OREIG Networking Event October 2025. Financing for TODAY'S Real Estate Investor with Craig Van Dolder

For information on NEXT EVENTS:  Events - Okanagan Real Estate Investment Group

For information on OREIG Membership:  Become a Member - Okanagan Real Estate Investment Group

To Schedule a meeting with the Founder of OREIG, Julie Hoffman:  streetsmartdiva.com/book

To Connect with Craig Von Dolder: 

Craig Van Dolder

BC Mortgage Broker

ON Mortgage Agent Level 2

C. 519-372-8524

E. craig@vandoldermortgages.com

Web. vandoldermortgages.com

Ton Connect with OREIG founder, Julie Hoffman about
Coaching, The Wholesaling course, OR to talk about Membership, please schedule a meeting at www.StreetSmartDiva.com/book

Transcript

SPEAKER_00: 0:01

All right, everybody. Welcome to the Okanagan Real Estate Investment Group October 2025 2025 event. My name is Julie Hoffman. If we haven't met, I know that we have. And welcome to anybody that is listening to this. You know, she was uh walking on big stages and she had uh really white teeth and was doing so incredibly well. And I watched her on social media absolutely not only crushing it, but working really, really hard at it, like showing people what to do. And uh I know she was working for two solid years, doing extremely well, and then and bringing in tons of clients, generating tons of revenue for this company. Hi everybody, it's okay. No worries, no worries. And um then one day, fairly recently, one mistake and she was out after all of that hard work, out all of the income, out of out all out all of the clients. And then I read a story recently online, and some of you might be familiar with this story. I tried to find it, I I was unable to. I I believe it was a guy in Ontario who bought 20 Bitcoin, I think it was 20 Bitcoin 15 years ago. And he stored them on a thumb drive. And he did an office cleanup and it accidentally got uh thrown away. Yeah. So he was actually working with the landfill, begging the local landfill to close so that he could sift through all of the garbage to recover his Bitcoin. And that's that's pretty crazy, right? It's pretty crazy that those kinds of things can happen. They hit they hit me hard when I hear about these types of things. Um they remind me why I love real estate because you can't misplace a condo. Right? You can't accidentally throw it away, you can't delete it. And um you can make uh a lot of mistakes. You can make a lot of mistakes. You gotta pay your mortgage, you gotta pay your taxes. For the most part, you know, it's just yours. And if you're smart, you put in equity building tenants who pay your mortgage down for you. That's why we're all here tonight, right? So whether you're a beginner or a seasoned pro, you you must know that real estate investing is very, very powerful. Even with all of the ups and downs that have happened recently in the market. And tonight, speaking of real estate, we have a very special speaker. And he's he's a mortgage broker. But he's not just a mortgage broker, he is also a real estate investor who knows exactly where folks are coming from. This is, I believe, the fourth time you've presented to our group. It's either the third or the fourth time, and every time people walk away with so much valuable information. Uh and so get ready for that. And please join me in welcoming back to Oreg Craig von Dolder. Can you turn your microphone on?

unknown: 3:42

Okay.

SPEAKER_05: 4:05

Okay, well, that's in the way, isn't it? All right. Well, good evening, everybody. Julie, thanks for the introduction.

SPEAKER_04: 4:14

Okay, I think we're good to go here.

SPEAKER_05: 4:16

Does this work? Perfect. All right, so um, yeah, a little bit about me. I was a yeah, real estate investor long before I was a mortgage broker. So first property I bought was in Guelph, Ontario back in 2009. Is that 16 years? Yep, 16 years ago. Um, I'm now a licensed mortgage broker with mortgage architects. I'm licensed in Ontario and British Columbia, uh, but I also have the ability to write a mortgage in any province in Canada. The only thing is I cannot advertise my services unless I am licensed in that province. That's the fine print on that. Um yeah, I have a passion for assisting clients build wealth through real estate. So yeah, it might just take a minute just to kind of give you guys a backstory of my story and what I started with and how you know I kind of started to acquire real estate over the years. So, like I said, first property was in Guelph in 2009. Uh, we had major, you know, my parents had made an arrangement with all of myself and my siblings that they were gonna help us out with half of our post-secondary education costs, which is awesome. Um, I had taken a year off after high school, saved a whole bunch of money. I actually had enough money for a down payment, so rather than paying rent for four or five years, bought a townhouse. Um, one of my parents was able to co-sign, once again, very fortunate for that. And that's what started. So for five years, I lived in a closet because I literally split the master bedroom with a wall, and I took the closet doors off and I put my mattress in there, and I lived in a closet. It was like six by seven feet, maybe. Um, and then rented out all the rooms to my roommates and my buddies, and that was kind of my first taste at being a landlord and collecting rent and having somebody else pay my mortgage for me, which I thought was pretty cool. So that was, yeah, first property. Fast forward five years later, my mortgage was renewing. I was now graduated and I had a job working for Enterprise Rent A Car, and that was enough for me to qualify to refinance that property, remove my parents as a co-sign, pull 30 or I think it was about$35,000 to$40,000 in equity, and that's what went into the second property. So I had met my soon-to-be wife at that time. Well, not yeah, anyway. We were together for I don't know, a year and a half, two years, decided that we should buy a property together. So the second one was a duplex up and down. We lived upstairs, rented the basement uh for we lived there for I think three and a half, four years. And because we had a tenant in our basement paying half of our mortgage, we were able to save quite a bit of money for those three or four years. Um, towards the end of that, my wife wanted to go out on her own and start her own business. I said, Well, before you do that, I learned by that point in time that it's really difficult to get mortgage financing if you're self-employed, especially when you're just starting this up. So she worked, uh she had a government job for child and family services with a salary. So I said, Before you go and quit your job, let's leverage that income. So bought a rental property in London, Ontario, put 20% down on that one, bought it as a rental, uh, moved out of our duplex at the time, put a 10-10 upstairs, and then bought a single family home with minimum down payment. I think we put like just over 5% down, and that was going to be kind of like a fixer-upper. So ended up renovating that whole thing, living through renovations, brushing my teeth in the bathtub, all that stuff. Probably wouldn't do that ever again, but it worked out well. Uh, lived there for yeah, two and a half years or so, and then yeah, sold that place, moved out to BC, um, bought the house we're in now, bought a couple other rental properties since we've been out here, and then are in the process now of, oh, sorry. Right before COVID, we bought a lot in Ontario that we were originally planning on building on at one point in time. Then plans changed, and we moved to British Columbia. So, I'm not gonna build on that lot. It's for sale if anybody wants a nice lot on Georgian Bay. Um, bought a lot out here recently, and we're just yeah, the next real estate adventure is doing a home build. So that's next year. So that's kind of a backstory in my real estate investing background, and all of my siblings have done the same thing essentially. I think my brother's got six properties, my sister has four, my other brother has five. So we all, you know, very fortunate have started doing that 10, 12, 15 years ago. But it's been life-changing for all of us, and it's it's super cool to see that. You know, I help clients do the same thing, so it's yeah, it can financially change your life for sure. So that's the backstory. Um, so today's agenda, we're gonna speak about some economic updates, jobs data, inflation data, um, all the kind of stuff that the Bank of Canada looks at when they make monetary policy decisions, which leads to interest rates. Um, gonna talk about debt servicing ratios, that is the foundation of every single mortgage, so it's kind of important to have a basic understanding of how those work. There's a skill test in question, so make sure you're all paying attention. Uh, we're gonna go through the ABCs of mortgages, that's A lenders, B lenders, C lenders, the different types, um, yeah, qualifying criteria, borrowing ability, all that kind of stuff. Um, how the lower rates that we've seen over the past couple years impact your mortgage and your borrowing power. We're gonna talk on some different lender policies. Not all lenders are created equal. There's some insane differences in underwriting criteria and policies between them, and we'll we'll talk a bit about that. Um, buying rental properties, uh, leveraging sweet income, tips for your approvals, you know, how can you maximize your approval amounts? Because if you're a real estate investor, you want to get as much cheap money as you can. So it's important to be able to know some of the loopholes and the tricks, um, things to know on your renewals. We're gonna touch on the new product that came out recently, some talks, some regulatory changes, and then we'll just kind of open the floor to any questions and discussion. So, start with jobs. Don't know if any of you guys follow this, but Trading Economics is a great website. If you want to nerd out on all things economic data, you can filter it for every single country in the entire world, and you can get cool graphs like this. So, anyway, this is the net employment change in Canada over the past, what is that, 10 or 12 months? So, and that's both full-time and part-time jobs. So last month we had a surprise. I think they were only targeting like 5,000 jobs created, and we had 55,000. Previous months was a loss of 65, which isn't good. And the month before that, we lost about 40,000 jobs, which is also not good. So even the bump we had last month was not enough to offset the losses that we've had. So if you look all the way back, does this have a laser pointer on it? Anyway, I don't want to press any buttons. There's like a net negative, or there's basically no jobs created in the last, well, this year, right? Tiny little positive there in February, April, and May, but it was offset in March. And then, yeah, we've created no jobs. But our employment or employment, our population is growing, mainly due to immigration. So we should be creating jobs because we're bringing in more people, but we're not, and that is why our unemployment rate is going up. Now, this graph is kind of makes it look a little more serious than it is. This is only a half a percent spread between 6.6 and 7.1, but it's kind of going in the wrong direction. You want your unemployment rate to be lower, not higher. So last time we saw it above seven was back in 2016. And at that point in time, I think the overnight lending rate was 2% lower than it is right now. Um, but yeah, it's been trending upwards for a while now. Uh, they're forecasting it to go as high as seven and a half percent in the next few months here, but we will see see where those numbers come in in the coming months. Once again, trading economics, if you want to track that stuff. Fascinating.

