk is not doing anything at all because you could be leaving thousands on the table. So if you don't mind running through some of the risks.

SPEAKER_01 20:59

So the biggest risk to not refinancing is obviously one of them being paying the loyalty tax, as we have touched base upon. Uh banks keep the sharpest rate for new business customers, they want to fight for the new business, whereas they completely overlook the existing customers, right? You're not being proactive, you're not checking in on the market, over time your loan becomes uncompetitive. Which leads to again coming back to it, you're paying more to the bank, whereas that money could be going back towards your mortgage or towards your savings. Uh, one of the examples being two people on the same loan size, on the same property value could be paying very different interest rates or repayments purely because one is shopping around the market, whereas one is not. Loyalty feels good, but it can be expensive.

SPEAKER_00 21:42

Absolutely.

SPEAKER_01 21:43

Uh risk two cash flow pressure actually creeps in over the long term, right? The more you the more money you're putting in into the bank's pocket, the less you're putting in your pocket, and then in the end you're just gonna have to adjust your lifestyle. Whereas there's more money back in your pocket, not having to adjust the lifestyle.

SPEAKER_00 21:59

Absolutely. Cost of living pressures right now are real. Rents are going up, and mortgages are going up, and bloody everything's going up. So if you can pick something back on the other way, grab it because there's a lot of money going out and a lot of coming in. So yeah, it's really important you take what's yours.

SPEAKER_01 22:12

Pretty much coming back to the subscription model. You want to check your insurances, your Amazon, the Netflix, the Spotify. You know, you want to find the cheapest model that works for you. Same should be with the mortgage. Risk number three: being stuck with the wrong loan structure, like having wrong repayment types, wrong loan term, or maybe not having an offset.

SPEAKER_00 22:33

Yeah, and offsets are really important. You know, people often have savings sitting there and they put them into just a normal savings account and not in an offset against their loan. And when you've got savings sitting in an offset against a loan, essentially you're not paying repayments on that money that's offset against the loan. So if you've got 50 grand in savings, you're basically not paying a mortgage on 50 grand, which is really important. And a lot of people don't even understand that. So that's the importance of having the right advice and the right structures, and it's not just about trying to get the cheapest interest rate, because if you have a really cheap interest rate, but you don't have an offset account and you got some decent savings, you're still going to be worse off with the wrong with a lower interest rate. So structures everything.

SPEAKER_01 23:08

Spot on. So $50,000 sitting in your everyday savings account, you're earning what 3.2% savings? Whereas it being in the offset in the mortgage, you are avoiding paying five and a half, six percent back to the bank. That is still a net profit of two to three percentage.

SPEAKER_00 23:22

Refinancing is obviously a lot more than uh just an interest rate. Uh, we see a lot of our clients, you know, our first-time buyer clients for our homes business, and they buy their principal place of residence, they buy it in their personal name. Um, and we're seeing a lot of clients now looking to explore investment properties in trust structures, and that's why it's super important to make sure you're talking to someone like a finance broker and potentially an accountant as well, to make sure that you set the structure up right from the start. So love to hear a little bit more about what you're seeing in this space.

SPEAKER_01 23:49

There's numerous pros and cons of holding property in a trust. Um, some of the pros being uh it's more so around asset income distribution and asset protection. That's one of the biggest pros of holding property into a trust. There are also other considerations that people need to factor in. It's not a one-size-fits-all approach, especially with the trust. Um, but what you need to also be looking into is the capital gains, the tax implication that you could possibly have. The income distribution side of things, and how the banks view your borrowing capacity with you holding property into your own name versus a company versus a trust. So there's a lot to be discovered around the trust, hence why getting into touch with us and using your financial planners slash accountant is going to give you a great insight as to how it's beneficial for you and whether it is the right fit for you.

SPEAKER_00 24:37

So this all ties back to the bigger picture. So 80% of mortgage holders aren't reviewing the home loans, which is crazy, and that's essentially slowing down their growth. So they're either going to be slowing down their savings or they're not positioning themselves to be able to capitalize on investment properties in the future, or they may be just leaving money on the table.

