- We get many customers that come through, who potentially haven't renovated before or just are really unclear of the process when it comes to financing, and this can range from a few queries with relation to that. So, first of all it's you know, where do I even start if I want to borrow a certain amount to do my renovation, where do I start with that? The other question is, what comes first should I find out how much I'm available to borrow before I approach a builder and you know to get a quotation. For example, the other day we had a lovely couple that came through and had previously bought a house for, I think it was 530,000 and their loan that they had got was 600,000. So they had 70,000 equity available to them. But, then their home renovation costs will be well in excess of that for what they want to achieve. And, you know it's just sort of what comes first, the cart before the horse scenario. So they came to us to sort of get an expectation of what, what they anticipated ballpark figures would cost for the renovation, so that they could approach the bank then again to see if they can borrow further. But the important thing to note there as well, is to make sure that you're not going to overcapitalize on your property. So, if they've borrowed well an excess of that money, then will they get that return on investment, if they decided to sell in a few years time? So there's a lot of things to consider. The other thing is that some people come to us with a pre-approved amount of money that they are able to spend. So yeah, so sometimes, you know it depends on what your situation is. Some people want to know first of all, ballpark figures of how much a renovation potentially will cost before they approach the bank or a broker or some people come the other way around, that they've already been pre-approved for price and that's their available budget and then you know, what scope of what can they achieve for that particular budget. So yeah, I think a few things to keep in mind We'll be chatting to the lovely Mairead from Loan Whisper in a few minutes. So stay tuned to get some more information and help you make an informed decision. So thanks to everyone that follows our Facebook group, Nail Your Renovation. Today we are chatting with the lovely Mairead from the Loan Whisperer. And the reason we've got in touch with Mairead is that we do have many people that are interested and or potentially don't understand the whole finance procedure when it comes to borrowing for a renovation or a home loan. So we hope that Mairead might be able to shed some light on some of the processes, things to look out for and challenges that people face and even at that, if there is some, options then other than banks or other avenues that people can take. So thanks for joining us Mairead Mairead you've worked for 27 years, managing loans in the banking world and now you have your own business to help people find a better way of acquiring and managing loans. So would you like to tell us a little bit about yourself and the Loan Whisperer?

- Yeah, sure. So Loan Whisperer came about probably three years ago after I stepped out of the banking industry. So as you said, I had spent 27 odd years in banking and realized that there's better way to do things and there's easier ways to do things and easier ways for clients to get their finance. So I stepped out of banking, where you only have one supplier and that's the person that you have to work for. And stepped into a world of so many options for clients. So, it's not just the big banks, there's smaller banks, then there's a whole range of providers out there that do unique and specialized things for clients that can't get their funds through a normal banking process. So that's the exciting part of my job. And the other exciting part is actually being able to provide that finance and see people be at you know enable them to grow their business, to get their dream home or to go on that they've been looking forward to, when we can again of course.

- Oh, fantastic. So Maired, what could you potentially talk to us about the finance, you know process and what it involves? So if someone, is potentially looking to renovate their home and then, require potentially 150, 200 grand, like what's the process and where really from the start, what do they have to do to go about that, to borrow?

- To go about that. Okay, so it can, yeah it can be an easy process, it can be a hard process. It just depends on the client situation. However, I think the first thing that they need to do is to know exactly what they're looking to renovate and how much. So if they're in that 150 to $200,000 renovation, it is quite a substantial renovation. So then they need to look at where their finance is or their home loan is at present. And it's a good opportunity at that stage to have a look at where they are, what their interest rates are and what that financial provider does provide to them. The next step then is to either approach their own bank to start with or they can engage a broker at that stage. And I think communication with either their bank or a broker at the very, very beginning is the most crucial part. So they need to be on board with what their end result is going to be. And once they're, let's go down the broker part 'cause I am a broker of course.

- Okay, yes

- They engage a broker and we get together and work out exactly what their end goal is. So with the renovation and such a large renovation, we need to look at the client's equity position. And their equity position is how much available equity they have in their existing home loan to be able to finance this new home loan. So first step would be to get evaluation on their property to see if there's sufficient equity to do the renovations without having to rely on the end value.

- Sure.

- If there's interest at that stage, then what we then need to do is go down the path of doing what we call a construction line. The construction line will then take into account the value of the renovations that have been, you know being.

- Proposed, yeah.

- Proposed for the homeowner. And the equity position is really the first, one of the first main things to take into consideration, if we can't get enough equity in the property where they've at least got a 10% equity, then that kind of cancer to start off with. So we need, that is our first thing that we look at. And then the second thing we look at is the client's ability to service that increase on their home loan. And the serviceability takes into account their income, their living expenses and their existing debt structures, what they call credit cards and personal loans and things like that. Once we've ticked off those two then the next part of that is their credit check. So clients need to ensure that their credit check is squeaky clean and they need to understand these days too, that the credit reporting is becoming more and more in-depth and the banks can and banks do actually report on your credit card history and your repayment history on your credit cards each month. So if I can give anyone a piece of advice, just make sure that your repayments are made on time or every month so that you don't have a mark against your credit history.

