With the new financial year well under way, and the effects of the Banking Royal Commission still rippling through the sector, it’s an interesting time for anyone to be refinancing, applying for new loans, and generally trying to convince the banks they’ve got what it takes to pay their loans back.
And it’s no different for Constance and Bill.
Constance and Bill have been our clients for nearly 10 years. When they first came to Clever Finance Solutions they were struggling financially with very little cashflow. They were behind on credit card repayments and stretched to pay their home loans. They owned one plot of land and half of another, but land doesn’t pay rent. They did own three other properties, one they were living in, but one was underperforming and between that property and the 1.5 blocks of land, they were in difficult financial situation. They were both looking to the future, knowing retirement was getting ever closer, but with little to no super. They were stressed, scared, and on the verge of losing everything.
To their credit, Constance and Bill sought help. They knew they were in trouble but could not see their way clear or even what the first step might be to move forward. This is when they came to Barry. The first thing Barry did was to review properties and loans they had and what each was costing them. Barry suggested that they sell the underperforming property, refinance the existing loans, and buy out the other property owner on the co-owned land so they owned two blocks. The refinancing also included finances for construction, and using the equity in the other two properties, Constance and Bill built two rental properties on the two blocks of land.
As a result of Constance and Bill selling an underperforming property, refinancing, purchasing the other half of co-owned land, and building two rental houses, they went on their dream holiday to Easter Island last year. Something they knew was out of reach for them a decade ago. This recent vacation inspired them to look more seriously at retiring next year and spend their time with family and traveling.
With the next step of their journey in mind, Barry is now reviewing the strategy he put in place nearly 10 years ago for Constance and Bill. Considering their lack of superannuation, the sale of properties is required somewhere in the future to supplement their income, but at present it’s about making sure what is in place for them is still suitable or adjusting it accordingly.
In this current climate, the banks are being even more stringent with loans and how those over 50 intend to pay back their loans. Therefore, making sure that Constance and Bill’s current lenders have faith in their ability to pay back their loans in retirement, while not jeopardising their way of life, is essential.