SPEAKER_04: 12:10

All right, interrupt.

SPEAKER_06: 12:11

Oh, here's your pointer right there. Oh, big one right in the middle. Perfect. Thank you.

SPEAKER_05: 12:17

So, um, why am I talking about this? This the Bank of Canada looks at this stuff when they make their policy decisions, right? What happens when people don't have jobs? They probably aren't gonna spend a lot of money because they don't have a job. When people aren't spending money, that you know reduces demand in the economy, and generally you're gonna see downwards pressure on prices, which is gonna cause cooling inflation. So usually there's a correlation between high unemployment and inflation. High unemployment pushes inflation down generally. Now, the Bank of Canada they really don't care what this number is, they just know that it impacts inflation. In the states, the Federal Reserve, they have a dual mandate. They need to maximize employment while keeping stable inflation. In Canada, they don't care about employment, they just want stable inflation between one and three percent. They do not care what you know that could go to 15%. Inflation's not under control, like that is the only mandate for the Bank of Canada. Um, but on that note, we're, you know, like I said, between one and three percent. That is the mandate, ideally around two. April, May, June, July, August, we've been under two percent. There's a couple blips right here. Um, but for the whole year, essentially, we have been within that one to three percent band. So that's good news, and that is why we've seen the Bank of Canada start to cut interest rates probably over a year ago now, but it's they've been coming downwards. So um, a little side note on inflation. This is off StatsCan's website. It shows you the main contributors to the 12-month change. So we get the upwards contributors, these are all positive numbers, and the downwards contributors. Um just go back a slide here. Does anyone remember what happened in the kind of rate around here? So I'm gonna do the carbon tax. Came off. Anyway, they stripped out the consumer carbon tax, which look at this. Gasoline, negative 13%. Air transportation, negative this, travel tours, all of this stuff, generally you're gonna burn fuel, right? You make fuel more expensive, or you make fuel less expensive by removing a tax. Look at that, inflation goes down, which is kind of funny because a couple years ago, when they were trying to crank up the carbon tax rates and they were saying that it had a negligible impact on inflation, and now that they've removed it, the Bank of Canada governor himself has said multiple times in press conferences that we have the removal of the carbon tax to thank for the downwards pressure on inflation. How dumb do you think we are? Anyway, another thing that's interesting here rent. This is Canada-wide. Like, I don't know if any of you have tried to rent a property here in the last year, but it's definitely not up 4.5% in BC. It's probably, I think I just heard Vancouver down 8% year over year for rents. But obviously, there's other parts of Canada that are still putting upwards pressure on it. And this one, this is this one bugs me right here, mortgage interest carrying costs. It's still one of the main contributing factors to upwards inflation. So when inflation got real crazy a few years ago, what does the Bank of Canada do to cool inflation? They raise interest rates. What do you think higher interest rates do to your mortgage interest carrying costs? It pushes it up. And that directly further drives inflation. So your solution to inflation now causes further inflation. We are the only country that includes this in our inflation calculation. Nobody else includes mortgage interest carrying cost for obvious reasons. Anyway, they did talk recently about removing that out of the CPI inflation calculation, and that would be good because that just makes sense. So anyway, that's inflation. Um coming down, sub 2%, and like I said, that's why we see rates come down. So we peaked at an overnight lending rate here at 5%. Now we're down here. This is the drop we just saw in September. We are down to 2.5%. So we've seen 2.5% in cuts since when did they start? It was uh yeah, kind of last summer is when they started cutting interest rates. Uh, and this, you know, I think they would have continued to cut here if our buddy down south didn't start talking about tariffs and trade wars and all that kind of stuff. Bank of Canada said, well, tariffs are inflationary and we don't like inflation. So they put the brakes on and now they're starting to cut again. I think they're gonna cut again at the end of this month. They meet on the 29th, I think it is. It's this last Wednesday of the month, but I think we'll probably see them cut one more time before Christmas. But yeah, lower interest rates, everybody likes that because nobody likes paying interest for more than they have to. So that, yeah, sorry, side note. This this is only for variable mortgages. That's not like when you see a quarter percent cut. I don't know how many, every single time it happens, somebody calls me and says, Does my fixed mortgage rate go down? I said, What's your mortgage? I said fixed. So, what does that mean? It's fixed. It doesn't change. Every single time you get the phone calls. So this does not impact fixed mortgages, it will immediately impact your variable mortgages and your home equity lines of credit. This impacts fixed mortgages. This is the five-year government bond yield. There's a three-year yield, there's a four-year yield. But we've also seen this coming down, right? As of this morning, I think we're down to like 2.6% on the five-year bond. And yeah, wonder why that impacts mortgages. So if I'm an investor, I got tons and tons of money and I want to have a safe investment, I can buy bonds, which is gonna give me a return that's guaranteed because the government of Canada has never ever defaulted on bonds. Or if I wanted, I could buy mortgage-backed securities, which people can miss their mortgage payments, they can default. So there's a little bit more risk there. So you will generally see about a 1.5% spread above this number. That's the risk premium, and that's where you get pricing on five-year fixed mortgages. So 2.6 add 1.5%, you're at about 4.1 right now on a five-year fixed, which is pretty darn close to what they currently are. You will see that risk premium fluctuate depending on the economic environment. You know, if unemployment's really low, everybody's got jobs, people are spending money, things are looking good, consumer sentiment is good, business sentiment, all that kind of stuff, you might see that premium shrink a little bit because things look good. When unemployment's going through the roof and people are losing their jobs and businesses aren't hiring people, higher chances that people are going to start defaulting on mortgages. You're gonna see that risk premium maybe jump to 1.6%, 1.7%. So even though the bond yields might be going down, there could still be upwards pressure on those fixed rates just because of that risk premium, just due to the economic environment. So, but anyway, general rule of thumb is as bond yields go down, you do see downwards pressure on fixed mortgage rates. So this right here, probably the worst time to take a five-year fixed mortgage. That was the fall of 2023. Um, like the best interest rates you were getting at that point in time on an insured loan was like 589. And now you can get those for like 369 to 399. So pretty substantial swing. If you know anybody that took a five-year mortgage at that point in time, it's worth talking to a mortgage broker because some of those are able to exit still with only a three months interest penalty, and you can actually lock in today at a 4% rate, and there's some pretty substantial net savings. That all depends on your prepayment penalty, which is gonna differ from one bank to the next, but worth looking at. I've seen many, many situations where people take six percent five-year fix and they can actually break it. They might pay a$10,000 penalty to break, but you do the math, you got three years left on your mortgage, you're gonna save$10,000 a year in interest. If I said, hey, I'll give you, or you give me$10,000, I'll give you$30,000 you're gonna take that deal all day long. So there is some opportunities for people that are in that position to exit and uh lock in a lower interest rate for some savings. Not everybody, but it just like I said, it depends on the penalty that the banks got. Um, what do we got next here? So, the history of prime lending rate. So that was this is what drives prime, right? This is the overnight lending rate. Prime for the longest time, well, for I don't know, almost 10 years now, whatever the overnight lending rate is, that's what banks borrow back and forth from each other. The prime lending rate, which is what mortgages are based on, has been 2.2% higher than this for years. So when we had a 5% overnight lending rate, we had a prime rate of 7.2. So I just wanted to show you something. I gotta exit this real quick. I have a graph, an Excel spreadsheet here. Let's see if you guys can see these numbers. This tracks the prime lending rate all the way back to 1934. You can borrow money at 5.5% almost 100 years ago. So you scroll down, you see these numbers change over time. Everyone, uh anyone remember the 80s? Look at this, wait for it. Whoa! 22.75% in 1981. That is the highest it has ever been. And there would have been people that locked their mortgages in at that being like, it's going to 23 next week. I better lock this in right now. And then guess what happens? About oh 18 months later, it went from 22 to 11. So whoever locked into a fixed mortgage at that point in time would have probably kicked themselves because the interest rates literally cut in half within about a year and a half. So when you go down all the way to today, where are we here? At 4.7. I just kind of want to show people what we had prior to the pandemic, right? So we had uh there's your 7.2, that's the highest it went to. We saw this aggressive rate hike from starting in March of 2022, jumped all the way up to that in July of the following year. Before that, we were, you know, here's our artificially low COVID rates, 2.45%. Money was basically free. Good times. Before the pandemic, we were at 3.95 for a while between 2018 here and 2020. And then the Bank of Canada did an emergency cut, like for them to cut from 395 to what is that, 1.5%. Like that never happens for them to do that out of nowhere. But you know, what are they? What was the what was the term in the pandemic? Uh unprecedented times. But I always show people, like, well, before that, yes, let's take the pandemic out of the picture here. There was a very long period of time prior to that that Prime did not go above three, and we're still at 4.7 as of today. So from August 2017, if you go all the way back, 2.85, it was three for a while, then it was 2.2.5, even lower than it was through the pandemic. To there we are, December 2020, 2008. So from 2008 to 2017, the prime lending rate was below three, three or lower. And we're still at 4.7. So we're still quite a bit higher than it's been in recent times. And if you take it from where are we here? January. Where's January? Beginning of the new millennium. Get an average of this. What are we? 4.06%. So we're still 64 basis points above the 25, almost 26 year average of the prime lending rate. So I still do think there's a little bit of room to come down, especially when we're looking at 7% plus unemployment. But we will see what the Bank of Canada does here in the coming months. I just started out from the beginning. Nice. All right, we'll rip through these here. So, yeah, average prime rate once again, 4.06, and yeah, 3% or lower for an eight-year span. So if we got down to 3% again, that'd be sweet. You'd have mortgages in the very low twos, but I'm not thinking it's gonna go that low, but somewhere I think we'll probably see prime get closer to 4% again, which means we'll probably see another two, maybe three cuts in the next 12 months. But once again, that's gonna depend entirely on you know inflation figures. So, debt service ratios, this is where the math starts. Like I said, this is the foundation to every single mortgage, and it's pretty straightforward. It's simply a percentage of your gross household income. So when I say gross, that's not your take home, that's not accurate EI and CPP and benefits and all that kind of stuff. That's your gross top line income. So and there's two debt servicing ratios. You've got your gross debt servicing, which I think should be called housing debt servicing or something to that effect. It includes four things, all housing related. So you've got your stress tested mortgage payment, property tax, uh, they do a utility cost for heat, and 50% of any strata fee. Not 100% of the strata fee, it's only 50%. So four things mortgage, tax, heat, strata. That is your gross debt servicing ratio, and that can make up 39% of your household income. Then you have your total debt service ratio, which is up to 44%, and that takes everything in here and then adds on any other obligations that you may have. So whether that's a car loan, a student loan, a line of credit, a credit card, child support payments, you name it. Anything that if you stopped paying, you would incur a debt. So your car loan counts, but your car insurance does not count. If you stop paying your car loan, we're gonna have to. If you stop paying your car insurance, you just don't have car insurance. So it doesn't get included in these kind of ratios. So notice that there's a 5% spread between those two numbers, and we'll we'll talk a little bit more about that further on in the presentation here. So once again, 39 and 44% of gross household income. So the next slide is a test. So if anybody can tell me in this scenario, what's the gross debt service and the total debt servicing for this client profile? We have 120 grand a year in income, and I did that for a reason. Because that per month is a nice, easy number, 10 grand. We got a three grand mortgage payment, 300 a month in taxes, 100 a month for our heating, and a stratophy of 400 bucks a month. Anyone good at quick math?

