She Renovates

[00:00:00] Hello, and before we get into today's episode, I just want to give you a little heads up. Um, today I've invited our Wonder Woman broker, Louise Lucas and James, her son and, um, head broker to come and talk about a loan that's been prepared specifically for renovators. Um, It's called the bullet loan, and I really want you to take notice of this, because this has been developed specifically for people who flip.

Now, a few of you are in that category, and so, listen up. And if you would like to find out whether this is going to work for you, then you can find Louise's details in the show notes and give her a call and have a chat. She'll also talk about what's happening with interest rates and,

[00:01:00] um, one of our favorite topics, renovating as a self employed person, how you get your loan.

So that's it for today. So enjoy. You're listening to the She Renovates podcast. You're listening to She Renovates, the podcast for women who want to renovate to create an income and a life they love.

Welcome Louise and James. Um, I thought it was time that we had a little bit of a chat about what's happening in the world of finance and you guys are the legends. So welcome. So I know that you've been talking about some changes in products available and so on, so I would love for our innovators to hear about those changes.

Super. We have lots of exciting news to share, but first up, we thought we'd tackle your first, your other question first, which was on interest

[00:02:00] rates. I've got, I'm sorry, I've got this new, you know, vacuum that does its thing and it's busy walking its way around the room. But it does pick up all the dog hair.

So. That's awesome. But anyway, so on interest rates, we're interestingly, even this morning, we're getting, I'm getting emails and James, we get, we get flooded with emails almost every day from lenders. But today they're offering like fixed interest rates for OwnerOck at 5. 55. And you're sort of thinking, wow, that's You know, super cheap from what's on, on offer.

But the reality is we're thinking rates must be heading down if that's. So what we're saying, I'll take over from here. What we're saying is because we're saving fixed interest rates around the mid fives. It's an indication that the lenders are expecting interest rates to go down. Now we've heard from numerous economists in the industry at the moment saying.

Oh, it's going to be February. It's going to be March. It's going to be

[00:03:00] later in the year, closer to August, November, kind of. Um, in reality, no one really knows when interest rates are expected to fall, except there is an expectation that they are going to fall. Um, people think that these fixed rates are amazing.

And for a lot of Short term, they can be. However, fixed rates are a good indication of where rates are going, but they're not always a good indication of when you should be applying for a fixed rate as well as to keep and keep that in mind as banks typically do win out on fixed rates here in Australia.

We very much, uh, variable rates can give you a lot more push and a lot more leniency, especially with certain discounts that brokers like Louise and I can get you, um, to any of your, uh, lovely, um, renovators, but also any of our other clients. It just, it's an indication of where rates are going and to be keeping aware of it.

And if you are interested in what your fixed rate is do, do reach out to Louise and I, cause we can do some big, some pushes even. Um, Louise and I are getting, uh, high fives at the moment for some Iron O'Rock rates that I've

[00:04:00] been managing to get. I've even got, um, some very competitive interest rates at, uh, for investment properties, um, that are tailored towards Iron O'Rock, um, interest rates.

So really there is a lot of push that we can get you, um, but there is an expectation that rates will start to drop soon. Right. So, yeah, well, long as we hope, but. The one of the commentators. So, um, try not to listen to the media and try not to have your hopes fixed on that because they just love a headline and they're just putting out crap for the sake of it.

So avoid that sort of stuff. One of the most respected commentators, Noel Whittaker, uh, he said he doesn't think before August and maybe later. So. Just don't hold your breath on rates. And if you see some really keen fixed rates, maybe you might say, well, one year I might be prepared to fix, but be wary because when they start coming down, you're sort of hoping that, but who knows?

No one knows. So they telling you they are. They wouldn't be

[00:05:00] working for a bank as an economist, seriously. No, that's right. And so, can I just ask you, I know that you spent many years in the banking system Louise, when the banks um, set their rates, let's say when they set their fixed rate, are they Operating on any concrete information.

Do they have any huge mounds of information, but it also is dependent on their actual book. So the amount of loans they have at a certain level, they might say, well, we'll offer this fixed rate to. Lock in a certain amount of money that we've been able to borrow and we need to sell it at this rate. So it's not necessarily all to do with what the RBA are setting and, and, and what's the cost of funds.

It's also how they're managing their own loan book. So. So what that could mean is you, like James is saying, is getting some really good rates for, um, some investors. Um, what that could mean is that you

[00:06:00] may not have to wait for an interest rate rise to actually, interest rate reduction to actually get a better interest rate.

