How to buy a property with no money!

Hello and Welcome to the Property and Lending Show 

Today, was a throwback to the old episodes when it was just Fadi and KM
We discussed everything regarding Guarantor loans and how you can enter the property market with $0 down

If you would like to get in contact with Mark, Fadi, Peter or KM you can find them here:
Mark@powerloans.com.au

Fadi@powerloans.com.au

Peter@powerloans.com.au

hello@firstbrick.com.au

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Transcript

KM: 0:18

Hello and welcome back to the Property and Lending podcast show. If you are watching on on video, you'll notice that there's a few heads missing today and if you're listening in, you'll find out soon. It's back to the OGS, the two guys who actually do the work around here and the other guys are missing. So I'm joined with Ferdi, the director and head honcho at Power Loans, Mark Kalara, Peter Georgie, both in, you know, Peter's in Fiji, Mark's exploring Europe and all the work has been left to Feti. Feti, welcome. And how do you feel about your staff just ditching?

Fadi: 1:04

I think it'll be a good process for Mark. I think he's traveling to try and find himself on how to share his feelings a little bit more better. I think everyone wants to know how Mark's feeling but Mark's feeling pretty well now at Europe and Peter's just enjoying his time in Fiji.

KM: 1:21

So they've left all the work for you. So you're very busy at the moment. I've got quite a bit going on as a by the time this podcast goes out it would have already happened but tomorrow we're doing a presentation. We were asked to give a presentation at the Leppington Builders Expo, which is cool, just half an hour on why invest in real estate, how to do so and very brief, very quick chat there. So I mean by the time this goes out it would already happen but if somehow someone knows about it see you there. We're both a little bit strapped for time but before it's been a little while, we're supposed to do one on asset finance but as mentioned, Peter's taken his private jet out to Fiji. We're going to talk about something that's been asked a lot recently and you've had quite a few clients or customers using this technique and then we'll discuss from the lending perspective and then the buying perspective, how it affects things. So what we're talking about is guarantor loans. So I guess we've had quite a few of them come up recently. I guess the first thing I ask is really simply if no one's ever heard of it, what is a guarantor loan?

Fadi: 2:40

So like you mentioned, we've had a lot of questions come through about 100% lending or 105% lending. So 100% lending can happen in two ways. You can go through a guarantor loan and what a guarantor loan is. It's a beautiful thing actually. If your parents have any sort of house or any sort of asset in regards to residential, we are able to borrow against that house. As long as there is equity in your parents house to cover the guarantee amount that you're looking to get in that guarantee amount, it's always going to be the case of 20% deposit. And it also covers a stamp duty cost and transfer costs as well that you can capitalize on top and that's where it pushes it to 104% in regards to borrowing. And another way we can borrow 100% is something that I guess most of us know we see a lot of as well, especially if your existing customers are always coming through where they're actually borrowing or taking equity out of their current property. They would have purchased through first brick for yourself. Equity has grown, they take the equity out and purchase their next property at 100%. And the way that works is you take the 20% plus dam duty out of the current property and then you borrow the 80% against the new property as well. So it's something that I guess a few of our mutual clients when you put those posts up yourself and I, and a lot of people have been messaging or messaging through our socials and like oh wait a minute, can we borrow 100% of the loan or how can we do this? I think we both have got a lot of questions coming through and I think we're discussing this morning how important it is to pretty much put some more information out there in regards to how it all works.

KM: 4:15

Yeah, it's a good summary and I guess the major takeaway from that is people always assume you need to have stacks of cash to get into the market and what you've just told everyone is you don't even have to have any money essentially. Is that as simple as it is? If I said to you ferdie, my parents have equity in their property, I can use their equity essentially or their property to guarantee my loan and I don't have to have any money. Do I have to have proof that I can save? What other requirements for me to be able to get a guarantor loan?