SPEAKER_04: 26:43

Nope.

SPEAKER_05: 26:47

Nope. So we got 36%. I thought everyone was gonna say 38. Kind of a tricky one in here. So you go 3,000 plus 300 is 33, 34, and then you only take half of this, right? It's only half of the strata fee. So 33, 34, plus 200 is 36 out of a$10,000 a year income. So these folks have a 36% GDS at a car loan at$500 a month, 36 plus 5, they got a 41% TDS. And that's that's like every mortgage application I look at, right? You're looking at what are the housing-related costs, what are their debts that drives these ratios, and that is the foundation for every single mortgage application. So ideally, you want low debt servicing ratios because that means you get a higher approval amount. So, two really the main ways, there's more than two ways you can impact these debt servicing ratios, but the two main ways you can do it is you either make more money or get less debt. And it's not like it's the same, right? If you add a dollar worth of debt versus a dollar worth of income, it is not the same at all. And I'll just show you here real quick. Um, we've got a baseline scenario, our example clients they have a household income, they both make 80 grand a year. Good for them,$160,000. They've got housing-related costs,$250,000 for their taxes,$300 for the strata fee,$100 for heat mortgage payment of$3,200, and they have a little bit of debt here, right? They got a student loan obligation of$165,000, they have a car loan for$665,000, and they have credit card balances, and we got to service$500 a month to service that. So there's your baseline scenario. Now these are these are based off of old interest rates, so these numbers would be a little bit different now, but based on that, they could get a mortgage for$664,000 and purchase for$715 with the minimum down payment. Now, one of them picks up a side hustle, and now they're making an extra$665 a month. So that's additional income that is going to drive down your debt servicing ratios, higher approval amount. So you add$7,900 a year in income, brings up their household income. All of them, all the other numbers are the same, nothing else changed here. Now they're up to a$767 purchase price. So their total purchase price increased by$52,000 just by adding seven grand a year, well, basically eight grand a year of income, which is great. However, if you did the exact same thing, you know, the same difference here,$665, but this time we're gonna remove it from a debt obligation. So now their income's back to$160, they don't have the side hustle anymore, but they wiped out their car loan. And if you remember, that was also$665 a month. So now it's the same amount of money coming out of the application rather than new income going in. What does that do? It's a$118,000 bump in their borrowing power. So a car loan for$660 wipes out almost$120,000 in approval amounts. Now, the reason for that is going back to these ratios 44%. So if I had a dollar of extra income. How many of those, how many cents in that dollar can service more debt? Only 44 of them, right? But if I remove a dollar of debt, I have just removed 100 cents. Now I can use all 100 of those cents to approve for more mortgage. So if you do the math, you go two, sorry,$1 divided by 44, that gives you 2.27. You know what else gives you 2.27? If you take 118 and divide it by 52, it's 2.27. So I tell clients all the time said if you want to go on lease a range over for a thousand bucks a month, you need to make an additional$2,270 a month just to wash that, just to offset it in your borrowing ability. So yeah, debt kills mortgage applications. So that's one of the easiest ways you can reduce your borrowing power. This is big when it comes to clients that have investment properties and being able to use rental income to offset the debts of that property. You're removing debt from the application and you can massively increase your approval amount. So anyway, that's just I just wanted to show you how impactful that is. Once again, there is all beside each other. Adding income gets you 52%. Removing debt 118. So it's way, way, way, way better to remove a dollar worth of debt than add a dollar worth of income. Alright, so now that we understand what debt servicing ratios are, I'm gonna go through the three main types of mortgages in Canada. So everybody's heard probably ABC lenders, or you're gonna hear them, you know, B lenders is the same as an alternative lender, it's one and the same. C lenders, that's private lending. A lending is your banks, your credit unions, MFCs, that stands for mortgage finance companies. Those are going to give you the best interest rates, but they come with the most restrictive qualifying criteria, i.e., like debt service ratios. So just to expand on mortgage finance companies, there's a lot of those in Canada. They just do mortgage lending. So you can't go to you know First National, for example, and open up your checking account. All they do is mortgage lending. But there's there's a lot of them. You get First National, MCAP, RMG, Strive, Merrick's, Lendwise, NEO is another one that's new in the Canadian space. So there's there's quite a few of them, and they have great rates, mainly for insured mortgages. That's anybody buying a property with less than 20% down. So A banks, that is the only way you're gonna get insured mortgage lending. So if you're gonna put down less than 20%, you are going to have an insured mortgage, and alternative lending doesn't do that, neither does private lending. It is all done at these A institutions. Once again, they are the best interest rates, but that's where you get that 3944 debt service ratio. Alternative lending is only conventional, meaning you have to have at least 20% down. They do not do insured mortgage businesses, um, but they are a lot more flexible with debt servicing ratios, um, minimum credit criteria, like you could have a lower credit score and still get an approval with an alternative lender. So, yeah, a lot more flexibility. You're gonna get higher approval amounts because they allow for higher debt servicing ratios, but all of that flexibility comes at a cost, it is more expensive. So you're gonna see with every alternative lender, you're gonna see a 1% lending fee up front, and the rates are usually between 60 and 100 points higher than A lending. So if you can get a 4.1% rate now at a Scotiabank, you're gonna be about a 5 to 5.2 or so, maybe slightly less than that, an alternative lender for a similar fixed mortgage product. Then private lending, that's kind of like the Wild West. They don't care what your income is, they don't care what your credit score is. If you've got equity in your home, they will lend. They don't care if you've, yeah, they you could have a 400 credit score, have all your credit cards maxed out. If there's equity in your home, they will lend to you. And that is very expensive. So you're always gonna get there's gonna be lender fees, there's gonna be uh broker fees, a lot of legal fees, appraisals, all of that stuff is up to the client. And it's not uncommon to see double-digit interest rates, like especially if you're getting into second and third position mortgages, you're pushing 11, 12, 13 plus percent interest rates. So, rule number one of private mortgages, don't ever go into one unless you have an exit strategy. Because that is a tough hole to dig out of. If you don't have a plan to get out of that private mortgage, generally people are maybe doing it to renovate a property and then sell it, or they're getting a job and they're or their parents are gonna co-sign next year and they're gonna go from a private to a B or an A. You don't want to sit at 12% interest year after year after year with the renewal fees and all the fees that come along with it. But unfortunately, a lot of people jump into private mortgages without an exit strategy, and it's generally not a good situation. So, give you a breakdown of what that means. So, like I said, alternative lenders, do you get a lot higher debt servicing ratios? So, here's another sample for you. We got a household income of 120 grand a year, smart, small car loan. These two buckets here are insured mortgages with only 10% down. Your maximum purchase price is 582, and this is as of today's interest rate. So if you got 120 grand income, the max you can buy right now is about this if you're gonna put 10% down with a 25-year amortization. Now, as of last December, you can go to a 30-year amortization if you are a first-time home buyer, or if you are buying a brand new property, you can go to 30 years. So, same numbers, same 120, that takes you from 582 up to 625. This is working with that 3944 debt service ratio cap we spoke about with an A-bank. So there's your cap. But it's only 10% down. You go conventional, one of my favorite lenders to work with is the Big Red Bank Scotia. If you have exceptional credits, you can go and they have an A, they have an internal credit rating system at Scotiabank and they rate you like your grade school report card. You get an A, B, C, or I think maybe they go D. If you get a D, like they basically tell you to kick rocks, they're not going to give you a dime. But if you have an A rating at Scotiabank, they will go up to a 50% total debt service ratio, which means you know your mortgage approval amount in that scenario goes from 580 up to 660. The purchase price is so much higher here because we're putting 20% down with a conventional mortgage, 20% down. So that's why you're going from 625 to 830, even though the mortgage amount is not going up nearly that much, it's the additional down payment. Now, if you go into in the alternative lending space with the exact same income, once again, they will allow up to some of them will do 60% TDS ratio, and they don't, yeah, they'll do 60-60 for both. They don't really, there's no separation between their gross debt servicing and your total debt servicing. But yeah, 60% ratio. Now 60% of your income is going towards your mortgage and everything. Like, depending on your tax bracket, you're in a higher marginal tax bracket, like you're not taking home 60% of your income once you get into those higher brackets. So if you're up there, you're probably eating Mr. Noodles and uh not going out to the keg every Saturday. Because yeah, you're paying 60% of your take-home income to service your mortgage, and a good chunk of the rest of that is going to the tax man. But anyway, pretty big swing between 580 and 960, all with the exact same income, and that's just because of the higher cap on debt service ratios. So that gives you an idea of the ABCs of mortgages. Oh, I will expand on this real quick. Um, alternative lending is a great option for self-employed folks, because they have a lot of different programs out there where there's stated income programs, they will look at your corporate bank statements to see, you know, to increase your qualifying income because a lot of people will run into like a lot of self-employed folks, they want to claim less income because you claim less income, guess what? You pay less tax. But then when you go to the bank and say, hey, I only made 50 grand last year, they say, Well, great, you can't really get approved for much. Here's your$250,000 mortgage approval. You go to an alternative lender, they can look at like bank statements, stated income, and they can gross that income up from$50,000 to you name it. If it's if it makes sense and you have the bank statements to support it, they could call your income$150,000 or$200,000. And now you're gonna get a way higher mortgage approval, and you didn't have to pay the income tax bill that comes along with actually claiming that income. So for a lot of self-employed folks, yes, the