The use of banks lingo in that one. It's all about appetite a lot of the time. So we have a BDMs across all our lenders that we communicate closely with when we're applying for clients loans and working through scenarios with our, uh, with the banks. So when we approach a lender, we will contact our BDM and sometimes we'll even ask, like, what's the appetite at the moment?

Are you looking to price at this rate? Um, what can you do for us here? Can you get some fees waived as well? So we're. Trying to get discounts across the board, not only just the fees, maybe the first annual fee. We can get waived sometimes, if not just get that reduction interest rate. Um, and then again, some lenders will turn around to us.

Like we don't really have the appetite at the moment. We won't be pricing, but they'll still try for us. Like they're always willing to try, but sometimes it's a bit of hard push. And then we just say, look, these are the rates that we're offering. We'll go to our clients. Um, many of your clients will have experienced with us already.

[00:07:00] 

Um, we give a selection and we say, these are the options. This is the pros and cons for each one. And these are the rates on what they mean, as far as your payment goes, buried fees, the type of loan that they're after. Um, there's all these options there. Okay. Thank you for that. That's um, it's a good sort of.

understanding of how things work. Now, we are going to get into the new products, but there was something else that came up that I think is probably worth clarifying. And we've talked about this before, but what is the situation if someone is self employed and they're so, They're relying on their accountant to support their application.

How does that work? Really easily now, although we've had, you know, a variety of different low dock options over the years. At the moment, you can rely on yourself declaring your income plus an accountant's letter. So, and often the accountant only has to say they can meet the repayments. They don't

[00:08:00] even have to verify your income.

So that's a pretty easy option for most accountants can say here I can see they can make them enough money to pay that loan. So, yeah, I can sign up on that. So it's a very easy push for the accountants, but I laugh. The lender will often send a letter and say fill this in for us and some accountants will cross stuff out.

No, no lender is going to accept you accountants crossing things out, that just doesn't happen. So let's get something where we can meet in the middle on, you know, what you're trying to say. But with the low dock loans, we can do it a couple of ways. One with the account center, another way is just sharing your BAS statements.

Say you, you've had a much better year. this first half of 2025 financial year compared with your 24s, we can actually just use your BAS statements and say, here's your BAS. And we haven't, or even if you hadn't finished your 24s,

[00:09:00] hadn't completed them, we can use the BAS statements from the previous year just to show consistent income and they'll review your business transaction account.

So they're just checking that you're making money. Which is fair enough. And that's pretty easy, pretty easy to get a low dock loan nowadays with those sorts of options, but you have to have been self employed generally for two years, or at least held an ABN for two years. So you can be new to the business.

Some lenders are less, but most of as much as that. I just wanted to clarify a few points there. So yeah, absolutely. The best statements we do also need to see previous statements and we may present that to the bank, but only usual bass as far as verification of income. Um, so it's good to have the. Across the board, what we can say is proof of where the trajectory going.

And then if there is say, you've doubled your income in the last in this 1st half of the year, we can actually tell the story as to why that's happened. Say, for example, you've expanded. You've got a lot more in just, um. Inventory, you're moving product a

[00:10:00] lot faster. You found some new marketing strategy.

Whatever the story is, as long as it makes sense, we can generally justify it to a bank and, um, get you that high level of lending with a higher income. Um, but the main thing for all self employed people to really keep in mind is you just got to be really friendly with your account and make sure they like you.

Because the more your account likes you, the more they're willing to help you out when it comes to lending and helping us get you that loan. Yeah, that's, um, yeah, I get that. Yeah, we've had a few situations there, haven't we, Louise? We get there, don't we? Pardon? We get there in the end, though. Yeah, yeah. We always do.

Louise has had a few come to Jesus moments with accountants. So, yes. Anyhow. Yes. Um, okay. So let's talk about what's new in terms of product. Oh, great. Can we do, first of all, I just want to talk about what's not new and what's old. And James, we've been

[00:11:00] talking about people are often coming because they want to have a line of credit.

And we understand the desire because they were a great loan 10 years ago. But, and they're so handy and, and they're so flexible and they used to be the same rate as your owner or standard variable. They were fabulous. You could do anything. But nowadays, because So many people didn't pay any debt off using these loans and 5, 10, 15 years later, they're still in the same amount of debt they always were.

ASIC has made the banks charge a lot higher premium for using them. And so we tend to avoid using these loans now. In fact, low dock loans, standard variable, low dock loans are actually cheaper than someone full dock getting a loan of credit. So lines of credit are often even higher than SMSF loans. So go there.

