Good morning everyone, and welcome back to Sugar Mama's Fireplay, the podcast that ignites your financial journey with inspiring stories and innovative strategies that are going to help you achieve all of your financial goals and dreams as efficiently and
as effectively as possible. I am your host's financial planner, Canna Campbell, and today we are back with our mini series Ask Adam, where we get to pick Adam's brain and get a really deep insight as to what is going on with the mortgage market, what interest rates we should be paying, what's a great deal, what do we need to be careful of or traps to avoid, and really get some honest, transparent feedback that is only going
to help us with our financial journey towards independence and freedom. Now, before I begin, a quick reminder, this is general advice only and educationally based, so please do not interpret this as being personal, strategic or investment advice at any time.
And of course, if you want to reach out to Adam directly to ask him questions about your mortgage and what you should be doing, please feel free to and know that I get zero referral commissions or fees for doing this I just simply have Adam on the show because I know him, I trust him, and I have over eighteen years experience working with Adam and he actually does my own mortgage and investment loans, so I know how good he is. Let's get cracking with.
Our ask Adam serious, Adam, thank you so much.
For coming in this morning.
How are you are?
I will thank you and well, I am. I'm actually quite excited because you are doing refinancing our loans at the moment for Tom and I.
You know, yeah, fun times.
Fun times, and it's is a refreshing insight to see with the process that you have to go through and the paperwork, and it's actually a lot easier than you sort of build up in your mind.
It is now be so much easier. There's a lot more automation and technology that we're using that make it a really seamless process and we try and take away all the heavy lifting for all our clients and it does. It is a lot more enjoyable now than what it used to be.
I know, from you know, financial planning, you know, getting clients to complete forms, particularly insurance application forms, which are lengthy. You know, it can be a question block yeah, I'm very confronting questions. Can you just quitt quickly out of interest? And this is not, I guess a question that's on my list for this morning, but it's one I would
love to touch you ask you. Can you explain to everyone what the process is to do that paperwork because it is actually a lot easier than people really it is.
It is look first, first, up coming on board with me as a client is a portal. We've got access to a portal ful filling in all your personal information. Personal information is off top of your head, right, it's all your personal details, where you're living, where you're working, your assets, and my abilities. It should be there off the top of your head, unless you've got a complex situation where you might need to refer to some filing that you've got. But it's about a twenty minute process
through that portal. It's safe and secure and once that's once you've done that with me, it's generally once off after that. Any other finance we're doing down the track is very quick and easy, and we try and make that as simple as possible, so you don't really need to go through and fill out a form again. We just capture what changes there have been, but upfront, it's about twenty minutes to fill the format, attach all of your documents, press a button, I'm done, and off you go.
That is a lot easier than when I think back, say ten years ago, when you were I was actually getting divorced and I was a single mother, and the amount of paperwork and even like letters from accountants and statements and yeah, oh from time to.
Time we need the odd letter from an accountant or you know, to support tax re frends and things will explain something. But again, we can communicate with your accountants for you all of those things, try and do to make it easier. So whatever you're open to, really, but there are easy ways to do things now.
So it's a lot more seamless, definitely. All right, Okay, so let's get cracking with these with these questions. All right, what do we need to know right now about the mortgage market.
That's a tough one, really, Like I'm having so many conversations at the moment with potential customers who you know, asking, you know, they're not really happy with their rate and can they move, and a few of them I'm having to say, look, yourate's actually not that bad.
That's why you're honest, like giving them good advice.
Yeah, well, look, I don't have any interest in wasting people's valuable time on my own if it's not worthwhile, and I can't you can't sugarcoat it, and you can't gooss over it. If we've got to present the facts and the details, we're trying to recommend something to a potential client. So it doesn't make sense why do it and why I waste each other's time. But the main, the main thing to take away from that is that
you just need to be a bit more patient. I think some competitive rates will come back later in the year, and when that comes it'll be more valuable or more beneficial to change at that time. Then now for the sake of a few basis points and a few hundred dollars a year, wait wait until it's more beneficial.
It's definitely worth asking the question. But if you know, you get an answer and as you said, you're actually a great rate. You can't do anything better than that. It's actually great to know that.
Yeah, it's really sure, and at least you know that. You know the biggest issue is that rates are high. You know, if you're seeing a six in front of it, you just think it's crazy because we came from two's and low threes. So it's just about getting over that that mindset.
We have short term memories, Yeah, definitely, because if you go back, you know, seven, eight, nine years like different rates or even further, actually.
