James sits down with Trent McIntyre from ANZ to talk all things mobile lending.
In this interview James and Trent chat about:
- Purchase prices vs. bank valuations
- Different types of home loans
- Mortgage brokers vs. mobile lenders
- What loans are suitable for different buyers
- Plus so much more!
Read on below for the full transcription of our interview:
– Good day everybody, James from mrkts.com.au here, and today we are very lucky to be joined by Mr. Trent McIntyre from the ANZ Mobile Lending Gold Coast branch. Trent has had seven, eight years in the finance industry and in the lending industry, and we’re very pleased to have him here to talk about his experience. Thanks for coming in, Trent–
– Yes, thanks for having me.
– Mate, let’s start from the start, I guess. If you could, we try and do a little bit of introduction on people so you have an idea of their past, so could you give us your CV and you know–
– Yes, certainly. So I finished high school what in, I think it was 2013, studied over at Merrimack high. So I was more sport-orientated, so I chose the football path over obviously academics.
– I don’t blame you.
– Yeah, when that backfired, I got into a trade. So done a bit of construction background, finished my Cert III in construction, and then took off for a couple of years and I went traveling.
– Yeah, beautiful.
– So I traveled all Europe and done a lot of stuff with me mates, and then realized I should probably come home and settle down and try to get stuck into a career. So here I am, Mobile Lending. I been with ANZ for seven, eight years. I was very green in finance when I started, back when I was like 23, 24. So I haven’t got back, ever since then. It’s a great opportunity, business is great, I love getting out and meeting new people, and helping people with their finance scuffs.
– It’s great, so.
– Fantastic. So there are a whole lot of different loans out there.
– And understanding that a mobile lender is not a mortgage broker. I just want to clarify that early.
– Correct, yeah.
– So the difference is your specialty is in the lending of money and different facilities to make it possible for individuals.
– Yes, spot on.
– So, yeah, with us, we’re independently owned. With ANZ, it’s a franchise model. So yeah, we are self-employed. So we are driven to help clients and whatnot. Difference to brokers is brokers will obviously go out and source you the best deal that’s on the market. You might be rate-driven, or there might be a certain product you’re after, whereas ANZ, we’ve got standard policies, procedures, and we deal directly with ANZ. The good thing about us mobile lenders, as well, is we do get direct access with our assessment department. So we’re always workshopping deals and whatnot, trying to get deals over the line, and our assessment department is pretty good in that aspect.
– So your core business is facilities and products for ANZ as the bank, but working privately and independently of that, whereas a mortgage broker would be more defined as someone who shops the whole market and looks at all of the options from other lenders and tries to get the best deal.
– The best deal for the client, exactly right.
– Let’s talk about, we’ve made a couple notes here. So a couple of different types of loans, and the benefits of drawbacks of those loans. So I thought we’d try and discuss those,
– And let’s start with the standard variable rate.
– So let’s do a little
– Yeah, okay.
– explanation of what it is,
– And then try and talk about the drawbacks.
– Yeah, perfect, yeah.
– No worries.
– So variable rate offers more flexibility than your normal fixed-rate home loan. So you can obviously make additional repayments without being restricted whilst you’re in fixed-rate term, and you do have the options of making bulk reductions off your loan at no extra cost.
– So it’s really good if you want to make those additional repayments, build up a redraw feature and whatnot, because you can then access your cash when need be. Whereas you’re typically restricted when it comes to fixed-rate home loans and doing that. So it offers more flexibility around repayments and whatnot.
– Okay, fantastic. And then a fixed-rate then, what is a fixed rate?
– Yeah, so a fixed-rate is generally good for someone who likes to stick to a budget each week. So if you fix in for a couple years, your payment’s gonna be, remain the same over that term. Okay, so if, compared to a variable rate, if your rates increase, your payments are gonna increase. If the decrease, well, great, because obviously you’re gonna build up more of a redraw feature. You’re gonna have more cash in the bank, et cetera. Whereas– Yeah, so the fixed-rates, you could have terms up to what, 10 years?
– Okay, so ideally you probably don’t want to fix in for 10 years because if you do, the rates are slightly higher, and you’re probably gonna get penalized down the track if you break that line early. So probably best to set a financial goal over a certain term and you try and stick to that. There is another feature. You can obviously split your loan, have a portion fixed, portion variable.
