 You know, the things that as younger buyers, we need to know before applying for a home loan because there's so many variables and it's very easy sometimes to fall prey to the FOMO and not really having a full grasp of what it is that you're about to sign up for. Very, very true. I love how you said that it's good to get into the rhythm of keeping up with the rental payments before you even dive into a fully fledged bond application because like you mentioned. You want to make sure. Well, this evening I'm very excited. It's two years in. Never thought to get so far. We're now doing that slow countdown to 500 episodes and I'm sure many of you are also excited. But today if you have anything in particular you want us to do for episode 500, let us know. We love getting your suggestions. We absolutely love incorporating them when we have a meeting and look at how we can better the show and shape the show because of course it wouldn't have been possible without you at home. And to get us started with our conversation this evening, if you remember two years ago when we started, the conversation that we had was around how to have that conversation and which conversation you should be having between a tenant and a landlord as we were heading in. As we actually already started that 21 days of hard lockdown, we knew that they were going to be after effects. There were people who weren't going to be able to move out of home. There were tenants who weren't going to be able to make rent because of course of their finances being affected. And we needed both parties to be able to sit down and have a conversation so that we could weather the COVID storm. And I think since that first hard lockdown, we've certainly had many, many, many storms. And this evening we're looking at the rise in home loan applications from younger buyers because as we know, one of the things that we saw because of COVID was interest rates going down and different people being able to access home ownership. And part of the demographic that was able to access home ownership and did in fact take advantage of those low interest rates were first time home buyers who were particularly young people. And that's exactly what we're going to be exploring this evening. Joining me on the show is Kyle Rigney, who is a bond advisor at Bond Spark. Kyle, good evening. And thank you so much for joining us on the show. Hi, Zama. Thanks so much for inviting me. I think it's like, I feel like such a special guest because it's the two year anniversary. It's crazy that I'm on the second year anniversary podcast. I mean, look, I think if anything is quite deliberate, we had to have a young person and talking on a topic around young people, because we have a very clear understanding that as young people we are a quite a force to be reckoned with. And a very key demographic when it comes to, you know, the buying market and especially young black women in particular, when we look at the stats of people who are buying up properties in their numbers, especially first time home buyers. But you're now going to be looking at young people, you know, all of us and both Kyle and myself are saying this to him, you know, we're both young so it's going to be a great conversation when two young people talk about, you know, the young demographic when it comes to property matters. And of course, do you keep the love coming around Facebook page on our two year anniversary as we tackle the rise in home loan applications from younger buyers. Now, Kyle, before we look at some of the trends, the drivers, and certainly what are the things we should be looking out for as young people looking to enter the property market. Let's talk about bond spark. We've never had somebody from bond spark. What is bond spark? What's the work that bond spark does? Thanks so much for that introduction. Yeah, so bond spark is pretty much launched for about four years to try and secure you the best interest rate on your home loan. Obviously getting the best out of it by being the cheapest home loan on the deal because ultimately who wants to be paying more than they really need to. But yeah, we've been running really strong where like a fully fledged pink company. So I see everybody putting the green hearts in the chat. If you are in the chat, please post some pink hearts. They are love to see those through. But yeah, that's pretty much what bond spark is. But I'm so happy to be here. No, you know, Kyle, I when you're saying you're fully pink and you're asking our viewers to also post those pink hearts, I will ask them to add pink. So we're doing green because of course we're private property. But let's let's add a bit of pink to show Kyle some love this evening. Of course, because they color their blood is pink, our blood is green. And so let's see if we can get some pink going there in the comments section. Now, Kyle, of course, one of the key things when we talk about young people that we always want to get a good grasp of is what the current trends and the opportunities are for young people when it comes to home ownership. Yeah, so it's quite an exciting time, I would say, for younger buyers, because typically younger buyers wouldn't always have that opportunity to apply for a home loan. But the reality is because of the ever changing market conditions, as well as the bank's appetite in favor of the buyer due to their evergreen desire for a greater market share, it's no secret that the banks are hungry for your business. There's been a month on month increase that we've been seeing amongst the numbers of the buyers between the ages of 18 and 35, formerly classified as a young professionals. Now, because prior to the COVID period when the primary was all the way up at like 10 points 25%, the reality is that affordability wasn't always in order. And the banks weren't always able to accommodate a younger buyer to apply for a home loan for whatever reason, let's say the buyer doesn't have like the additional costs that might be included in the process. But as the COVID period has started to come through, we've really seen that the buyers are really coming to the table to be able to accommodate younger buyers to be able to actually make their dream of home ownership true, simply because things like the attaining fees which were maybe prior to this a bit of a blocker in the sense that not everybody has them is now a facility that the banks are willing to offer. I mean, considering this is like a really massive move in the property market, it's I'm loving that so much so many younger people are making the dream of home ownership true and investing in themselves and their assets. Because reality is once we I consider