interest rate's about a percent higher, but would you rather pay six, seven, eight thousand dollars a year more in interest or an extra 30 grand a year to the CRA? It's kind of a no-brainer. Sometimes, self-employed folks, it just makes sense to stay with an alternative lender because the additional cost in interest is nowhere near what the tax savings are. So just a side note, yeah, a lot of a lot of self-employed folks will will find themselves in that space. Not because their credit's bad, just because it just makes sense for a taxation perspective. Oh, so next slide. So lower interest rates, which like we've seen earlier, we've seen them drop 2.5%. What does that mean for you? So every time we see a 25 basis point cut from the Bank of Canada, if you have a variable mortgage, once again, if you have a fixed mortgage, you're out of lock. But if you have a variable mortgage, you're gonna see, sorry, if you have an adjusting payment variable mortgage, you're gonna be paying$14 less a month for every thousand hundred grand you borrow. If that's on a HELOC, you're gonna be saving about$20 per month. So it doesn't sound like a lot, but we've had what 10 cuts now, 25 basis point cuts. So times that by 10, it's about 140 bucks a month for every hundred grand you borrowed. So it's it's a pretty substantial difference. I have some variable mortgages, so I'm appreciating these rate cuts. On the way up, it was not as much fun. It's a lot more fun when they're coming down. Um, so back to debt servicing ratios. A lower interest rate means that you're qualifying at a lower rate, which means you've got lower debt servicing ratios, which means you get a higher approval amount. And it's a pretty big difference. So remember back when I showed you the graph of the bond yields and the peaked in 2023, and I said that was a real shitty time to get a five-year mortgage. Back then, you had this same household income. Here's your scenario we got 120 grand income, property taxes on this property, call it a townhouse,$2,400 a year, strata fee, utility cost for heat. Here's our interest rate, which is gross for an insured mortgage. Uh, you're qualifying, this is the stress test, you got to qualify at 2% above. So you're qualifying at 7.89%. Back then, you could only qualify over 25 years as well. So you were capped at a$495,000 purchase price, is all you could get if you had$120,000 a year household income, and that payment was going to cost you$2,908 per month. So if you fast forward to today and we've seen all those rate cuts, Scotiabank was just running a$369 promo. All these numbers are still the same, same income, same tax, same house, same strata fee. You're just qualifying now at$569 rather than$789. If you're still doing a 25-year AM, you've jumped up to$602. There's almost a 22% increase in borrowing power just because of the lower interest rates. But we can also do a 30-year amortization now, once again, first-time homebuyer or buying a new home, you can go to 30 years. So now with your 120 grand income, you can buy for basically 650. So that's a 31% increase in your borrowing power, and you didn't change your income, you didn't change your debt. The only thing that changed was the rates and a policy to extend to a 30-year amortization. So pretty substantial difference. And even if you did that and you spent$650,000 and you got your mortgage and moved into your new townhome all happily ever after, your payment is still lower. Even though you're$150,000 higher, because the rates are so much lower, you got a$2,800,$2,845 payment versus$2,900, and that's on a house that's$150,000 cheaper. So a lot better time to buy a house now than it was two years ago, which is encouraging. So uh what do we got next? So we're gonna run into some lender policies, and this is what kind of made me want to be a mortgage broker because when I was trying to buy these rental properties, I remember who did I go to? I think it was RBC and TD, and they both declined me. And then I talked to a mortgage broker, and like a couple days later, he's like, Yep, you're approved to Scotia, no problem. And I'm like, same documents, same application. I'm buying the same property with the same income. How did I why can Scotiabank do it and these two can't? He explained to me some other policy differences uh around rental income treatment, around debt servicing on your existing home equity credit lines, all that kind of stuff, and it makes an enormous difference in your approval amounts just because of a policy change. So, yeah, rental income is big. We're gonna show you some rental worksheets and the difference between an offset and an add back of rental income. This right here is really big. Now, remember earlier when I talked about adding a dollar worth of income versus removing a dollar worth of debt? A rental income add back adds a dollar worth of income. A rental income offset removes a dollar worth of debt. And which one of those two is a lot better? We like offsets. That's what we want when you're, especially with rental properties, that can make I've seen a half million dollar swing in approvals just from one better one lender policy to the next, just because of that. I had a guy in Burlington, Ontario trying to refinance a four-plex, and yeah, he went to CIBC and he wanted a home equity line of credit for as big as he could get it. Do a bunch of renovations, went to CIBC first because that's where he banked, came to me. I did it through Scotiabank, and it was a$500,000 difference in his limit on his line of credit with the same application, just because Scotia at the time had an offset. They discontinued that about six months ago, which is a real bummer. Regulators. But uh they still use it in some scenarios, just not when you're buying a new rental property. If you have existing rental properties, they still use an offset. Uh, another big one debt servicing requirements for existing credit lines. So I think this is the one that caught me up when I was getting declined. Um the balance versus the limit. So, Jesse, your name. All right. Say you have a primary residence, you got a small mortgage on it, and you got a line of credit for half a million bucks, and it's sitting there and it's empty. You're not using it. Now you want to go and buy a rental property. And let's say you approach TD Bank. They say, Okay, here's your new rental property, we got your income, we got your mortgage payment on your house, your rent's, you know, your new property is gonna rent for three grand a month. We're gonna allow you to use some of that in your application, but you got a$500,000 line of credit. The balance is zero, you're not using it, but we have to treat that as if it's maxed out. Because at any time you could technically pull it because it's there. You could literally walk into the bank and you could walk out with a half a million dollars at any time. So they have to treat it as if it's completely maxed out. The calculation on that is they take it and they run it over a 25-year amortization at the 5.25% benchmark rate, and it works out to$596 for every$100,000. So call it$600.$600 times five, that's a$3,000 a month payment obligation that is going to get put into your new rental property application. Remember when we were talking about removing a car loan for$600 a month? Think of adding$3,000 in debt. If you walked into Scotiabank with that exact same scenario, they'd say, Okay, yeah, we got your mortgage, you got your income, you got your new rental property, you see your line of credit, what's your balance? Zero dollars. They say, Great, we don't care. Here's your mortgage. They don't, they they Scotia and a lot of some other lenders, they debt service the balance. They do not debt service the limit. So CIBC, RBC, T D, they all look at the limit. So even though you're not using it, they treat it as if it's maxed out. So I used that trick when my brother wanted to build a house. He had four rental properties at the time. He didn't want to do a construction loan because it's a bit of a headache. There's a lot fewer options in Ontario. There's a lot of credit unions out here that are good for that. But we refinanced the rental property on his renewal, we set up a big line of credit, we left the balance at zero. Then we went back to Scotiabank again on another rental property because his balance was at zero, it didn't impact his next one. So we repeated that process four times. By the end of it, he had$800,000 on four different home equity credit lines that he could use whenever he wanted to, which is way more than he would have got if he went to any other bank. So then he built his entire house, he financed it all himself with his credit lines. Once the house was built, he refinanced it and he paid back those credit lines. So just yeah, massive, massive differences just because of a policy variance from one bank to the next. So that's why, like I said, I was pretty interested in becoming a mortgage broker. Because I'm like, how would anybody know that? Right? Unless you came to me and said, hey, here's what I'm looking to do. And I look at your profile and be like, oh, well, you're gonna completely waste your time if you go to this one, this one, or this one. But if we're gonna take you over here, it'll be an approval right out of the gate. And you don't have to walk into every one of those lenders, just throw them all your paperwork, wait three weeks for them to get back to you with a decline for a reason like that. So yeah, I thought that was an eye-opener because I thought, like, do these guys not all by have the same policies and the same rules? They absolutely do not, and that's just one of them. Um, specialty lending programs, that's another big one. Um, net worth lending, some banks don't do it, some will. We'll we'll get into that a little bit later on as well. Um, business for self programs, there's some really, really good programs out there, and this is with A lenders, not alternative lenders, for individuals that are incorporated and run a business. You can leverage the earnings in the corporation on top of what you've personally paid yourself to give yourself a higher qualifying income. Now, the benefit of that is you know, corporate tax rates in BCE are what 11%-ish. It's a lot better than 53 or whatever it is at the marginal, the highest marginal rate. So a lot of incorporated self-employed individuals, like dentists, doctors, realtors, mortgage brokers, you name it, they leave a lot of money in the corporation because I'd rather pay 11% tax. Thanks very much. So, but then your tax return shows a much lower number because all the money stayed in the corp. Some A-lenders have programs that'll say, Well, okay, you could have paid yourself an extra hundred or two hundred or three hundred grand last year, but it stayed in the corporation because taxes. We're gonna give you a bunch of that on your mortgage approval. So now your qualifying income could jump by. You know, I had one recently, it was a$250,000 boost in qualifying income, which is like$1.6 million more mortgage. Just once again, specialty program that some lenders offer and some don't. So, yeah, you talk to a client like that and they're they're pretty stoked because they just saved a ton of money in taxes and they got a higher mortgage approval amount. It's kind of a win-win. Um, credit requirements. Some banks will do uh you know 640 credit score, others won't. Some banks look at Equifax, some banks look at transunion. I've seen 100 point swings in transunion to Equifax. So if you got a really bad Equifax score, but a pretty decent transunion score, we know which bank to approach. Uh so that's just yeah, just some of the examples. So um this yeah, do you want to take a break?