– That way you get the best of both worlds.
– Is there a name for that?
– Yeah, you can set that up under one of packages.
– Oh, okay.
– Okay, So generally when you split your loan, you get the benefits of everything. So you can fix in, you can have a variable portion, you can have your redraws. You’ve got everything.
– So fixed is for those disciplined people who know what their income’s gonna be each week and they’ve budgeted it out.
– Yep, correct.
– As well as it can be for anybody,
– But it just gives you more clarity going forward.
– But variable is slightly more of a gamble in the sense that if interest rates go down and the banks choose to pass it on,
– Then your rate may go down.
– Or it’ll go up, depending on what the market conditions are.
– Correct, yeah.
– Okay, excellent. So then interest-only loans, I know that there’s, if you read any newspapers, which of a lot of your members read a lot–
– Interest only is a compensation that’s come up quite a bit as loans that aren’t being offered very much anymore.
– Yeah, correct. It is for the homeowner. Generally, assessment won’t ask a few more questions in regards to why, why does it show that your principle place of residence and you’ve got interest only repayments. One reason might be is you’re saving for a holiday out one night, or generally, interest only repayments would more benefit the investor because obviously there’s tax reasons and accounting reasons that you can obviously claim the interest and whatnot. That’s more suited for that investor. When it’s a homeowner, occupier, it’s probably a bit different. You probably would want to pay your loan off because it’s only gonna cost you more interest in the long run.
– So potentially pay off your loan a lot longer.
– So interest only, being in the name, and it’s not as tricky, ’cause sometimes it’s all in the name. So interest only just means you’re not paying the additional principle, you’re just doing interest payments and it’s gonna be a higher interest rate. Will they fluctuate?
– Yeah, if it’s variable.
– They can. Variable, okay.
– So you can have, you can have interest only on a fixed rate, but the terms need to match. So if you’re two years fixed, for example, two years interest only.
– Keeping in mind if you take a three year interest only term, come the end of that three year term, actually your loan term repayments kick in at 27 year term, because you’ve actually set out to start with a 30 year term. You’ve got 30 years to pay off your loan, but you’ve decided to take three years interest only, then your repayments are gonna kick in from 27 years onward. So your repayments could increase significantly. Okay, so best to again, set goals, good financial goals down the track, and set a plan.
– We’re all about setting goals.
– It’s very important. And doing your research, which is another thing.
– 100%, yep.
– So always looking at what the other options are, and then finding what suits you best. Alright, offset home loans, another one I wrote down.
– Offset’s generally good if you’ve got savings put aside. Seeing a savings in your offset account’s obviously gonna offset the interest that’s charged to the home loan. Okay, so for example, if you’ve got a 300 thousand dollar loan, and you’ve got 50 grand sitting in your offset, well each month you’re only gonna get charged interest on 250, not the full 300.
– So it benefits you that way. So your savings is actually offsetting your interest payable on your loan. No different to a redraw facility. So if you’ve got 50 grand in savings, your loan’s 300, you can throw that loan, sorry, throw your savings, throw it off the home loan, have full access to it later on, and then interest is still gonna be charged to the 250, not the 300.
– Okay, so if the 50
– No difference.
– that you’ve got saved, so your cash, it’s the ability for the bank then to utilize that, because they don’t just put money in a vault anymore. It goes and circulates in the market.
– So by doing that, they benefit you by only having to pay interest on
– The difference.
– the money that isn’t yours, essentially.
– But then can you access, I know that you just mentioned that, but a bit of clarity around it. Can you access that 50 grand, should you need it, and then just pay interest on the full 300?
– Yeah, so your offset account will be your everyday transaction account.
– So you own a key card, you can go to the ATM, pull it out, keeping in mind, interest is calculated daily, charged monthly, okay?
– So the longer you’ve got that 50 grand sitting in your offset account, the better the interest being charged at the end of the month’s gonna be reduced. Okay, so it’s gonna be charged on the 250, thereabouts.
– Okay, so best to not try and touch that 50 grand in your offset .
– If you can help it.
– Well, people tend to use credit cards, put all your bills on a credit card and then pay all your bills come the end of the month. Okay, so just to maximize on interest only.