A bit further. So two thousand and nine when the GFC hit, that's when rates really leapt forward. I think we're talking in high sevens, yeah at that time, so you know they're a bit higher now. But I also think that was a bit unnecessary, particularly in November. Cash increase from the RBA was totally unnecessary. But even though with all the inflation figure changes, there's no way they'd
take that back. But it was unnecessary and unfortunate. But look, if you're low sixers, you're good in terms of what else is on at the moment, not a great deal. There's a bit more variety in terms of options for self employed borrowers, which I find really exciting. It's helping a lot of a lot of those small businesses who have got different types of setups in their business and you know, maybe have done it tough for the previous year or two in the back of COVID or during COVID,
and now they're in a good place. So there's some credit policy that's opening up access to credit for them. That's become a bit easier. So there's a few different products around that space, and I think that's really good. It's giving some small businesses a bit of a leg up that they need.
All right, So we now know that if you have an interest rate in the low sixes, you're in a pretty good deal. I heard that some banks have actually already started dropping their rates, even though we haven't actually seen any official cuts yet from the RBA. But these new deals are only for new customers. This seems really unfair, So what's going on.
Yeah, look, it's no different. That's the way it's been always been. Banks and lenders will target new customers and they'll market their new rates to them, and existing customers are stuck with a rate they are on, or go back and ask for a better discount. You won't always get it, but new customers are valued more. Unfortunately, it's
the same in the employment sector. You know, generally you go to a new employer and you're going to get valued for your new skills more than your exist employer might give you a pay increase for we live.
In such a fickle, two faced, shallow world.
No, it's not right, but there are ways around it, you know. You can you can approach your lender and ask for a better discount. You can bluff, politely, bluff that you're leaving. You know, it's a funny one. You're threatening a bank that you're going to leave. You know. Hear the ads on on radio bit about that they don't really care. You're just a number drop in the ocean essentially, which is sad. But some banks do it really well, and some smaller lenders do it really well.
They value their existing clients customers. It won't necessarily mean they'll just go to market and offer everyone the lowest, same rate.
You've got to ask if you don't care, now, what size mortgage can you start asking for a bigger discount?
Like over a.
Million, two million, ten million.
In the so, if you're a new new de bank customer, you're going to market for a new loan. Anything above well, generally they're segmented, so it's above two hundred and fifty k five hundred k seven to fifty million, above a million, then it's free for all. So it's basically you're in
that top top level that the banks look for. Above that they will offer some discretionary discounts, but generally above a million is where you get into that state of that extra discount if you're loaned to value ratio is right? So if you've got good equity in your property.
Is that what we call private banking level?
No? No, it's just a million dollars. Isn't much anymore? Is it? No? A bit of a shock to say that, But it's not particularly in Sydney. So meand all alone is he's not far away from the norm? Wow?
All right? As an everyday customer, how do we actually ask the bank for a better deal?
Like?
What?
What?
How do we have this conversation? Like is there a script that we should be using or is there a particular key terminology that we should be using so that the bank know that we know what we're talking about, even though we may not necessarily like what's the best way to approach this, you know, respectfully and professionally?
Well, as I said earlier, bluff politely, it's just a conversation that I'm yourself, go, you know, understand what is out there? In the market, what the lower rates are. Have that written down, so when the phone call to the bank, your bank, you call them and you ask for a better discount. You know, the longer you've been there, the more chance that you'll get an extra discount. And if you understand what the market rates out there are, and you can convey that to them to them in
a conversation, you're a chance of getting it. Maybe not on that phone call. You might then need to push it at another level and threatened to leave that you're going to leave and go to a different bank, in which case they might refer you to their attention team, who will then look at your rate, and if you're on a good rate, they won't just give you a discount, and I'll just say, sorry, you're in a good rate.
We're not offering you extra. If you want to leave, then we'd be sorry to see you go, but see you later. But if you are on a higher rate and there's room to give you a better discount, they should They won't always do it, but the longer you've been there, the better chance you are of getting that discount. And if it's been a long period of time since you've asked for one before, or if you've never asked for one before.
Is it better to get a mortgage broker to do this for you?
It is not all brokers will do that. I mean as part of once you're just in kind of mind, we do that every twelve.
Months and more automatically without even asking to the customers.
Yes, yes, we approach those lenders regally for better discounts.
Actually, you've called me before and randomly and said, hey, I've just spoken to the bank. I'm just getting you a discount of X basis points.