SPEAKER_01 24:55

Another risk being you lose out on your future flexibility. You may have plans of upgrading to a bigger property, maybe renovating your home. Having the right lender and the right structure will align with those goals of yours, and you could be buying a new property, or as we say, potentially restructuring.

SPEAKER_00 25:12

Nice. An example of this would be if someone is in their principal place of residence and they may want a structure where they have some equity that they can draw down pretty quickly because they may want to put a pool in or put a granny flat in the backyard, or they just want to do a bit of a facelift on their home. Um, these are the structures that enable you to do that.

SPEAKER_01 25:30

And that's why you want to be with the right lender who's going to support your goals, has uh is giving you the access to the equity whilst offering you the right borrowing capacity.

SPEAKER_00 25:39

Nice.

SPEAKER_01 25:39

Another risk being uh people are reacting rather than being proactive. Most refinances happen after the stress starts to begin, whereas it should be the other way around. You need to be with the right lender who's giving you the right borrowing capacity, you've got the right equity, which aligns more with your future goals.

SPEAKER_00 25:58

Absolutely. You don't want to be approaching these situations in a reactive manner when you're like, oh my god, I need cash flow. It's all about making sure that you're always proactively reviewing your mortgage and you never get yourself into a pickle where you have to make really fast decisions because you need cash flow or you need to make a quick decision because you want to buy an investment property. If you have a plan, um generally you're always going to make smarter decisions.

SPEAKER_01 26:19

Exactly, exactly. Well, refinancing should be a strategy, not a rescue.

SPEAKER_00 26:24

Nice.

SPEAKER_01 26:24

Well, to be fair, doing nothing feels safe, but over time it can cost you flexibility, peace of mind, and just affect your future goals.

SPEAKER_00 26:33

As I've always been told, no decision's the worst decision. So the best thing to do is at least pick up the phone, chat to a finance broker, chat to your bank, and just discover what you what you're capable of. So our next segment is do you think you're ready? So these are questions that we often get from our customers. So we'll fire them at each other and we'll um we'll hopefully uh share some insights. So, question one refinancing is a whole lot of admin and paperwork.

SPEAKER_01 27:02

Not correct. It's not as hard as the first time you got your home loan because most of the documents you already have bank statements, pay slips, IDs. So it's not a lot of admin as you would like to think it is.

SPEAKER_00 27:14

It takes way too much time.

SPEAKER_01 27:16

Most of the refinances get done within a couple weeks' time, right? But for that couple of weeks apart, the homeowners are actually involved for a very small portion of it. Most of the work's done behind the scenes, the mortgage broker talking with the banks.

SPEAKER_00 27:30

People hate changing their bank details. So what happens with all their direct debits and salaries and subscriptions?

SPEAKER_01 27:37

Well, this one comes up a lot, but it's not as painful as people would like to believe it is. When you are s uh when you're doing a new home loan application with a new bank, we do set up your new bank accounts and everything. And it's quite easy to move all your subscription to the new bank account. And we also suggest to not close up your old bank account just yet. Keep it open for a couple more weeks so that you know you are across all the direct debits and the right ones get moved to the new home loan.

SPEAKER_00 28:02

So if you give us a number, how long does it take? A couple of hours to change all of them over? What do you think?

SPEAKER_01 28:06

Uh I would reckon you should be able to change all of your direct debits within an hour's time.

SPEAKER_00 28:10

That's exactly why advice matters. Um, talking to the right people. I always say the wrong move is no move at all. Like at least pick up the phone, talk to people, educate yourself, find out what your situation is. And the worst case is you get peace of mind knowing you've got the absolute best interest rate and the best loan there is. Or alternatively, you find out there is a better interest rate out there and you're gonna get a better loan and better structure to suit your life. So pick up the phone, talk to people, and explore your options.