Wow. So it just tells you really that

[00:12:00] the banks are trying to avoid using them. And so people come to us and say, Oh, I've just, I've been told by my accountant, I've got to get a line of credit and blah, blah, blah. God, that was like 10 years ago. That was a great idea. But nowadays. If you can go full doc, we'll get a standard variable loan.

We can do five years interest only. And then in the five years time, we'll revisit it. But five years interest only virtually gives you the same thing. You have your money in your offset. You're not paying any interest unless you're using the money. You can put the money in and out of the offset account.

No issue. So I just wanna talk about that as an option for people. Yeah. Because people will often think, oh, you're just not giving me what we want. But the reason is because it's not in your best interest. Yeah. And we have as brokers a best interest duty, which the banks don't have, by the way. Yeah.

Brokers actually have to, to act in your best interest. And when we know those loans are really expensive and not, not really fabulous for you, we tend to avoid putting you in them. Yeah. Yeah. That makes

 [00:13:00] sense. Yeah. James, anything to say on that? Yeah. I was gonna say, keep in mind with the line of credit. A lot of the times you do need a security to hold the line of credit against, say, for example, for renovators, I would assume maybe 200, 000 would be fantastic 10 years ago in a line of credit and being newer Uh, Um, and line of credits being what they are these days, as I've been introduced to broking over the last few years, that sounds like a fever dream back when they, when they were fantastic and they worked exactly how they were.

But now they're really, it's more detrimental. There are higher fees involved. The interest rates are a lot higher. And overall, if you look to a lifetime of the loan of what you're going to be using it for, they don't, they no longer make financial sense. They're going to cost you far more than taking a standard variable interest only loan.

using that for your renovation and your purchase and then paying that off as you sell the property. Um, and then you can restart and go from there. That makes more financial sense long term if you're going to be continuing to gain money in this, um, with renovations rather than having a revolving line of credit.

There's one that needs to sit [00:14:00] against the security. So you need to keep trying to find some way for that to sit against and you have to move that before you can sell. Secondly, Well, hopefully we can put it against your home. That would be the aim. So we don't have to move it. We just, yeah, exactly. That's probably what they're thinking in the first, you know, case.

I know a few clients though, who don't have it again. They just want to buy it, live in, sell it and move to the next one, live in and sell. Um, and that's not going to work for a line of credit, for example. And like, these are the scenarios you've got to keep in mind as well. Yeah, that's true. Yeah. Yep. And we also wanted to talk to you about bullet, bullet loans is a new loan offered by, um, one of, uh, uh, lenders that is specifically designed for renovators.

And I love this. This has a, this could have many, many options for people. So they actually capitalize the interest and there's no servicing required. So if you don't have income to service, you can just use this loan. It uses residential and commercial [00:15:00] securities. Uh, the loan term is from minimum of six months to a maximum of two years.

It must be unregulated, so non, um, uh, regulated loans. So that means that it must be in a company or a trust, it cannot be in personal names. They have to have a clearly defined exit strategy, so the exit strategy will be usually selling and flipping the property, which is fine, which usually you don't want to tell lenders that because, you know, it can be.

They, they don't make any money on loans that are, uh, short term. So this is specifically designed for this purpose. The maximum loan to value ratio is 75 percent in residential and commercial, but only 70 on vacant land. The loan size of maximum of 8 mil, um, and there's, did you say 8 mil? Yeah. So there's plenty you can do with that.

And especially with someone who like, say, for example, like yourself, Bernadette, who made a living in a company that is entirely based on [00:16:00] flipping, this is an ideal loan scenario going forward. Um, to think of the opportunity you can have, and especially with the lack of servicing, you could have say multiple projects on the go with, uh, such as a bullet and you can do multiple things at the same time, because it's not so much dependent on the servicing.

It's the capitalized payment at the end. Which is where this, where these bought lines make their money. Um, so really it is a win, win, win for yourself, the flip and the lender. Cause it all lines up with the goals that you're trying to achieve. You're paying the fees, but your interest rates are actually starting, depending on your scenario, 8.

79. So they're not even like a private lender 16, which is major lenders. It's a lending, you know, unsecured lending at that level. So they're actually pretty good rates for what you're getting. So how do you secure them? Like what's the security? With the property, yeah. With the property that you're actually flipping.

Okay. That is amazing. Yeah, I know. I think it's great. [00:17:00] I hope all my students are listening to this. So I think it's, it's a really, I mean, there are some cheaper low doc options, which we can do, but it depends on how bad your servicing is and it's still cheaper. If you're doing private lending, you're generally looking at over 14%.