Yeah, yeah, Look, it's just part of this ongoing service. But not every broker will do that for you if you're not on there, if you're not a customer or a client. Sorry, So it is best to be an ongoing customer of that broker, and the broker should regularly do that for you. But if not, you don't necessarily need to have a broker do it for you, and it won't necessarily get your better results either.
I do like that idea. With a bank, you're a customer. With a mortgage broker, you're a client, it's a lot more. It's a far more valuable relationship. Absolutely, that has potential to save tens of thousands of dollars in interest, if not one hundreds of thousands of dollars of interest in valuable time.
Purely unbiased advice. And we're constantly you know, everything that we do is built around them what's best in your best interest, not particular Linda or a bank.
And do you charge when you go and call up a bank on your client's behalf?
No, we don't charge fees at all. We're paid. That's part of the commission structure that we've got, you know, with an upfront payment from the loan that we do and then an ongoing trial commission, which is you know, public knowledge. Now you know, we don't hide from that, and that's explained in our credit proposal documents that we issue our clients as well, so that all that service is part of the commissions we get paid.
And that's all very transparent as well.
Absolutely, Yeah, it must be.
How important is it to have an experienced mortgage broker having that high sort of contact rate or human contact rate up the food chain within a bank for complex applications or situations.
Yeah, that's critical, and we don't always have that contact higher up, but it's it could be someone on the lower level who knows someone or just your relationships within that bank can get you there, because you know, bank credit officers who approve these loans the human They make human errors, and they don't know the customer or our
client as well as we do. So it's really important to be able to get the message across about a customer if the credit officer doesn't necessarily understand the transaction or how their income is derived. So it's really important for us to have access in those situations to get the message across and help get the right result for our client.
Okay, Now, for some listeners who've still got some pesky credit card debt leftover from Christmas time or the school holidays that they haven't been able to get back on top of, what are your thoughts about sort of drawing a line the sand, consolidating that debt and starting again. You know, can you do this yourself directly with your bank or do you need to speak to your mortgage broker about you know, refinancing.
Oh look, you ken, it's a funny one. Credit cards. You don't want to be getting into a habit of consolidating credit cards into a mortgage.
That's why you need a budget.
Yeah, correct, And look, if you're trying to do it yourself, and if you've just come off an expensive Christmas and they're looking at your expenses, then the bank might knock you back and say, look, your budget is much higher than what you've stated based on your spending. But if that was only a one off month of spending, then you should be able to explain that. But going direct you may not get the right result that a broker
would by being able to explain that upfront. So credit cards, if you can consolidate it, I'd either keep it as a separate loan amount. You know, if it's say fifteen k, you get a twenty k loan to clear those credit cards, and then you pay that thing off in two three years if you can as quickly as possible, because consolidating a small short term debt over a long term loan facility means you're paying interest on that Christmas for the next twenty five years. Not ideal.
Yeah, all right, what's your best advice for just again, all right? What's your best advice to people who want to try and pay their mortgage off as quickly as possible, which I will add is a brilliant goal to have.
Yeah, look, as we spoke about earlier, so constantly managing the budget, reviewing your budget and putting whatever surplus savings you've got from that budget into your mortgage where it's into your offset or your redraw. Offset and redraw can have a huge impact on interest savings over the long term.
I think I actually saw something on your Instagram account where forty thousand dollars in an offset account or a redraw facility for a four hundred thousand dollars I think, like I say, six and a half percent interest rate saves like over one hundred thousand dollars in interest two years off homeland, which is I mean people who have emergency money sitting at a separate savings account and still against their home loan like matters.
Yeah, you don't realize because when you're talking about extrapolating those savings over the twenty five thirty years, it's huge. So and some some clients I see and speak to, I've got savings account, I gr savings account Mcquarie. They've got their homelane and they've got an offset, They've got a little bit in their offset, but then they've got savings in other banks for rainy day or emergency.
You know, we talked about Michael Thompson from how to theyre for that is twenty three different savings accounts.
We've got, We've got you know, we've got access to credit or access to funds via our smartphones, so you can instantly transfer money around so that that need for emergency accounts in that other banks doesn't really exist anymore. And then if you're any interest on that, you're paying tax on it. Yeah, you know, it's much better used in an offset or in your redial account.
Exactly. All right, coming up to the end, I've got a couple more questions, and these ones I am intrigued with your aunts. Oh sorry, you're sorry.