Fadi: 5:01

So in regards to the Guarantor loan, there's a few requirements that you would need. First off, obviously if you do have some sort of savings, that helps because the bank also want to see that you're able to save as well. They're not just going to give it a loan of 105% out unless we can show some sort of history whether that's through savings, whether that's through you're currently renting. So people don't, not a lot of people know this but if you've been renting for more than 90 days that actually shows 5% genuine savings. Okay? So in regards to if you don't have any cash but if you can show that you've saved 5% or you've saved over a three month period, that's one of the requirements as well. So it's as simple as that. Obviously when people are coming to see us, they show like there's been so many scenarios. Again. It's such a beautiful thing where we've got young couples that are coming through looking to purchase either their first property as an unoccupied property or they're looking to purchase their first investment property. And they've got cash flow in the bank hoping to use towards either their wedding, towards holidays, honeymoon, children are on the way, or any long term plans they're able to hold onto that cash flow and purchase their first property. So I think it's important to outline as well, you can only have a guarantor once and that's only for your first property.

KM: 6:12

Yeah. Okay. Now, what are the implications for the actual guarantor? So for the parents or whoever is the guarantor in the scenario, is there a negative, is there an impact to them? What happens to their property? Are they put at risk to do so if someone's thinking this when they go and tell their parents to have a property? Or can you be a guarantor? The initial question or the immediate question is usually, what does it mean for me? We've just said if it was a $500,000 purchase, usually you would need 10% to 20%. So we're talking 50 to 100 grand plus DMG. So you're talking between 75 and 125 grand. And with a guarantor, we don't need anything, we need zero. What does it mean for the actual person that's guaranteeing the property?

Fadi: 7:06

So when we go out and see guarantors, when we know it's a guarantor loan, obviously the broker needs to go out there and interview the parents as well to make sure that they're fully aware of what's about to happen and how it all works. Now, first question we always ask is which lender are they currently with or if their house is unencumbered, it kind of makes the process a lot more easier. Now, I'll start off if the parents are to have a property with a loan on it, let's say, for example, it's a million dollar property, they have $400,000 owing on that current property if we're going for the same lender. So if the parents are with lender A and we're going with Lender A as well, that lender will allow you to cash out that 20% plus team duty, up to 80% of what the house is worth. 80% of a million dollars is $800,000. So they've got $400,000 they can guarantee for their children. Now, for a $500,000 property, it's a 20% deposit, which is one hundred K. Correct. I don't want to get that wrong on the Internet.

KM: 8:04

Yeah.

Fadi: 8:05

DM duty and transfer cost. So you're looking at about maybe 145, let's call it $150,000 that your parents would have to guarantee as that 20% deposit in the CMG plus the transfer cost, which they have in that scenario because they've got $400,000 to guarantee. So now they've used 150 out of that. The great news about that as well. If they've got another child that will go for a guarantor loan, that means they've got 250K left to guarantee for the other child as well. So you've got that wiggle space. Wiggle space, sorry. And that's why I said if the parents are also their properties are unencumbered, it kind of gives them if they've got three or four kids, they'll be able to guarantee for those three or four children. Now, the biggest risk to the guarantor, and this is something that we emphasize even though our customers or our applicants are there in front of us, is that the biggest risk is if the kids or the applicants are going for the loan. Stop making those repayments. The parents are the number one people they'll be approached in regards to covering that debt. And that's the main risk going towards the guarantor.

KM: 9:10

Yeah. Okay. So in that example, you just said there was 125 or $150,000 used to guarantee the purchase. Now is that $150,000 actually physically, is it like a refinance? Is that money coming out as cash? Or is it just on paper that we're going to represent that $150,000 part of the loan?

Fadi: 9:38

Yes. So that's something I should have mentioned. So that one hundred and fifty K the guarantors will not see on their side. That is going to be the applicant's debt. So that's really done paper. But applicants are going to be owing so for a$500,000 property, they're going to be owing about 540 grand. That will come up on the guarantee, which is the applicants bank accounts. Now, for example, we've got a lender that most lenders will allow us to have it under one umbrella. So you have the 540K in one loan. There are maybe two lenders out there that will have it as a split. They'll have the guarantor portion was the 20% plus stamp duty, plus transfer costs as one split and the remainder 80% as the other split as well. I don't know why that's done, but obviously each bank has its sort of policies, but no time the parents would see that loan come up in their portal.