almost rentals like a black hole in the sense that you put money into it but you don't really get anything out of it. But the reality is when you purchase a property is you're putting money into it and in the day is you're setting a value towards I call it building your empire. But yeah, it's just amazing to see how much the banks have really come to the table to accommodate younger buyers and purchasing properties. I mean, the caveat that the caveat I always bring Kyle, when people talk about, you know, the debate of to buy or to rent and the argument against renting and I always say this to people, look, you can say renting for as long as possible. I'm a property investor. I'm a proper entrepreneur. I bought many properties of sole properties. I've lived in rented properties and there have been certain instances where actually wanted to live in a rented property even though I own multiple properties. So I think as a young buyer in particular, as a young person in particular, what's really important is to understand where you are on your financial journey and make sure that your numbers stack up, whether you're looking to buy your primary residence or of course looking to buy an investment property. So if for instance for those first two, three years, especially when you start working, renting makes sense to that. I did it at some point even lived with a friend and you find that you know the disposable income you have afterwards is substantially more because the cost of home ownership is also of course one of those things that when you haven't adequately prepared for it can certainly shock you quite a bit. And Carl, I think I actually want us to explore that. The things that as younger buyers, we need to know before applying for a home load because there's so many variables and it's very easy sometimes to fall prey to the FOMO and not really having a full grasp of what it is that you are about to sign up for. Very, very true. I love how you said that it's good to get into the rhythm of keeping up with the rental payments before you even dive into a fully fledged bond application because like you mentioned, it is a long term commitment that you really have to keep up to. And while I think it's quite the loaded question to talk about like the different factors to consider before maybe purchasing while applying for a home loan is this just so many things that I would love to dive into as much as I can for today. But I think like there's so many things that people have preconceived notions against maybe shutting down or don't think are as important. And I think one of these major factors is even coming up with a deposit. If you are able to save for a deposit, the reality is it has a drastic impact on the type of interest that you're going to receive on your home loan. So it's things like having a deposit on hand. It's things like who do you currently bank with? Does your bank offer any benefits or any preferential treatment towards you because you bank with them? It's things like fixed rate versus a prime linked interest rate. What are the benefits and pros and cons of each? Do you think that maybe a fixed interest rate would be more beneficial towards your budget or is the prime linked interest rate going to be better towards your budget? Insurance always comes after you purchase a property. Are you going to be able to afford insurance as well as any additional costs like levies and pretty much rates and taxes that come into play? Now, while I think it's pretty much I would dive it into two things that I would consider before you go into diving into practically purchasing a property and its affordability as well as your credit information. Now, with a company like BonSpark, we take pride in providing clients with what we call a pre-qualification certificate. Now, all that a pre-qualification certificate is and people like to refer to as a pre-approval is we do a fully-fledged analysis of your credit profile, having a look at things like what is your current account conduct? Are you keeping up with all of your current financial commitments? What is your credit score currently looking like at the moment? How many inquiries have you had? Are you good with your income and your budget on a monthly basis or is it something that's maybe a little bit on edge? That's just one aspect of it. The other aspect of it would be your affordability. So what is your current budget like on a monthly basis? What is your gross income? Because the banks have a policy or the National Credit Access policy where you can only use 30% of your gross income towards a bond repayment. It's things like what are your current living expenses? Are there any that could be eliminated like a rental expense maybe? Any deductions or benefits that we're coming to play like a housing subsidy perhaps? So I would really say that the two major things to consider before purchasing a property would firstly be your affordability and second your credit information. Those two affect the results of your home loan application more than pretty much anything else that I can think of on hand. And that's why with a company like Bondspot we really do give you a fully-fledged analysis into that information before you even make an offer on a property. Because at least you know then exactly where you stand. Is it a good time for me to apply or not? What does my affordability look like? Do you think maybe I should wait and improve my credit score before diving into a long-term commitment like a home loan? But yeah, I would really dive it into those two categories, your credit information and your affordability. That's just something that you can't get passed when applying for a home loan. Two years of the private property podcast with myself is Amadongo Kumailoa. And this evening I'm in conversation with Carl Rigney who is a bond advisor at Bondspot, looking at the rise in home loan applications from younger buyers, getting a really good understanding of what the trends are, what to look out for, and of course some of the mistakes that we need to avoid. And I think talking about signing up for something that is 20 years long, we also know that we want to pay off our home loan facilities, especially your primary residence, as soon as possible. If you're an investor, it depends how you want to pay at it. I know some want to keep it for as long as possible. Others want to pay it off, refinance, access the equity, pay it off, refinance, and just keep repeating as much as possible. And so Carl, I want to bring you in. When we then look at younger buyers, particularly investors, let's go through the different ways that they can pay off that home loan facility quicker. I