- Yeah, okay.

- Yeah, so they would be probably the three main things that we need, that we're looking into when we're doing the renovation on.

- Okay, perfect. And do you know what, I suppose what challenges do you find that people come up against, during that process, is there specific things that, obviously you've mentioned there about making sure your credit history is squeaky clean, but are there other challenges that people face and how do they overcome those challenges if they can?

- Yeah, definitely. So there can be any number of challenges that come, that appear and come through. I'll just give you an example of income that could be a challenge for some banks. So let's take the mining industry, that resource industry, there's a lot of people that work up on the mines that are actually contractors or casual, labor hire casual. So there are financiers out there that actually won't accept casual income, there's no credibility. So then we have to look for another financier that we can place that application with to overcome that hurdle, if you like.

- Okay.

- Some of the others with the renovation side of things, some people may be overcapitalizing. So if they wanna put a $200,000 renovation in an area where it's not going to give the finished.

- The return on investment, yeah.

- The return on investment yeah. So that's another one that we have to look at. Sometimes they're a hard conversation to have because once the valuation comes in, you kind of can't change the valuer's mind, so then we have to have a look at a different way as to how these renovations can be conducted if that happening, if they can't quite get the value up on the property that they need.

- Okay, okay and you know, have there been events that potentially where those things have happened that, people have had a way around it or does that just mean, that they just need to take a step back and wait, for another time that either they have savings elsewhere or that, you know maybe the value of the house might change, in the next five to 10 years. It just means that a waiting period or is there any other options for people in that situation?

- Yeah, look there's always an option, and you know and one of those options may be just to wait and to wait it a one or two year period. If they can see and have information that there's growth, potential capital growth potential in their area, then it may be it awaiting case. Alternatively, there are third tier, fourth tier lenders and specialist lenders that will actually take on what they call that risk. But then in those circumstances too, the interest rates and things like that and the risk profiles are a bit higher, so the interest rates can be a bit higher. So it just depends on each client, each individual circumstance and how far the clients are willing to go and what price they're willing to pay to have growth that they like.

- Okay and Mairead, if someone was looking for a broker to assist them with these things, what type of things should they be looking for in that broker? You know, so if they've had a chat with yourself for example and someone else, how do we know who's gonna have that, the client's best interest at heart? You know, what things could people look out for?

- Yeah, so brokers at the moment we, there's a best interest duty that has been introduced since the Royal Commission. So every broker should actually be conducting themselves or you know and approaching their clients in their best interest. One of the things I would look for is definitely communication with your broker, constant communication, open and honest communication. And also the broker providing a range of alternatives. So not just one, one bank, one process, one, they should actually be offering the client a range of options or solutions, but then for the client to make that decision. So if you've got someone that's kinda pointing you in one direction, I'd be saying seek further advice and find some alternatives that you are happy with. And then it is, like we will make it a suggestion to you that this is probably the best financier to go with. However, it is your decision and you need to weigh all the alternatives for you. So open, honest communication I think is the best answer for that one

- Sure and thank you for giving that as well And I suppose lastly Mairead, what would be the typical time? Like I know it depends on everybody's circumstances, but a usual timeframe, so if someone has, decided that they would like to get a renovation done and the next step then is, you know seeing how much they can borrow and then having to go through the application process, what would be the usual timeframe from start, I supposed, to finish? I know there's variables but.

- Yeah, definitely. And look I'd like to, usually I would have said a four week period. However, at the stage that we're at at the moment and the turnaround times that are coming through at the moment, I would say stop the process at least eight weeks prior to innovating that finance on the dot, yeah.

- Okay.

- It just gives time for the turnaround times at the bank, that gives time for questions to be asked, time for the evaluation to be completed. And if we're having to refinance from one institution to another, we definitely need that timeframe as well to refinance and get you to the best possible solution at that another financier.

- Okay.

- So I'd say minimum eight weeks but start talking to a broker or your financier, yeah.

- Okay.

- We'll look at what's necessary.

- Thank you Mairead and Mairead if someone, wanted to avail potentially of your services at where can somebody find you?

- Yeah, definitely. So my email address is maireadhodgson@loanwhisperer.com.au. I do have a website there or my mobile phone number is probably the best one to get directly in contact with me, which is 0-4-0-2-7-8-0-8-9-9.

- Fantastic. I'll pop those details up on the post as well Mairead. But I'd like thank you so much for giving us that information and knowledge today. It's been hopefully really valuable to some people just to understand really some of the process, I know there's, you know a lot more deep conversations that we can have about different, riskier properties and things like that. But we could leave that for another day, you know we'll have some more question time. But really thanks so much for your time today, I really appreciate it.

- Great, not a problem.

- It was great to chat, thank you.