KM: 10:26

Yeah. Okay. So the parents are not affected during this. Their loan doesn't change if they have one, it doesn't become more expensive for them. The person purchasing is going to have obviously a larger loan than the purchase amount because you're always taking into account all the other costs as well. Now.

Fadi: 10:48

Sorry.

KM: 10:49

Yeah, go ahead.

Fadi: 10:50

I was going to say, just keep in mind the main question that comes from the parents and the guarantees, obviously, is when can we remove our parents as guarantors of that loan application? In this scenario, in most scenarios, as long as it's not an LMI territory, which is the lender's mortgage insurance territory. And that's the reason why we've gone ahead of the guarantor loan, so we can skip those costs, those extra fees involved as well. So once the property that is being purchased gets at 80%, which basically means you owe 80% to what it's worth, that's when we can actually remove the guarantors. And it's such a simple process where we would order evaluation through that current lender, then they'll fill out a one page form to pretty much discharge the parents of that title because technically your parents are guaranteed and are on that title as well. Technically.

KM: 11:40

Okay.

Fadi: 11:40

Yeah.

KM: 11:42

That was going to be my follow up question.

Fadi: 11:44

Sorry, Nana. In scenario, or those professionals like the professional packages where you can go up to 90%, once they get to that 90%, as long as it's out of that lender's mortgage insurance territory, we're able to remove the parents as the guarantee.

KM: 11:58

Yeah, cool. So I guess a follow up question to that is because I know a lot of our clients ask this is when the parents have been removed from the guarantee. So you've come down to this 80% LVR. Now usually, for example, if I purchased a property and I put a 10% deposit, so I had a 90% loan, and then it got to a point where I was at 80%. There's some available equity now when you are on a Guarantor loan, because this gets asked a lot and I find that trips people up and they get a little bit confused. You had 104% or 105% loan and now we're at 80%. So we've removed your parents. So the value of your loan is 80% of the value of your property. At this point, usually there would be available equity for us to pull out. If you are on a Guarantor loan, is it the same? Do I have available equity now or does it start counting? Does the available equity start counting? From this point onwards, the equity will.

Fadi: 13:13

Be counted from when it gets to 80%. Obviously, in most scenarios, the banks were allowed to go up to 90% into LMI territory. Again, if it's for a purchase, for a future investment opportunity, they'll allow you to cash out up to the 90%, including lenders mortgage insurance. But there will be no equity taken out of that property as long as the guarantees are on there and there is no equity available on there until the guarantees are removed. So that's a pretty strict rule. Yeah.

KM: 13:38

We'll run an example scenario. Let's say we purchase a property for $500,000 and we use the Guarantor. So our loan was 530,000. Now, assuming you're not part of a professional package and you're releasing equity at 80%. Now, let's assume the property hasn't gone up in value. Just to make it really easy. We've paid off $130,000 and now our property loan, our loan is $400,000, which is the 80%. The value is 500, the loan is 400. We've removed the parents from the Guarantor loan. Do I now have equity that I can pull out or does it start counting from today, the equity they can pull out?

Fadi: 14:24

In that scenario, when it's at 80%, the only time you can be most lenders cut a policy, the only time you can take out equity because you're going to be paying lenders mortgage insurance, which kind of defeated the purpose of you going for a Guarantor loan in the first place. But when you're going through that in regards to the equity, you can release equity up to 19%, including lenders mortgage insurance. So technically, the equity that's really given to you is up to 88, let's say 88%. In some scenarios, we can push it up to the 88.25 to allow that space to capitalize. The lender's mortgage insurance in there as well. If you're looking to pay for the lenders mortgage insurance upfront from your own pocket, then you can cash out to the 90% to use for your next purchase.