– Once again, all of this is advice that, or it’s not necessarily advice, this is just conversations for you to make sure you’re doing your research and understand the basics, but then when you make your own decisions, you make your own decisions based on your research–
– And the best thing for yourself. And then a package home loan, I think we touched on that earlier.
– Touched on that.
– So that’s having the best of both worlds, but you can’t just have it–
– Say, fixed for five years and then two years of variable. You’ve got to have it evenly spread out.
– You don’t have to have it evenly spread out, you can have 60-40 splits, you can do whatever. You could have 90% of it fixed and 10% of it variable. So really down to the individual and what they wanna get. Some people set themselves goals. Right, if I put 50 grand variable, well let’s try and aim to knock that 50 grand down pretty quick, and then we’ll leave the rest fixed in for a couple years. ANZ have a break free package. There’s an annual fee, but then it covers all of your banking. Okay, so you got annual fee, a card fee whatever’s on your credit cards, offset accounts, free offsets. There’s no loan approval fees. Selected insurances you get discounts on. It’s also good for the investor as well, if they’ve got multiple loans. They’re gonna get greater discounts, so on your fixed rates you’ll get a .15 discount off the advertised rate, whereas the variable you’ll also get a large discount on the variable portion as well.
– So it’s really good for a portfolio and a package that covers generally all your banking. Generally all those accounts and whatnot, all the fees on that are waived, and then you just pay the one annual fee of 395 per annum.
– It’s really tempting.
– Okay, so if we were to go through these rates that we’ve just discussed and try and, I know that it’s gonna be hard because it’s circumstantial, and as we discussed before, it depends on the individual, but if I go through these and say alright, standard variable rate, what type of property purchases does that suit?
– Well, it really does come down to the individual. If you listen to the media and rate cuts and rates, interest rates going up, you’re not sure which way you’re gonna go. So maybe the fixed-rate option is good. So the good thing about that break free package, as well, is if we do set your loan up on a variable rate, okay, you can then come back to me and say, “Trent, I now know what I want to do. “I want to fix in for two, three years.” I go, “Okay, no worries.” I send off the request, and it doesn’t cost you anything. So there’s no renegotiation fees, okay. So it’s all still covered under the break free package.
– That’s awesome. Okay. Now, LVR is an acronym that comes up a lot,
– Which is loan to value ratio and I know that because I read something . I got very lucky and picked up my mouse and did some studying before this interview. My apologies, I should have known it already. But, so loan to value ratio, what is it? And then why does it matter?
– Well, loan to value ratio, like you said, is an LVR. So generally comes down to your loan amount against the value of the property. We find that ratio and then determines what we can lend you. Okay, so let’s say you got a 20% deposit, well the bank will then lend you 80%.
– Okay, so when there’s an 80% LVR, there’s no lender’s mortgage insurance, which is great. There’s no additional fees.
– Let’s say you’re a first home buyer and you’ve got minimal deposit, five, 10% deposit–
– Which is becoming more prevalent nowadays.
– It is.
– Difficult to save.
– It is, it is. So if you got the 10% deposit, obviously the bank will lend you 90%. Okay, now when we’re up around that 90% mark, the system is a little bit tougher, but there’s just more questions being asked. The reason for that is there’s more risk. There’s more risk to the bank. Once approved, there’ll be a lender’s mortgage insurance. There’s a premium, okay, so it’s the bank getting insurance, as such, on that money. Reason being, if you default, you’d run higher risk. The bank’s insured for that. Okay, so it really covers all parties.
– Okay, but if we were to break it down then, and we’ll do little diagrams on the screen at some point, so the house is worth 500 thousand, let’s say, and then you’ve got your 20%.
– Then you’re gonna give 80% of the 500 figure.
– So your loan amount then will be 400 thousand, and you’ve got 20% equity in the property.
– And that gets parked in there and then you will select from one of the packages that are available, or one of the options that are available that suit you that it may be fixed, or you can do one of those offsets, and you can, with the offset, though, that 20% is not included in that, is it? It’s a deposit that’s held by the bank.
– So it all goes into the property transaction. So if you’re a person who applies for 500 thousand, and you’re a first home buyer, great. There’s no stamp duty for a first home buyer in Queensland–
– On new property, or all property?