unknown: 49:53

Well, 50 minutes.

SPEAKER_05: 49:55

So uh 50.

SPEAKER_03: 50:00

Everybody good? Everybody good? Coffee break?

SPEAKER_05: 50:04

10 minutes? All right, we'll rip through this one. So this is Mr. and Mrs. Sample. This is actually almost exact numbers from a client profile that I dealt with this year. What they were looking to do, well, actually, they were looking to sell their townhouse, but market kind of sucked. So they decided to keep it and rent it, and they wanted to buy a single family home with a suite. So they had a combined income of$160,000 a year. They owned that townhouse, uh,$3,000 in taxes,$300 a month strata fee, they had a$525k remaining mortgage balance on it. The payment was around$2,500 a month. They figured that that townhouse would rent for about$3,400. Um little tiny bit of debt, but otherwise pretty strong clients, good credit scores. So one of these two actually hadn't lived in the house long enough to be considered common law. They were a first-time home buyer. So on the new property, we could do a 30-year amortization because one of the two is still considered a first-time buyer. So, um, yeah, this is just I'm comparing two lenders here for this scenario. So rent the old townhouse, buy a new property. So if I put that townhouse on Scotia Banks, this is a rental worksheet. So as soon as you have rental properties, this is how bank analyzes them. And theirs is like the easiest one out there. It's dead simple. Here's your one, two, three sample address, market value, mortgage balance. This is the important stuff. They take your rent, they divide it by two, and they subtract your mortgage payment. That's it. Dead simple. That kicks out a shortfall, or it's a negative number of 800 bucks a month. Guess what we get to do with that 800 bucks a month? That is now debt in your next application. We don't like debt, it kills mortgage applications. Take the exact same property. This is a mortgage finance company that I spoke about, Strive Capital. Their rental worksheet allows one, two, three, four, five, six rental properties. So you could have six other rental properties and be doing this scenario, buying yourself a new owner occupied. Very, very, very generous with rents. So, same numbers. This one's just a little bit more complicated. You put in your rents, uh, they don't have any parking rents or anything. Monthly payments, the same property taxes. This one actually includes taxes and convoy fees, expenses for heat, and then they automatically calculate a maintenance expense. And then depending on what province you put in up here, up here, sorry, it kicks out a vacancy rate, which I think we're higher than 2.2 right now, but I'm not gonna argue with that. This, not we don't have an$800 a month shortfall anymore. We actually have a$5 and 20 cent surplus. So that now gets added to the application as additional income. The big thing, like five bucks, that's not gonna make a difference. It's like what could you do? It's but the the important thing here is that you are not adding$800 as a liability. So if you did this new purchase with Scotia, this is you know, here's your income. Here's all the stats on the new house. We got a$325 taxes. There is no stratophy because this is a freehold home and it has a rental suite in the basement. Mortgage payment is this. Once again, the debts are all the same, and this house is gonna have uh$1,800 a month in suite income. They're putting 10% down on this, so once again, debt service ratios they have to fall in line with insured guidelines. We cannot go above 44, and we're pretty close. And that puts your purchase price to 822. Exact same one. Here, everything is the same with Strive. We just no longer have the there's no rental shortfall anymore, right? That's gone, it's not in there. So, same stuff, the sweet income. Strive is more generous in this scenario with adding the sweet income as well, but with the same numbers, you went from 822 to a million forty-five. So it's the exact same application, it's the exact same numbers, it's just going to a different lender, and it's a$223,000 difference in your approval amount. Yes.