KM: 15:04

Yeah, but I guess my question was more so around the timing. So the same time we've taken off the parents is because we're at 80%. LVR can you also start to you can release equity immediately. So in this scenario, the property is worth 500. We're at 400 now. That's 80%. We've removed our parents and then the next day I can try and get equity out. Is that correct? Correct. Yeah. Cool. Because we get a lot of questions and it gets a little bit confusing around people. Does the equity start counting from when we've removed the parents or is it just 80%? We've removed the parents and you can pull out equity.

Fadi: 15:45

The parents are up there as a guarantor.

KM: 15:49

I guess I have one more question about the structure. But that's a really good advantage, if you really think about it, is you're getting into the market with no funds up front, essentially, even if you've got savings or whatever, and you've come into the market with no funds. Evan, the second you've pulled your parents off of the loan is also the same time you have available equity so you haven't put anything into it to start off with. And then you've gone into a point where you're at 80%, you've removed your parents, and then you have immediate equity that you can pull out to go again. So it's a really strong advantage to get ahead, especially if you don't have the funds at the start. It's a great way to get into the market. I was going to ask, is it only parents that can be a guarantor?

Fadi: 16:41

In most scenarios, you have to be the parents because that relationship there, it's basically your parents. They're able to do the guarantor loan for you. And it's mainly for siblings as well. There are some lenders out there where allow. There's a grandma, a grandfather, uncle and auntie. As long as they're okay to guarantee it, the lenders will allow for that as well.

KM: 17:03

Yeah. Cool.

Fadi: 17:05

You have to just that relationship as well.

KM: 17:08

Yeah, for sure. Now, I guess one of the major disadvantages that I encounter when it comes to guarantor loans is cash flow. Now, people, especially with interest rates the way they are today, six, seven, eight in one case, I heard of someone's, rates are at nine and a half, 10%, which is crazy. Rates are high, so your repayments are already high when you're using a guarantor loan. I find sometimes our clients not fully aware of the cash flow implication. And what it is is your property. You've purchased for 500 and we're receiving call of $500 a week rent. So that's 5.2% yield, which is unbelievable, right? It's a very good yield, but you actually have a loan of 540,000 or 530, so you're actually borrowing more than it's worth. So your loan amount, you have 100% plus four, so 104% loan and your rent is obviously not going to cover in most scenarios, it's not going to cover your mortgage repayments or not even usually not come close to it either. So it's very important to understand that if you're borrowing more, your loan amount is going to be more. And it is sometimes unrealistic expectation to assume that we'll be able to get properties that cover a full 100% loan or 105% loan, especially when rates are really high. So it's just something to take note of and to be aware that everything has a pro and a con right there's, positives and negatives, and you have to decide if this is the right thing for you. And that's why it's important to speak to brokers like yourself who are holistic and look at the full picture, because someone might have $100,000 savings. And looking at using a guarantor, I mean, you just have to understand, okay, if we use a guarantor, your loan is going to be bigger, which means your mortgage repayments are going to be bigger, but you're going to keep the 100 grand in your pocket, and you can put that in an offset account or something.

Fadi: 19:23

The flip side. Yeah, sorry. Keep in mind in regards to that scenario then, I think we both have seen this a lot, is that, again, when the guarantees which are the applicants come through, they have such a large savings, but they go ahead of the Guarantor loan if they want to purchase another property upwards. If they come back and say, Km, you know what, we actually do have funds, we're looking for another great investment opportunity. We've actually got the funds there. It's actually another good way, especially a lot of the customers that come to you and they're, you know, we're looking to start our investment portfolio and what's the fastest way that we can do that as well? If their first home, it's their first home to enter the market, they can go for that Guarantor loan if they have the option to. And a couple of months later, or whenever that loan settles, they're able to use those funds that they've got saved up to purchase another investment property as well, which we both have experienced with our customers as well.