– All properties, there’s no stamp duty. You still do have to pay, obviously, your transfer and registration fees and assistance fees.
– So you’re gonna have those fees on top of your 20% deposit. So round numbers, you’ll have, what, 100 grand plus all your conveyancing and whatnot, so 105 grand in total, for example.
– The new thing with that is at the moment, is we’re advertising for the first home buyer, so we’ll actually refund you 1000 dollars for your conveyancing.
– So we’re trying to eliminate all those set up costs for first home buyers.
– ’cause its a challenge.
– It certainly is.
– Okay, excellent. So moving on now, we’re going more into the personal, sort of, full process is, and what it is you’re doing, or how you advise people when they’re trying to choose the right person. So could you explain the process from start to finish for somebody who’s looking to acquire finance to purchase a property?
– Yep, no worries. So we’d come out and, see you at your own home, or somewhere suited.
– Sit down with you, really just map out obviously your goals, again, set yourself up, what you’re trying to achieve. Talk all home loan products and whatnot, sign an application. If everything’s good, sign the application. We’ll generally discuss in the appointment your personal details, how long you been living here, whatnot. How long you been in your job? Do you plan on having kids down the track, or what’s the overall plan moving forward in life? If everything’s good there, we take that application away. We get all your supporting documents, such as driver’s licenses, tax returns, deposits, savings, evidence of savings, and then we package up an application, and we lodge that for assessment.
– Okay. The assessment time frame’s gonna be anywhere from two to three days, to six days.
– Okay, so generally then come back and say, “Look, you’re all pre-approved, subject to the following.” Okay, so if you’re purchasing, we’re gonna need a contract of sale, okay. We may need to see further evidence of savings and whatnot. Okay, so there’s a few conditions, and then we just work together and tick those off, and then send it back for full approval.
– After that, once they say we’re all approved, the bank then issues loan documents, okay, like a letter of offer. They can then take that away to get it obviously looked at from their solicitor or whatnot, get some further advice on that–
– Which would be suggested, as always.
– With anything.
– 100%. Accountant, whatever. Solicitor, so once that’s all signed, get backed, and then we push on for settlement. Okay, so really the clients then have to do nothing with us. That’s all handled by the banks and the solicitors after that.
– Fantastic. And are there fees for you?
– There are no fees, no set up costs, okay. The clients don’t pay us at all. ANZ pays us.
– Okay, so we’re employed by ANZ, and the bank pays us our wage.
– Excellent. So what documentation, then, would you recommend people have ready? ’cause they’ll have to ask questions about the people in their lives, their employer, or their accountant, or whoever’s around. What are they key documents that they should already have their head around before they come and speak to you?
– Pay stubs. So if you’re employed, for somebody, pay stubs. Evidence of your pay don’t actually enter your bank, so bank statements for the last three months. That then just confirms that your income’s being received.
– Very important.
– You’re not doing anything dodgy. That, or if you’re self-employed, we’re gonna need your tax returns or your financials and whatnot.
– Credit card statements, I take it.
– Credit card statements
– To know where the money goes once it comes in.
– Correct. Home loan statements. So we’ll generally capture most of that in the appointment in our application, knowing all your assets and liabilities, making sure there’s no hidden credit cards or car loans that we’re not aware of that we’re paying. So we really need to capture all of that, and then obviously put that up to assessment as well. So generally, just your income documents to start with, that way we can have a quick look at it and give you a yes or no, really on the spot, to see where you’re at, and then talk about all your expenses and your living expenses and your day to day expenditure.
– Are there any sticking points that you’ve noticed recently that have held up applications with the bank?
– At the moment it’s just workflow issues. Given the rate we’ve had at the moment, things are a little bit slow just in that regard. Generally if we can get everything to start with, everything we’ve asked for, generally it’s pretty smooth sailing from there, okay. Assessment might have a few issues about your income or whatnot, if it’s out of the ordinary. Okay, but–
– What if people are getting UberEats too often?
– Too often?
– For example, ’cause you read that a lot.
– 100%. Well you need to declare that. If your grocery bill’s 100 bucks a month, but your UberEats is 500 bucks a month .
– Then you’re in a bit of strife.
