Chris Bates

speaker

1,659 appearances 5 recordings 1 series first heard Jun 2021 last heard Dec 2022

Chris Bates’s voice in public audio — every appearance, attributed to the second.

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Australian Finance Podcast · Property investing strategies (advanced) with Chris Bates · 4 Oct 2021 podcast

The financial wealth of all households, their biggest asset is property.

And so if you start playing with that,

You start changing the mentality of Australian consumer, right?

And Australian consumer drives our economy, you know, etc.

So, what banks will do is will treat property differently as an asset class in terms of what they're willing to lend on, right?

And so if you go into walking to buy property, a share portfolio, no bank's going to want to lend you 90% on a million-dollar portfolio of shares and only putting in $100,000, right?

They're not going to say, I'll give you $900,000 to buy a million dollars of shares.

But with property, they do it every day.

I mean, we don't really like to encourage clients to borrow more than 90%.

We don't even do loans over that.

We just think it's important for clients to get to that 10% deposit because of the LMI sort of savings.

But let's say a client does buy, just use round numbers, a million dollar property with a $900,000 loan.

You know, that's in 2021.

know as over time they pay down that 900 000 loan um and the property value goes up it might go up because they might do you know renovations to it but it just might go up because the area is shifting in terms of price and at some point though the value of the loan decreases and the property value goes up and you start to build equity in the property now equity is always something that's often misunderstood because people say well if the property is now worth 1.2 million

and my loan's now 800,000, you go, oh, actually, I've got $400,000 of equity.

I could borrow that to buy shares, et cetera.

Well, no, because the bank needs to protect themselves.

So what they'll do is they'll lend generally up to 80% on the value of the property.

And so in this situation, that person's got a $1.2 million property.

80% on that is 960,000.

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