SPEAKER_02: 53:53

Does it have to be a legal suite?

SPEAKER_05: 53:55

Good question. Very much in the gray area. Yes. Um, it used to be that, so some lenders don't care, like Scotia, they don't care. As long as it's got a separate entrance and a separate kitchen and it's self-contained, they don't care. You're gonna get the same treatment whether or not it's legal or non-legal. Some of the other MSEs, like Strive, for example, they used to, if it was illegal, they would give you a 50% of rental income add back. So they would take$1,800 and they'd say, okay, we'll give you$900 a month to add to income. But the big thing here that Strive does, that Scotia doesn't, is they remove your taxes and your heat in a scenario like this. If you have a suite, they remove taxes and heat and add income. So you're adding income, but at the same time, you're removing debt. That's why their approval amounts are so much higher. It's the debt removal thing. Recently, they've basically said, if we don't know it's illegal, we'll still give you 100% of rents. So sometimes realtors put illegal suite on there. And like sometimes you say, hey, maybe remove that and call it a like it's legal. Call it a suite, call it a uh what's the other like uh grant, not a granny suite. An in-law suite, call it an in-law suite. But there's yeah, I I literally am dealing with this right now. Um, yes, your question?

SPEAKER_04: 55:20

Uh just kind of on the same topic, but uh I was just curious if you have to deal with like underwriting. Like if you send an application and it goes to Scotia, do you ever have to deal with underwriting?

SPEAKER_05: 55:28

So I I like I underwrite a file, like I run all the numbers and say, okay, yes, this fits their guidelines, you will get approved here. It'll go there. They also do underwrite it just to check everything. But yes, the mortgage brokers.

SPEAKER_04: 55:41

You know, whose desk it lands on versus if you're dealing with Scotia, do you ever have to pull out like a policy card and say, actually, the red tape says this? Sometimes, or you say, Oh, thanks, I'll just give it to someone else.

SPEAKER_05: 55:52

Sometimes, yeah, for sure. Yeah, yeah, like Scotia's especially unique for that because they like they'll have underwriters that like they're they're a great lender, and I love them. And my underwriter is probably the best there is, he's amazing. But I've had other underwriters when he's on vacation, like, nope, we can't do that. Yes, you can. Yeah, exactly. I'm like, well, I'll just yeah, just you go on vacation, I'll wait till Graham's back because he does this. But yes, you there's yeah, I've and at the end of the day, if the underwriter doesn't support it, they don't like something, depending on the bank, they can have a lot of pull. So mitigating factors is big. You know, do you have fallback? Do you have additional savings? You know, what's the credit history? The going back to the whole five C's of credit thing, but um to answer that question, there is variance, yes. Not so much, not so much in insured mortgages because it's pretty cut and dry with those debt servicing ratios. If an insurer supports it, the bank is basically, yep, we'll do it because they have no risk, right? On an insured mortgage, if you don't pay your mortgage, the insurer is gonna pay. So the lender's getting paid regardless. So if they can get the insurer support, the bank is generally gonna be an approval. Yeah. Um, sorry, we were talking about the suites non-legal versus illegal. So yeah, I'm like I said, I'm dealing with this right now on a file. And it was a whole thing to try and get the same treatment. And talking about gray area, if you get an in mostly in those situations, you generally get a market rents appraisal. So you get a third party to come in, say your suite's gonna rent for$1,800 a month. Here's a little appraisal report, gives$200, thanks very much. You take that to the lender and they use$1,800 for the rental income. Problem is the appraisal institute of Canada technically won't allow an appraiser to give you market rents on an illegal suite because their argument is, well, this isn't a suite. It's illegal. You can't have rents for this. So the only way an appraiser will do it is they do a hypothetical appraisal. So there's a little disclaimer on the appraisal document that says this is being done as if it were legal, essentially. Like hypothetically, this suite would rent for$1,800 a month if it was legal and registered with the city of West Kelowna. That's the disclaimer. The lender doesn't really want to see that because once again, if we don't know it's illegal, we'll still give you the full treatment. So the lender can also take a lease. So they basically will say, well, just bring us a lease. Who goes and buys a property and before they even lift their financing condition has a lease drawn up? It's just a stupid policy, and it's basically just asking the client to fabricate a lease, and that's mortgage fraud. Why would you not take an appraisal that's gonna say here's what your market rent's gonna be? This is by an accredited appraiser. It's a stupid policy. There's a lot of them in the industry. That's just one of them.

SPEAKER_02: 58:51

So if they had a bought the house with an existing tenant, they're kind of at least in place.

SPEAKER_05: 58:57

Yep, you could do that. Yep. Strive also actually they'll allow you to, if you run into that problem and you need 100% of rents and the suite's illegal and they're only giving you 50, they will allow through their purchase plus improvements program, you can make the suite legal through their program, and then they will give you the full uh rental income treatment in that scenario. So you can actually use that same program to buy like a house with an unfinished basement. You say, okay, it's 800 grand, I'm gonna spend 100 grand to the house is 800, I want to renovate it for 100 grand to put in a legal basement suite. They'll give you a mortgage on the$900,000 purchase price, give you the extra money to do that renovation, and in that mortgage application, they will give you this full rental income treatment for a suite that is not even there yet if you build it under that program. So super cool program. It's a lot more tedious in the approval process because you need to get quotes from a contractor contractor and all that kind of thing, but that program does exist. It's about a year and a half old, but. Pretty cool option for the right client. But it's easier if the suite's already there, that's easier. But they do have a program for that renovation. So yeah,$223,000 difference. So you'll have those clients walk into the bank and then they come to the mortgage broker and they say, Well, here's your scenario. Here's a lender we need to approach, and we're gonna get you an extra$223,000. And they go, What? That's a pretty big difference. So once again, it's just policy variances.

SPEAKER_06: 1:00:26

So did we want to do a break now, then Julie? What are we out here? An hour and a half in or an hour in?

SPEAKER_04: 1:00:35

Great.