– Well, yeah.
– Okay. We just need to document all that, and we’ll capture all that when we get the bank statements for your pay or wage applicants.
– So careful with your expenditure. Once again, this is the largest asset that you’re gonna purchase.
– I hope so, yeah.
– Or entirely likely it’s gonna be the largest asset that you own.
– As with everybody in this room.
– try and be as disciplined as you can when it comes to expenditure, or your property portfolio’s not gonna grow as large as you want it to.
– Alright, so we’ve covered quite a bit now. I was thinking, when the purchase of a property occurs, the bank sends a valuer, I believe, to then get proof of what the value of the property is, because they can’t take the contract on face value.
– Because maybe you’re somebody who has got a really good deal and they’ll be happy with that price, or somebody who might’ve paid a bit too much ’cause you didn’t do enough research.
– Yep, 100%.
– And the bank doesn’t want to lend on that figure. So what’s the difference between a purchase price and a bank valuation? And does it matter to the buyer in that case?
– Well, the purchase price is the agreed amount that the vendor was willing to sell for, and the purchaser is willing to buy for it. Okay, so that’s the agreed value. When it comes to doing a bank valuation, let’s say the valuation comes less than the contract price, well the bank will only lend, say, 80% on that valuation, okay. If the valuation is higher than the contract price, which is, you don’t see that too often–
– I’ve not actually seen it.
– No, see that’s, yeah. So if the value’s over the contract price, well, the bank will still lend 80% on the contract price. Okay, so you’ve agreed to that value, beauty. ANZ, or the bank, will still lend you 80% on the contract. So it comes down to the lesser of the two.
– So do your research, have a look around in the marketplace and make sure that you’re not overpaying, or spreading yourself–
– Little bit different when you’re maybe buying off the plan. We say generally unconditional purchases, so then if you buy something now, well there’s no guarantee it’s gonna be valued at that two years down the track when the property’s built. So it can be, I’m not gonna say consequences, but the bank, if it undervalues or overvalues, same again. Like always.
– But they’re not gonna be pressured by timelines.
– So preparation, I take it.
– When do you want people to come and see you if they’re going to buy a property?
– First, before they get out there.
– First thing.
– Yeah, let’s try and get you prequalified, that way you can actually go to the agent, say, “Hey, I know what I can spend. “I know how much deposit I’ve got, what I can buy. “I know the budget.” And then you can look for properties that would suit.
– I feel from a negotiation perspective, that’s also very important ’cause if you know your budget, then you know what you can pay and what you can’t pay, and then it keeps you within a framework, and then you can start to speak to the vendor and get the price you think is fair.
– We’re there the whole step of the way. We’ll assist you speaking with the agents. We can recommend solicitors. We can assist you and pretty much hold your hand the whole way through it and make life simple for you.
– We can come out and see you on sight, if need be, to sign an application .
– It’s the mobile.
– It’s mobile, yep.
– And we’re 24/7. So the phone’s always on. You got your questions, feel free to shoot me an email, give me a call, shoot me a text message.
– Yeah, I like building that rapport with all the clients.
– And you guys are all over the country?
– We are, yeah. ANZ’s all over the country.
– ANZ, the mobile lenders are?
– So we, here on the Gold Coast, cover quite a large area. So I think we cover from Miami, Burleigh, all up to Miacravat, Lascot Way. So it’s quite a large area.
– That is a big patch.
– Yeah, so we’ve got four or five lenders that covers the Gold Coast, so, but we’re starting to churn on each other’s ground now. We’re starting to grow and get out there, which is good when people start to know. So we probably see a few of those little ANZ cars getting around–
– Around town.
– As long as, I’m happy to hear that it’s independently owned because it basically just means that the bank has the ability to lend money, but you guys are working for yourselves and not really under the thumb of anybody else.
– Which is important.
– And for the client. We’re here to get a deal done for clients.
– And get the best product–
– Excellent. Trent, thank you so much for your time.
– Pleased to have you.
– Been a real pleasure.
– Thank you for coming in. I hope that video was informative. There’ll be a lot more to come, and watch this space, and we’ll try and get Trent in over time to keep learning about what the market’s doing and what the banks are doing, and why that’s important for you. So we’ll see you very soon. Thank you very much.