It's a minimum, you know? And also the fees and private lending do catch up with you very quickly. So private lending can be an option. Vastly more expensive than these kind of options that we can look at. But also, we've just got to say, it's not necessary that you will get that 8. 79, but that's where they start.

And it's in that range. It's in a lower range because they're specifically designed for this purpose. Well, that, that was definitely worth scheduling the episode for. So, what would be the scenarios when someone wouldn't be able to secure a bullet loan? If they do not have a company or trust that they're purchasing the property in, so they need to [00:18:00] have, and it is not a trading company, the company is for the purpose of, you know, buying the property.

So. Um, you can't just use something you've had. Yeah. Preferably you've had your ABN and for a while. So whatever you're using, you know, that way. But, and this is your main line of income. That would be really positive for the lender. They would prefer to see you've done something. So usually people can do a first project using their home equity and then purchasing.

Yeah. But then they get slowed out because they're not, and often they'll count that not as income from the project, but it'll be counted as, you know, whatever, an investment and blah, blah, blah. Anyway, that's the accounting side of things. But on this loan, this becomes your job. It's the flipping loan, really.

Anyway. And that is the main thing. So it is a, it is an income. It is a profitable income from the project. Yeah. Yeah. Well, [00:19:00] um, anything else you don't have any cash to put in, then you start. So yeah, people sometimes come to us and say, Oh, can you borrow the whole. So, you know, I can borrow a hundred percent of my bank.

Yeah. No, you can't actually. What you're doing is your bank is using your own home as the security. Cross collateralizing. Yeah. Yeah. Exactly. And they're just not telling you. So don't lie to yourself and me because that's simply not true. There are no hundred percent lends. Yeah. Yeah. You have to put some cash in.

So in these projects, yeah, they want to see. So anyone who's got a good, you know, a reasonable chunk of cash sitting here to go and do one of these. It can be a good way to, you know, increase that. Amazing. Absolutely. Amazing. And for like, I'm thinking for the class project. It's possible. Yeah. Because we'd only have to raise the deposit, which, you know, like that really opens up, um, lots of options.

Yeah. Yeah. Have to have a project for, well, it [00:20:00] depends who owns it. So, but yes, for yourselves, it's definitely a possibility. And the requirements are just, you have your cash backing as a deposit. Remember it's 75 percent plus purchase and you've renovated costs. So you need to pay a bit more cost, you know, and your stamps and all that.

You need the cash behind you to afford these kinds of loans. But once you're in, it's definitely a tool that can be used to accept. Accelerate your, uh, flipping, um, as a full time income, uh, just keep in mind that as much as we're saying, yeah, it's 75 percent of the property. Keep in mind, you have to make up that 25 percent plus stamp duty, plus fees and everything else.

And then you're flipping costs on top of that. So, um, for first time flippers who are just joining. This isn't probably the loan for you. You're probably something where we ought to do, which is an equity release and purchase. Um, so we can get you the deposit plus fees, et cetera, and your money for, um, using it for a flip.

And then your purchase on top of that, this is someone who's been in the game for [00:21:00] maybe one, two, three flips and knows what they're doing to get moving. Yeah. And also Bernadette has a brilliant, um, feasibility worksheet. So don't do this without doing the work. Yeah, absolutely. That's what I find. People come to us and they really haven't used all the tools you're offering, which is just insane.

Just go through the, an actual, do the worksheets. God, it'll save you in the long run, you know, enormously because it actually just is a tick the box program. It's so handy. I love it. But I like figures. So those of you who are avoiding the figures, just do the work and you'll find it good. Well, I like, look, to be honest with you, I hate book work.

I love numbers, but I hate book work. But I, so that's why I have two versions of Feasibility. I have one that's It's very, very detailed for those people that really love that level of detail. And then another simple one, which is the one I use all the time. Easy to do and yeah, but yeah, [00:22:00] shortcuts are the bane of my life.

Yeah. But anyhow. So that's really great because I think, um. Um, yeah, I actually find, think I could use that. Good. Good. Absolutely. No problem. Beautiful. Yeah. So just call us. Look, check out the website. Anyone who's watching at propertyed. com. au and, uh, Yep. We're keen to help. Well, thank you so much for coming.

Um, that's short, sharp, and very actionable. So I love it. So thank you. We have delivered on the brief and yeah, more than happy to help. Fantastic. Thank you very much, Bernadette. This is the She Renovates podcast to discover how to harness the power of renovating, check out the school of renovating. [00:23:00] com.