KM: 20:18

Yeah, for sure. So that's a massive positive. And you can use a Guarantor to get into the market and that loan on its own, you might be at 100%, 103%, whatever, even using your cash on a separate loan, separate to the initial property, you can use that to get into the market if you have your 10% to 20% deposit as well. But it's just about understanding the implications of using a guarantee loan and not expecting the same results. From a cash flow perspective, if you are on an 80 or 90% loan, that all changes, it's all up and down, there are different implications, so it's just about understanding and being aware of that. When it comes to lending again for a guarantor loan, can you be guarantor loan and have an interest only loan as well, or do you have to be principal and interest?

Fadi: 21:12

So ideally in most scenarios, from a broker's point of view, you'd like to think you'd want to go and print to an interest payment to get your parents off as guarantors as soon as possible. And going back to what you were just saying now in regards to a cash flow, that cash flow is not going to improve on an interest only loan because the loan is not going down. So in that scenario, cash flow is not going to be improving unless the rental goes up, the market goes up, the property work as well, and you're not getting the Guarantors off sooner than later, which allows you to also pay the loan down, have access to equity where your parents are no longer on there. So the Guarantor being on there doesn't allow you to have access to those funds as long as the Guarantors are on there.

KM: 21:55

Yeah. So most guarantor loans you will be running on a PNI, so obviously it's important to take that into account with your numbers. Can you have an offset account?

Fadi: 22:07

You can have an offset even interest only if it's an investment. If it's an investment, you can have interest only. Obviously that's under the bank, but then you're not looking, so your cash flow is not going to be improving under a guarantor loan on an interest only and you're not getting the guarantors off there anytime soon. You do have access to an offset account if you choose to have one as part of the product that you go through the lender and you can use those funds that you've currently got in the banks now to put into the offset account, to offset basically the interest that you're going to be paying on that new purchase.

KM: 22:39

Yeah, for sure. So what are the steps? I guess if I say to you fairly, I want to buy a property, I don't have much of a deposit, my parents have a property, can I use them as a guarantor? What's the process? Who do you speak to first? Is it the parents, is it the banks? What's the process? How long does it take in comparison to a regular loan?

Fadi: 23:06

So the process would be it's pretty similar process. The only difference is that when we get the guarantors involved, so the beginning process is we take a look at the servicing for the customers, for the applicants that are coming through to see how much they can service up to. So what the banks will allow them to borrow for the next purchase. Now, let's say, for example, they're able to borrow 540 grand, which basically means they could purchase a property for 500 grand and have the stem duty and transfer cost capitalized on top, which takes it to the 105%. Once we know that figure of how much they can borrow in this scenario, 540 grand. Second step is now visiting the parents, taking them through the process, explaining the advantage and disadvantage and disadvantages of going down as a guarantor loan. And then we'd be asking the parents again, which lender are you with? What's the current loan? What's the current outstanding balance on your loan? Finding out. Also evaluation is also done on the guarantor's property to find out what the value of the property is. And here's another example. So we discussed before, if we're going for the same lender as your parents, as lender A, and we're going with another with the same lender A, we can go up to 80%. If your parents are with lender A and we're going with another lender, let's call it Lender B, that lender may only allow your parents to go up to 60% LBR because they don't have security. So we're pretty much putting another bank is putting a second mortgage on another bank's security. So in most scenarios those lenders are like, no, we're only going to allow up to 60% LVR because we don't actually hold that security.

KM: 24:41

Yeah, cool question that just came to mind. Can you guarantor or can you guarantee serviceability, not deposit? So, for example, I have 200 grand saved up, but my income is low. I don't know where I got 200 grand from, but I've got it. I've been saving for a long, long time, 20 years. I saved 20 grand, ten grand a year. I got 200 grand, but my income is not good. Can I get a guarantor to guarantee my serviceability or is it only for deposits?