SPEAKER_05: 1:00:39

All right. All good. So buying rental properties. When you buy a rental property, you need 20% down. You can leverage the rents from that property to help you qualify, but you do need a 20% down payment. You can buy an owner-occupied home with as little as 5% down as long as you're gonna live in it, right? Now, a little side note, 5% is good to 500 grand. You go from 500 to 1.5 million, then you need 10% on that additional amount. So if you bought for$700,000, for example, you need$25,000 for the first half million. That's 5% of$500 is$25,000. And then from that$500 to$700, you need 10%, which is$20,000. So the minimum down payment on$700,000 is$45,000. If you're gonna occupy the property, it's a lot less than 20% because that's$140,000. So basically$100,000 swing. So a lot of people think that the first time home or it's a first-time home buyer incentive to buy with 5% down. They think once you've done that once, you've used it, you can't do it again. But you can buy your 27th property with 5% down as long as you're gonna live in there. And that applies for duplexes, triplexes, and fourplexes. If it's a duplex, you can do it with 5% as long as it's under 500 grand. Uh triplex, fourplex, you need 10% down. But once again, it's still a lot less than 20%. The important thing in this scenario is when you're if you're moving out of your owner occupied, turning it into a rental and buying a new owner occupied, you're doing exactly what uh where was it here? Sorry, yeah, you're doing this, getting your 1,045,000 mortgage approval. If we ran those exact same numbers with an actual rental property purchase. So in this scenario, uh, where are we here? Let's go back to Mr. Mr. Sample. They want to stay in that townhouse that they already had. The new freehold house that has a suite, they are now gonna buy that as an investment property. So they're no longer moving upstairs and renting the basement suite, they're gonna rent out both suites and they're gonna stay in their townhouse. So we're gonna assume that that house as a whole is gonna rent for four grand. So let's say, I don't know, eighteen down and twenty two hundred up, four thousand dollars in gross rents. If they did that, they would need a 20% down payment, and their mortgage approval would be limited to about a$528,000 approval amount versus what do we have at Strive? It was like nine, yeah,$970. So they go from$528,000 in additional borrowing power. If it's a rental, and if they're gonna move into it, it's$970,000. A lot of that has to do with offsets versus addbacks. And once again, an ad back, you're adding rental income. An offset, you're removing debt from that rental property. Um, yeah. 145 anyway, yeah, it's uh huge, huge difference. Because in that scenario, you're buying the same amount of properties, you've got the exact same income, but it's what is that, over$400,000,$440,000 swing in your approval amounts just because you've structured it differently. So that's and that's what I did when I was starting. The first townhouse I bought, I turned it into a rental property, I bought an X property. I lived in that property for four years, I moved out of that property, I bought another property with a minimum down payment. So you're trying to acquire properties, it's a lot easier to do it when you're only putting five or ten percent down versus twenty percent down, and your borrowing power is way higher because you're using offsets and you're using that incredibly generous rental worksheet from Strive. And once again, you could do property one, two, three, four, five, six. So I've seen clients that have really good performing rental properties, every single one of them is kicking off, you know,$500,000,$600 a month in surpluses. They had five properties and they're all kicking off a$500 a month surplus. That's$2,500 a month in additional income. So they just got a$30,000 a year raise. So that's how that's how you can get clients that only make like$100,000 a year and they could have five or six properties. Yeah, like if you right now, in a standard scenario, you can get about five times your income. So if you make$100,000 a year, you can get a$500 grand mortgage. You go back to this slide here. Uh, where are we? Sorry. These clients, remember they had a they had a they already had a$525,000 mortgage. Now they're getting another million fifty, so they're up to$1.6 million in borrowed money on a$160,000 income. So they're at 10x their income in mortgages. So if you structure it right, you know, a modest, no, I wouldn't say modest, but a pretty average household income can go a long, long ways to building a portfolio of properties. Um all right. So townhome versus suite. Chad, you just sold one of these, didn't you? Where are you? Yep. So I ran this scenario with some clients recently. What would you rather have? This, sorry, and to be fair, when I ran the scenario, this was 20 grand higher. It started like 694.8 or something was the starting asset price. But you can buy a townhouse, three bed, three bath, 1,800 square feet with a single-car garage, and I think it's like a 370 some odd dollar a month strata fee. Or would you rather have a 4,000 square foot, five-bedroom, four-bathrouse with a suite? What would you rather have? Right? You look at a client scenario, they got a 140 grand income. This is the townhouse, this is that freehold house that we just looked at, right? This is these exact two properties. So if you were a client getting a pre-approval and saying, okay, I got 140 grand a year in income. I'm looking at this townhouse, we got taxes, we got strata fees, we got a monthly mortgage payment, a little bit of debt, nothing too bad. There's their max purchase price. Once again, we're pretty pretty close to our 44% here. Um$694. That's the highest they could go. Like that townhouse would be the maximum they could buy with$140,000 in income. You came to me with this exact same client profile on that freehold house, they can go up to$900,000,$205,000 difference, and that is because it has a basement suite. So when you're adding that suite, you're well, first of all, you also don't have a strat fee, right? Because that's a freehold house, there's no strat fee. So that removes debt. We like removing debt from applications. If the suite is legal, you can also remove the taxes and the heat from your application. Once again, you're removing more debt, and then you're also adding, in this scenario, sixteen hundred dollars a month in suite income. So that makes a$200,000 difference in your borrowing power. Once again, same client profile, everything else is the same. You get a rental suite, you can go up to$900,000. And if you look at the true cost of ownership, if you're in that townhouse and you're paying your strata fees and you're paying your mortgage, you don't have any rental income to offset it, your housing costs at today's interest rates are right around that. Whereas if you live here and you live upstairs and you got your one bedroom suite rented, you're about$800 a month less. And you live in a lot nicer house and you're not paying a strata fee, and you don't have to care if you're you're you know what the strata does because stratas are annoying. Some more than others. But you own your own house and you got your own lot. Much better scenario. Um, and yeah, a lot of clients don't know that they could make that jump from a townhouse to a freehold with a suite. Once again, it just depends on the lender's policies. Because some lenders that aren't as generous with the suites, you'll take this the same scenario and they only give you a 50% of rental income. They do not remove tax and heat. That 200 grand would only be about a$60,000 to$65,000 bump. So nowhere close to enough to actually get them from the townhouse to the freehold house. So once again, policy differences. Um, yeah, I made this one up not long ago for a realtor partner of mine. He just he had a really, really outdated one. So, in case you're wondering, and this is with an insured mortgage on a 30-year amortization with 10% down, you know, what does it take to buy a$1.5 million house? Combined income. Now that's assuming you don't have a basement suite. If you did, you could have you could get away with slightly less income. But when I built this too, I did I change the housing scenario because if you make$50,000 a year, you're definitely not buying a$1.5 million house. And if you make$275,000 a year, you're probably not buying a little one or two bedroom condo with a stratafee, right? So this bottom section here, we're we're assuming that it's a condo, it's assuming it has strati fees. This is your purchase price by income. You move up to the$120,000 income range, we're into a town home, so slightly higher taxes, slightly higher strataf fees, and then as soon as you get into this 180 range, you're into that like million dollar price points. It's a detached house, you got no stratafies. So that's it might be slightly lower now because I think we've had one or two rate cuts since I made this, but that's pretty damn close. So once again, it's about a five times multiplier, right? Five times you got 100 grand, there's your purchase price, 5x. With once again with an insured mortgage without a basement suite. Um all right, mortgage renewals. A lot of those coming up. A lot of nervous borrowers because they're losing their 169, and rates are not 169 right now, but they were during COVID. So it's a really, really good time to kind of do a reset and rethink your financial strategy. A lot of people don't do that, and they just think that the bank's giving them a competitive rate, so they just click the button and say thanks renew, and we'll just continue on as is. They don't shop around. I think I read somewhere that you're more likely to um shop for coupons when you buy groceries than you are to actually shop your mortgage renewal, which is a staggering statistic, but uh yeah, that's that's the reality. So obviously, when you're renewing, you want to shop around for rates because banks go through different cycles. Sometimes they're trying to bolster their accounts, like their deposit accounts, and they're trying to slow down money going out the door on loans, so their interest rates aren't that competitive. Like two and a half years ago, Scotia banks rates sucked. Like I love Scotia, I do a lot of business with them. The rates now are fantastic. But I have a client renewing with Scotia right now, like their renewal rates are extremely competitive today. But two years ago, like we were saving people upwards of one percent difference on your interest rate. So, like, you do the math on a five-year mortgage on a half million dollar mortgage over five years, one percent, that's like almost$25,000 in savings. Takes you a long time clipping grocery coupons to save$25,000. Um, so yeah, that's a no-brainer. Shop around for interest rates. Really good option, too, and I do a lot of these on renewals is set up a home equity credit line. Because a lot of people that bought five years ago in 2020, they have still seen, you know, they've benefited from a pretty decent upwards adjustment in their price. They have equity in that property. It's a great time to do it on renewal because when you switch from a new lender, or sorry, when you switch from your existing lender, the new lender takes really good care of you. They say, Come on into us, we're gonna cover the cost of your legal fees, we're gonna cover the cost of your appraisal. So if you want to get a HELOC set up, you're gonna incur legal fees and an appraisal. Anytime you do that, you might as well do it when you're renewed. Because if you're renewed and then you want to do it a year later, guess what? You get to pay for an appraisal and you get to pay for legal fees out of your own pocket. So do it on your renewal. The best time to do it because it doesn't cost you anything extra. Well, it doesn't cost you anything at all in a lot of cases because the lender picks up those fees for the lender that you're coming into. This is big. Adjust your amortization. It's like the refinance pull equity, that's kind of a repeat of the HELOC. Um, a lot of people, you know, maybe you want to refinance to invest that money. Maybe you want to buy a rental property, maybe you want to throw it in a non-registered account, maybe you want to start doing a Smith maneuver, which is another thing we could talk about later on if we have time. Um, but adjusting your amortization is important because it can protect your future borrowing power. So I'll give you an example. I had a guy earlier this year, he wanted to buy, his daughter was going to school in Lethbridge, and he wanted to buy a little townhouse for her to live in. She was gonna do the same thing I did, right? I'm gonna live in a room, I'm gonna rent out three to my friends. It's a great idea. He had only like 50 grand left on his mortgage, and he had just renewed it, and he only had like two or three years left on the amortization. His payment was like$2,800 a month to service a$50,000 mortgage. So he came to me and said, Hey, I want to buy this extra property. And I said, Okay, let's run these numbers. And I looked at his mortgage amount and I looked at the payment, I'm like, holy smokes,$2,800 a month payment for a$50 grand mortgage. He's like, Yeah, I'm gonna have it paid off in two years. He was like super stoked that his mortgage was gonna be gone in two years, which, you know, I understand that, but it completely ruined his borrowing power. Because if when he had renewed that other mortgage previously, if he had adjusted his amortization, he could have kicked that mortgage back out to 30 years and he could have had, I don't know, like a$250 a month payment rather than a$2,800 a month payment. So it would have dropped his payment obligation by call it$2,600. That's removing debt from his next application. So he couldn't borrow an extra dime. His debt servicing ratios were already capped out because his mortgage payment was so much bigger than it actually had to be, he had no borrowing power. So he couldn't buy that property for his daughter and she went on to rent a place. If he had extended his amortization, his thing was, well, shit, I'm gonna pay way more interest. I'm like, yeah, of course you are, because you're gonna pay it off over 30 years. But you have prepayment privileges, you can increase your mortgage payment almost as much as you want to, but you cannot decrease your mortgage payment. So I tell clients, I'm like, if you ever have any future plans of buying an investment property, buying a cottage, helping somebody co-sign, you know, like your daughter or whatever is gonna go away to school, you want to co-sign for a mortgage, adjust your amortization because it will lock in the lowest required payment obligation, which will lower your debt servicing ratios, which will protect your future borrowing power. And then as soon as your mortgage funds, you just crank up the payments, right? You can double up your payments, you can make lumps on payments, and you can pay off your 30-year mortgage in five years. So you can always pay it off faster, you can't pay it off slower unless you refinance, and then you're paying a penalty to break the mortgage, which is a bummer because sometimes penalties, especially if it's a fixed mortgage in a declining rate environment, can be really, really gross. So, something to consider adjust your amortization. Not everybody wants to do it, but like I said, if you ever have any future plans of doing anything borrowing related, you want the lowest required payment, and that that's how you do it. Uh what else we got here? Tips for higher approval amounts. So, this is another one that I see, right? People taking car loans. They say, I could pay it off in three years. Now you got a$1,600 a month payment on your truck. If you finance it over eight, it'd be a$700 a month payment, and you'd have lower debt servicing ratios, and you could buy a bigger house. All those auto loans, they're fully open. You can pay them off as fast as you want to. So if you finance it for the longest possible term, lowest payment obligation, once again, it protects your future borrowing power. This is one I see a little bit of. So if you can get$2,600 a month or you can include utilities and get three grand a month, that property is gonna look better on a rental proper or a rental worksheet, and you're gonna have a higher approval amount. So I have some clients that have done that, and it does make a difference, especially if you have multiple properties, it can make a difference. It can be the difference between like a shortfall and a surplus, which once again that's debt versus adding income. Um keep payment obligations 5% or less of your income. So remember at the very beginning when we talked about those debt servicing ratios, it was 39 and 44. I always tell clients if you're gonna take on a car loan, if it is five percent of your income or less, you're in that five percent threshold. So back to that 10 grand a month or 120 grand a year scenario, if you had a$500 a month car payment, it would not impact your borrowing power at all for an insured mortgage. If you had a$1,000 a month car payment, it absolutely would. So 5% is the sweet spot for any payment obligations. That kind of goes back to you know financing it over the longest possible term. Keep your payment low. Um buying investment properties. I've had clients come to me and say, hey, I got this huge HELOC. You know, Jesse's got a 500 grand HELOC on his house, he's just gonna, he's gonna buy this thing outright. He's just gonna he doesn't get a mortgage on it, he just buys it on his HELOC. Don't do that because it'll screw up your borrowing power in the future. Yeah, don't do it. Once again, that's back to the rental worksheets, right? If you let's go back to our striver worksheet here. So Jesse's got that house. This is the this is our townhouse scenario, right? The mortgage payment is$2,500. If he didn't have that, you know, that's great. He would have a$2,500 a month surplus, which is good, that gets added as income. But if he had that debt held against the rental property and not on his HELOC on his primary, he would have the ability to offset$2,500 worth of debt. So in that scenario, it'd be like a four or five hundred thousand dollar swing in any future borrowing that you do. Because if you if you hold the debt for your investment property against your primary residence HELOC, and I've seen people do it, there's no opportunity to use a rental worksheet anymore. You cannot do an offset, it's just they just take whatever the surplus is and they add it to your income. So it's really not great for your debt servicing ratios. So you want to actually hold the debt against the rental itself. I've seen people do it too, where they have a lot of equity in one rental, so they'll do the same thing. They'll just pull a HELOC on the one and they'll buy the other one outright. Exact same scenario happens, it just buggers up your borrowing power. It doesn't, it doesn't put you in the best position. Um remember how I said there's a lot of stupid rules in mortgage underwriting? This one really kicked it's this one's hilarious. So, debt, right? You've got a credit card. Anything that's unsecured has to be debt serviced at 3% of the balance. So if I had$10,000 on my credit card and I'm getting a mortgage, I got to look at that payment. I have to look at that balance. It's$10,000, 3%, that's$300 a month. Guess what? That$300 a month goes in as debt for anything that's unsecured. There's a couple banks out there that have a rule that if you have a limit on your unsecured lines of credit, these aren't HELOCs, these are unsecured. If it's$50,000, sorry, it's a if it's above$50,000, so it has to be like$51 or higher, they will use the same policies as if it was secured in their debt servicing. So what that means is, I'll give you an example. I had an optometrist earlier this year that had a big line of credit for his business, but he had personally guaranteed it. So his personal name was on it, and it was getting included in his mortgage application. There's like$40,000 on it, and it had a, I think the limiter was like$45,000 at the time. So$40,000 times 3%, I had to put in a$1,200 a month payment obligation in that application. Um, but I knew this trick. I said, okay, Mr. Client, if you go to your bank and say, hey, my limit's$45,000, can you please lift it to$55? All of a sudden, there's two banks that'll do this and it makes no sense. They will allow you to debt service that instead of using 3% of balance, they do the 525 benchmark rate over a 25-year amortization. So just to give you an example, what is it? Uh it dropped it from$1,200 a month to$200, it was about$238 a month. So I I'm explaining this to this client. So he's like, you're telling me that if I get a higher credit limit, I can get a$180,000 more mortgage. And I said, yes. That makes no sense. And I said, Yes.