SPEAKER_01 28:37

A lot of people are waiting for the rates to come down.

SPEAKER_00 28:40

Look, waiting is um you're gonna be waiting a while because I think interest rates are probably only going in one direction at the moment. So time is money, and if you can find a solution that's gonna be better suited to you right now, the quicker the money in your bank account, the better. So we all want interest rates to come down, but we're not none of us have a crystal ball, and you know, if anything, interest rates might be going the other way. So my advice would be get in as fast as physically possible, understand your options, and the quicker you can get a better interest rate or a better loan structure, money's going into your pocket anyway. So why wait for the banks to reduce their rates when you could probably negotiate a better rate straight away? So get get moving right away.

SPEAKER_01 29:18

If I move the banks, it's gonna cost me more to change the banks.

SPEAKER_00 29:21

Look, that's a valid point. Um, back in the day I had an interest rate that I was locked in on and there was break fees and it was thousands of dollars to get out. Look, that doesn't really exist these days anymore unless you're on a fixed rate. Um, and to change lenders is anywhere from 500 bucks to a couple of grand, and often there's real benefits for you to be shifting. So a good mortgage broker should never be talking you into shifting um mortgage products if it's not benefiting you know a few thousand dollars a year. So, yes, there will be costs to change, but the cost that you'll be saving will far outweigh the cost that you'll be getting.

SPEAKER_01 29:55

Spot on, and hence when when we are doing the assessment, we're gonna look at the cost to leave the bank or switch the mortgage versus what you'll be saving. And if the benefits outweigh the cost, it's an okay.

SPEAKER_00 30:10

Our next segment is bringing to the table. That's where our guests bring something that's really special or meaningful to them and they share and talk about it. So, what have you brought with you today?

SPEAKER_01 30:19

Well, I'll bring a mindset to the table rather than a product.

SPEAKER_00 30:22

Nice.

SPEAKER_01 30:23

Uh the mindset. Treat your home loan like a subscription, not a set and forget. As we have touched base on before, keep on reviewing it. 12 to 24 months is the right sort of time frame. You want to do a health check on the mortgage, make sure you're not paying more and you're just sitting on the right product that sits more with your lifestyle and your future plans.

SPEAKER_00 30:45

Nice. So let's lock it up. So, what did we learn today? I think it's super important that clients are treating their home loan like a subscription, like we said. So have no loyalty to the home loan and making sure you're reviewing it very, very regularly. So, what I'd recommend, um, and we actually do this for our customers, is put a 12-month calendar invite in. So we look at your mortgage literally every 12 months, see where you're at, see what interest rate you're paying, and seeing if there's a product out there that's better suited to you. Treat your loan like you do anything else, like your subscriptions, like going and doing your weekly food shop. Make sure you're driving a really hard bargain and you're getting bang for buck. It's literally the biggest purchase that we have is our home loan, and we need to be very, very strategic in making sure we're maximizing every dollar back into our pocket. Banks are literally the most profitable businesses in Australia, and our banks are the most profitable globally. So it's very, very important that everyday Aussies, you know, fight the good fight and get every dollar back into their pocket where they can. So I think listeners need to be asking themselves three key questions. When was the last time you looked at your home loan and your interest rate? Uh, does the loan structure suit my life and what I'm trying to achieve? Um, and if I want to buy again in the next couple of years, have I got the right loan and right structure set up for that? So, very important that you're considering those three things and making sure you're talking to people like yourself to make sure that you're reviewing your home loan and your situation really regularly. So I'd like to thank you for your time. Um, some really cool insights today. And um, if you want to reach out to Anchor, we'll share the details. But yeah, thanks so much, Anchor.

SPEAKER_01 32:20

Thanks very much for having me, guys. With a pleasure.

SPEAKER_00 32:23

Thank you for listening to Own It, Your Property Partner. If you found today's chat helpful, share it with a mate, subscribe, and leave us a review. Today we're recording on the land of the Wujak Noah people. See you next time.