Fadi: 25:20

You can. So you can actually have it's now called a serviceability guarantor, but then your parents be going on the title as well. That means they're a shared party on the title, so there's an interest. So your parents would have to be added to the title. Not so much on paper like it is with a guarantor loan where you're able to service it. This is now called a serviceability guarantor loan. And when it comes to serviceability guarantor loans, you're pretty much kind of left with the option of going to the same lender that your parents are with at the time as well to allow for that serviceability guarantor. And I think you know more than most in regards to trying to do a guarantor loan with a different lender than the parents are with. It's quite draining. Pretty hard to get two banks to communicate with each other in regards to that sense. In most scenarios, we try our very best as long as it fits the customer's profile, what they're requesting regards to their products and features. We always strive for stress levels or blood pressure levels on all parties to try and go up the same length parents. But that serviceability guarantor is definitely an option.

KM: 26:28

Is it used often or not really?

Fadi: 26:31

We don't see much of those. Man, I can probably say I probably read it maybe ten in the last five years as a serviceability Guarantor. And eventually when the guarantees or when the applicants, the kids, are in a position where they are earning that sort of income, then we can look at removing the parent as the serviceability Guarantor. But here's the kicker. When you're removing a parent off as a serviceability Guarantor, you're now paying stem duty to remove that parent off because that parent came on as a serviceability Guarantor. They added to the title as a normal applicant. And then I've just actually had this scenario just recently. We then had to pay the person that was taking on the whole loan, which is the applicant. The initial applicant had to pay the stamp duty out back to the government. So in that scenario, we have to send the value, third party valuer out to value the property. They'll come back with that report and then you'll be paying half that stamp duty. Or your parents can be going down. It depends on how much serviceability we need from your parents. We can either go down as a 5% parents can be down as a 5% on title, or it may be 50% on title. It just really depends on the servicing.

KM: 27:45

Yeah, okay, so that's interesting. So overall, there's a lot of positives to using a Guarantor to get into the market. You can only use them once. They can help you get into the market. And if you got cash, you can dump it in an offset or you can use that to purchase another property if you wanted to. There are so many different aspects and different ways, different implications around it. So, as always, speak to your trusted mortgage brokers at Power Loans Fetty. Don't speak to the other guys because they'll just take your money and fly over the world and whatnot, but speak to them and look at it as a holistic approach and understand the positives and negatives to it.

Fadi: 28:36

I have a question for you, mainly because we do a lot of the Guarantor loans at the moment, what's the biggest challenge when applicants come to you? It's a question that always comes up and it's fair when it comes to investing. When you're purchasing an investment property under a Guarantor loan, and that cash flow obviously is not going to be great. As if you were to put your 20% deposit down plus dam duty and have that 80% loan. How do you get past that? How do we explain that to customers? Where at the moment, if we're looking to get a Guarantor loan, are we. I guess in your scenario suggesting that we do go for the principal and interest payments where we can try and pay it down to improve that cash flow, or how does that work, how do you approach it?

