Always a touchy subject when one partner wants to stay put and the other wants to get moving. It’s doubly emotional when the family home is involved, the sacred cow of wealth. So how do we handle the emotionally charged subject.
Well firstly… communication, secondly knowing the rules of the game and having a clearly defined strategy and finally, this one simple approach which I’ve found will turnaround all but the most fierce opponents to remortgaging the home.
Hey guys, so your partner doesn't want to remortgage.
I'm Brett Alegre-Wood, and this is Property Rant.
So basically, you've got a partner. You want to move ahead, you want to race ahead and do it. They don't want to move ahead quite as quick. Maybe they don't want to remortgage the house. How do you find a middle ground? How do you actually invest but satisfy their risk aversion or their reasons for not wanting to invest? And there's a couple things that I do.
So first of all, obviously, communicate. Definitely, 100% have to do that. It's not a case of one running off and doing the other. The principle that I talk about is a principle of five year loan. So what I do, rather than being this infinitesimal, “We're going to borrow money and we're never going to pay it back,” What I will do is I'll sit there and I'll say, “Right, we're borrowing this money for a period of five years.” And if you look at what it's going to cost over five years, so the plan is we will pay it back within five years. And when you do that, it gives a definitive end to that.
Now the reality is, over that five years, what tends to happen is the other partner gets highly organized and educated and actually realizes that actually, that's not a problem, having that debt there because it's secured against another asset and that asset most likely has gone up in value and made a return on income. So actually, it's been okay.
The key here is getting that principle right, so basically, just as if you're taking a personal loan, work it out on an interest rate, so whatever your mortgage rate is, work that out and that plus the interest has to be paid back in five years' time. And when you approach it like that and when you go into the new investment, whether it be property, whatever, the reality is you go into that investment and then you make sure that that's going to make you enough to pay back that. And when you do, things tend to settle down. Now that's the first thing.
The other side of it is this: What I tend to find in any partnership, and with Arlene my wife is the same, whereas for instance, I may want to race ahead, she's a bit more conservative. So she'll be wanting to slow things down. And you know what the interesting thing is? Is that when you first start out that's the way, generally, and I'll say the guy will want to race off and the girl will want to be secure, security, all that sort of stuff. The reality is it doesn't have to be. It can be the other way around. But what happens after some time and if you do it properly, is all of a sudden, the wife then wants to go straight ahead and the guy tends to sit back and let it all happen. And certainly if you're working with someone like my company, then we're going to do it all for you.
So actually, the husband or the one that wanted to race off at the start actually can kick back and relax and enjoy themselves because our whole thing is about set and forget. Our whole thing is about you not having the time to do it yourself. And if that's you, then obviously give us a call because that's something that we do very well and we've been doing for a lot of years. Look, if you want to get involved, you want to do everything, that's fine, absolutely fine.
Find a company that will support you or a team around you that will support you to do that. But look, in terms of the partner, you've got to start off and you've got to find a way to convince them, and it may be small steps. It may take some time. You may have to get highly educated and then pass some of that education on. But look, don't give up, because this, the outcome that you will get longterm in this is far worth any issues, any discussions that you might have with your partner. I would say arguments, because they probably are, but the reality is that's…you got to deal with that. You have to get around that, and obviously it's a partnership, you've got to come to a decision that works for both parties.
The five year, the principle of a five year loan, absolutely fantastic. Used it many, many times with many, many clients, and it gives that level of comfort, especially when you can show that the money's coming from here, it's going there. It's not actually being spent, it's still in a capital-appreciating asset, and that's one of the keys here. But then understanding how partners change. And the partner will be fast at the start, slow down, slow at the start, speed up. Understanding those dynamics really helps get things moving along.
All right, guys. Have a great day. Live with passion.