This is a YouTube video titled "Why your bank wants to keep you in debt..." created on June 20, 2017. The content is a monologue or talk explaining how banks and brokers benefit from keeping customers in long-term debt, particularly through 30-year loans, and advising viewers to aim for paying off debt faster to reduce interest payments and improve financial security. The speaker discusses the financial incentives behind loan structures and cautions about advice from brokers and banks.
Now it's going to be pretty controversial. I'm going to tell you why your bank and your broker want to keep you in debt for as long as possible. I'm not too sure if you're aware, but banks and brokers sleep together. They're on the same team, they're on the same side of the fence. They want to keep you in debt for as long as possible for one reason and one reason only, so they can make more money. The longer you're in debt, the more interest you pay. The more interest you pay, the larger the profits the bank, the larger the profit to the bank, the higher the share price. The higher the share price, the more value to the bank. That's how this all works. Now your broker is on one side saying, we want to set you up on a 30 year loan. We'll give these cheap rates out so you can be in debt for 30 years. Now every single month that your loan is not reducing, your broker is being paid a percentage of your loan balance. So if you put your broker hat on, what don't you want your client's loan balance to do if you're getting a percentage of it every single month? Go down. And so that's where the 30 year loan is perfect. The debt doesn't move. The average Australian only pays $4,000 off their mortgage per annum. That means the broker's trial doesn't reduce very quickly and the bank's got them in debt for as long as possible. So what you really want to be looking at is a 15 year loan. You want to be paying off your principal in no time, getting stuck into that deb. In 15 years you're debt free. You've got all your income to put towards you and your retirement and your financial security, not the brokers or the banks. So just be very, very careful who you're getting advice from. A lot of people got everything tilted in their favor. You want to be out of debt as quickly as you possibly can so you pay the least amount of interest. Brokers and banks want to keep you in debt for as long as possible so they earn the most out of you. The faster you're out of debt, the better it is for you. Not the bank, not the broke.