know between the two of us, we can't conceive having, you know, a credit facility for 20 years. I always say it's likely going to be the longest relationship you'll be in. It tends to be longer than most marriages. In fact, when many marriages end, they end that relationship as well. And so how can we pay it off as quickly as possible if that's our intention? Yeah, Nazem, I agree with you so much. I think it scares me to think that our home loan would last a full period of 20 and even 30 years depending on what people are requesting at the time of the application. I think it's quite important to realize that you can pay off your bond quicker first and how you would go about doing that. So the banks have what we call an access bond or what we call, depending on the bank you ask, you might call it a fixed reserve facility. Now, basically all of that means is if you're given a repayment of, let's say, 9,000 rent a month, 9,500 rent. What that means is you can pay over and above the repayment on a monthly basis in order to try and get that one paid off quicker. But you pretty much have one of two ways of going about it, I would say. There are pros and cons to each way, but the default way that would happen is, let's say you then invest 1,000 rent into your home loan in addition to your monthly repayments every single month. Six months down the line, you've now got 6,000 rent pretty much saved up in the home loan account. Now, the reality is that when you apply for what we call an access bond or a fixed reserve facility, nothing really happens to that money in the sense that it's either going to get then credited towards your next repayment or it sits in that account almost like a bank account in the sense that nothing really happens to the money. So if now something really comes up, let's say, okay, if things aren't good in the house, you need to get attorneys involved or whatever it might be, you know, divorces and whatnot. And you do need that money for an emergency situation is you can then request from the bank to withdraw that money out of the account. Now, that wouldn't necessarily be to your favor if you are looking to pay the bond of quicker because that would then bring me to option number two. Option number two is if you have 6,000 rent now saved up, then it's six months down the line and you pretty much don't really need the money or you think that you know what you rather want to invest towards the property. How you would go about it is you would rather than ask the bank to capitalize that particular amount. Now, basically what that means is we have what we call a cost-to-credit multiple. Now, the cost-to-credit multiple basically means how much interest you're going to be paying on top of the loan amount. So if your loan amount is, let's say, a million rent and your cost-to-credit multiple is 2.13. It means that over the full 20-year loan term, you're going to be paying pretty much 120% additional interest on top of your loan, which is going to work out to over 2 million rent. I mean, who wants to be paying double what you're actually buying the property for? If the property purchase price is only a million, you don't want to pay 2 million under the interest. So what happens is when you ask the bank to then rather capitalize on that $6,000 that you saved up into the account, is the interest on top of that amount then gets taken off. There's a particular financial institution that does this by default, but now basically what that means is now instead of you then paying towards your monthly repayments and paying off that interest before you even get towards the actual capital balance, is you're now taking that interest off. So now instead of me taking off $6,000 off of my outstanding balance of the home loan, I'm now taking maybe even $12,000, $13,000, $14,000 off of the actual outstanding balance. And if you keep at that for good few years, even months, whatever that might be, whatever that might look for you, the reality is your bond will be gone quicker than you can even realize that it's been paid off. And before you know it, you own a property and whatever you want to do with it, whether it be towards investment, rent or income. Because ideally when you are purchasing a property for investment, you would ideally want to use it for rental income. If your rental income is then paying you towards your bond repayments and you still got maybe just a little bit of income left over from your normal salary, use that towards the bond. Get it paid off. Then once the bond is out of the picture, you've got plenty of money to spend on your favorite wine. This is the reality, but there's so many ways to go about getting that bond out of the picture so that you can spend more money and invest more into yourself. But yeah, I hope that makes sense. And that's where we're going to leave it. Kyle, be proactive, not reactive. Make sure you have your ducks in a row fact check and of course you want to make sure that you take your time. Don't fall into the pressure of thinking that you need to give in to the FOMO of owning a property. You want to do it on your terms and the financial terms have to stack up as much as possible. Kyle, it's been such a pleasure to have you with us this evening. Thank you so much for joining us. Thanks so much for having me. It's been a pleasure. And that is Kyle Rickney, who's a bond advisor at Bond Spark wrapping up the two-year anniversary episode of the Private Property Particles with myself as Amandonga Kumalo. Thank you so much to all of you at home who have watched not just this evening, but of course have been watching us for the past two years. We're very excited for what we're going to be bringing you for the rest of the year and we know that you're going to keep inviting your friends and family, make the property circle bigger and of course help each other out in our property journey, especially because there's so many new things that keep coming up. There's so many different strategies that one can use and there's always something new to learn when it comes to property. For myself, Amandonga Kumalo, it's been such a pleasure to be in your homes on your screens or if you're watching us as you're travelling or suddenly listening from Apple Play or from Spotify. It's been such a pleasure to have you with us. We love the comments that you keep sending, do keep sending them through as usual. We're very excited for more that we're going to be bringing in the coming year and for myself and the rest of the Private Property Particles team has been such a pleasure. We're going to be back on your screens tomorrow evening at 7pm. Until then, hope you're staying home and staying safe.