KM: 29:18

Yeah, I think it depends on the person and their goals, right? And everyone is different. People have different risk tolerance levels, which is a big thing as well, especially with going to a loans because it's obviously you're taking on more debt than the property is worth. So that's obviously your first amount of like that's your first thing is that some people are extremely risk averse and that alone is enough to make them not sleep at night. So that's something we discuss and we say, okay, well in this case we obviously want to be on a PNI and get the principal paid off as quickly as possible. But I think the biggest conversation is, well, you have two options. Well this is assuming you have a deposit. If you don't have a deposit, you don't really have an option, right? I mean you do, you still have two options. You can wait or you can use a guarantor. And in this scenario, it's usually better to just use the guarantor because we know waiting, waiting, waiting, waiting usually don't get in. You spend money on traveling, food, cars, whatever you procrastinate. But if you use a guarantor, it gets you into the market and so you starting to make gains immediately. So in that scenario, usually we're just going guarantor is a better option if you have the option and you understand the cash flow implications. Now if you do have a deposit, say you had 100 and 5200 grand, whatever it is, and you had the option to use a guarantor. And people ask me, well, what's the better option? We run the numbers and we run some scenarios and we say, look, it really comes down to this, right? If you use a guarantor loan, you're going to have a bigger loan. Your cash flow is going to be poorer because you obviously got a larger loan. So you got a $530,000 loan as opposed to a$400,000 loan on the same property in two scenarios. So your cash flow is going to be poorer in one scenario than the other. But you've also saved, and I say saved in quotations. If you can't see me listening on audio, I say in quotations because you haven't saved it, but you have the 130 or 150 or $200,000 that you would have put accessible in your hand today. And then you have got option, you can put it in an offset account. So it's as if from an interest perspective, you actually put the deposit down so your cash flow will improve in that scenario slightly. Well, not your cash flow won't improve, but a bigger portion of your repayments is going towards your principal rather than the interest. So your principal is getting paid quicker right, which means you're going to bring that LVR down quicker. Or the other scenario is you've got that funds and something you mentioned is you've got those funds and if you wanted to purchase a second property or even a second and third property with that deposit, you could do so. So then we have a look at we run the numbers on all the scenarios and we present it to the client and say, okay, if you went just the vanilla route you put down a 20% or 10% deposit, this is what it's going to look like, that's it clean. You put a 20% deposit, your equity is immediate right from the start. You've already got equity because you're at 80% LVR and then later on you can pull that out and happy days. The other side to it is we've got the other scenarios where you've used the guarantor and then we run the calculations on if we put the money in the offset and then run the calculations if you purchase a second property. And we say, hey, these are the scenarios, these are the cash flow results for all three options. For example and this is a forecasted capital growth result on the free options. Which one are you most comfortable with, which one is clear in terms of who's going to make you the most amount of money? But it comes back down to mixture of what's going to make me more money and what am I comfortable with, what can I afford to hold on to week to week, things like that. So we run the scenarios and then we let our customers come up with their decision. And that's why there's no black and white because everyone's different. Some people happy to take on risk, happy to take on over debt in the world and then use their funds to buy more properties and then all of a sudden you went from zero to three properties really quickly because you use the guarantor and you use your deposit across two properties. Some people are like, no, all of a sudden I have 103% debt, 80%, 80%, I have all these debt. It's too much debt. Some people like, I'll just put 200 grand on a 500 grand property. Happy days. 100 grand on a 500 grand property, sorry. So we run the scenario based and then we let our customers choose. But we go through all the implications, positive and negative across all the scenarios so they can make an informed decision in that scenario.

Fadi: 33:59

And again we go back to current customers or customers that we've worked with in the past that have purchased those few properties in a row. It's like they've purchased those properties at 100% every time because once they purchase one or first two properties and they start growing equity in that. I think we saw a lot of equity growth during COVID They were starting to purchase properties, investment properties, ongoing, using equity to purchase the next property and then using equity of that current property to purchase the next property and still having funds in their offset account. There's heaps of advantages in this. Obviously, there's a little bit of risk here and there. It just depends on what, like you said, how risk adverse you are. But it is a very interesting topic and like I said, most of the posts that we put up in regards to guaranteed loans or if someone sees 100% lending or 105% lending, like, what can we do? That definitely an interesting topic.

KM: 34:55

Yeah, obviously you have to be able to service 105% loan, so that's one part to it. But again, always have a chat with Fertie and the team at Power Loans and then if that's all good, come to us and we can run some scenarios and then you can make a decision on how you want to play it. We're both running out of time. We both have meetings in like three minutes, so we'll wrap this up. If there is questions around Guarantor loans, obviously speak to Ferdi or myself or let us know. We can have a part two to this podcast episode. Otherwise, thank you for listening, as always, and we'll see you on the next one. If anyone has any topic requests, please send them through.

Fadi: 35:39

For Asset Finance. He should be back from his gorgeous holiday next week.

KM: 35:43

You can tell us how to fund a private jet. Yeah, all right, we will see you guys next time. Thank you.