Yeah. So another another thing to remember in something that I that I see often is you know clients who want to pay their loan off before they invest. You know, if you think you've got some room to invest in your cash flow and your budget and you want to plan for your retirement, do it. And that's something that we can help. We can help with. Borrowing to invest can help reduce your taxes, so you get a large attack refund every year. You use that to help pay
off your home loan. You know, we consider the home we call the homeland bad debt investment line good debt. That's one way of doing it as long as you can afford it, and then it's much better to do it that way than to pay your loan off and then in the last ten years of your working life trying to invest and scrape together the money to you know, to buy, You're not holding it as long term as you could, so ideally you want to be investing earlier.
That's another way to help pay off you your mortgage earlier as well.
I think debt recycling is one of my favorite topics to talk about, so I feel like we need to do maybe a special Ask Adam debt recycling episode. So for the listeners right now, I want to hear that episode. Can you please make sure that when you're leaving us a rating a review, that you state that so that I can prioritize this particular episode as quickly as possible
for you. All right? Next question is if we happen to get an interest rate cut a little bit sooner than anticipated, how do we use that cut to our advantage if we have a mortgage free goal.
Your repayment's the same, so you'll start getting ahead and that can be invaluable. You know, I've had I've had examples of currents who lost their job or got run well and had some long term health issues so it couldn't work. So being ahead a couple of years on their mortgage was enormous. Keep the stress out of that of that situation for them. So I'd always recommend trying to keep your repayments the same regardless of how many rate cuts you get. You'll know then you'll really start
smashing your mortgage debt. Your debt recycling is the other one you spoke about earlier. If you if you can then pay off extra through the rate cuts, split a bit of split a bit off your mortgage debt, recycle, go and invest. Yeah, that's another good way as well.
All Right, I have this last question. It's a burning question of mine, and it's the reason why I've come up with this question is I'm starting to see a lot of mortgage brokers popping up on social media, and some of the things that I'm seeing are actually I would say incorrect, but they're questionable. So and you know,
if you don't know, this was obviously I do. Being a financial planner, you could very innotantly assume that this person is experienced as a mortgage broker and knows what they're talking about, and I see a little bit of danger. You know, you don't know what you don't know almost How can we tell as a consumer that we are dealing with a knowledgeable, experienced mortgage broker that can actually handle our application smoothly and can actually genuinely get us
a really good deal. How do it over in safe hands and knowledgeable hands?
Well, I think first and foremost is a good mortgage broker needs to be organized, so organized with all your dealings, conversations, have a relationship, you know, a good relationship. Talk about something I'd like to talk about is ongoing relationships are not transactional. We don't consider you know, working with our corrents. It's not transactional. Once you're on board, you're part of family.
So it's about moving forward together, helping you stay at the forefront of the best interest rates without refining you every year or two experience so you know, some good good knowledge and on difficult transactions, and being able to have those conversations with you directly over the phone, not being prepared for meeting things like that. These are a good mortgage broke with experience, off the top of their head, should have answers for the majority of circumstances or difficult
issues to discuss. So I think probably those would be my key ones to take away from that and and just not feel any pressure. I think if you're feeling pressure and a rush from a broker, you know, there might be other reasons for why they're working for you. It's not so much at your best interest and pushing it's one thing that I will never do. I just don't push push my clients. It's working at their pace
within a reason, within reason, you know. But unless you've got unless you've got critical timelines and settlement deadlines, you shouldn't be feeling that type of pressure and constant stress from a broker hassling you.
And if your gut, I guess smell something's not quite right. Your intuition is very powerful.
Yeah, And look, I think over the last sort of five years, a lot of those you know were referred to as cowboy brokers that weren't necessarily tewing the compliance lines and things like that aren't really around anymore. The pressures of being in business and as a mortgage broker, which has really turned the corner into that profession, recognized profession.
Now then a lot of those are gone, but there I think some key things to look out for, and a good mortgage broker will do those things for you.
All right, amazing, Well, thank you so much for allowing us to pick into your good quality mortgage broker brain. As everyone knows, this is part of our Ask Adam miniseries which is here to stay, and I'm so thrilled and honored and excited to be able to, I guess provide Adam's brain for your benefit, guidance and greater financial security in this day and age. All right, everyone, thank you for listening to today's episode. Until next Monday morning.
Please stay motivated, stay educated, empowered, and never stop seeking ways to achieve your financial goals and dreams. I believe in you, what you're chasing and what you are worthy of achieving. This is sugar Mama's fire