SPEAKER_04: 1:20:39

You must love just delivering that news.

SPEAKER_05: 1:20:41

Oh, it's it's awesome. Yeah. Oh, it fires me up. Because when I like I'll pull people's credit, I'm like, oh, there's an opportunity we can do this. And it makes absolutely no sense. Like it's an old loophole that I asked my underwriter, and I'm like, why does why do you do that? It's it makes no sense. It's like, well, they guess back in the day they figured if you had a credit limit that high, it had to be secure. There's no way you could have an unsecured credit line for$50,000. It's unheard of. But like happens all the time. I just pulled credit for a guy the other day, he had a$60,000 and an$80,000 unsecured credit line. So and with him too, same thing. He had a smaller one. I said, move that balance over to the one with the$60,000 limit. Because then I can do that trick. I can it it changes it from it drops it by it's it's one-fifth of the payment obligation. So if the payment obligation was fifteen hundred dollars a month, it would drop it to$300. So, and that that can be the difference. In this particular guy, the optometrist, it was$180,000 was the difference. For him to go in and say, Could you please lift my limit from 45 to 55? Yep, perfect. Come back to me, 180 grand higher approval amount. Makes no sense. But once again, how would you ever know that? The bank's not going to tell you that. So yeah, that's why this is fun. It's like it's just, yeah, it's like a puzzle. Everybody's a puzzle. And the more, you know, the first-time home buyers, those are like dead simple. You can kind of do those with your eyes closed, but when you get these clients that are, you know, self-employed, multiple properties, corporations, that's it's a lot more work, but it's also a lot more fun, I guess.

SPEAKER_06: 1:22:12

Umie, do you just want to power through, or what do you think?

unknown: 1:22:17

Yeah.

SPEAKER_06: 1:22:17

Maybe like 15 minutes, 10, 15 minutes? Cool. All right.

SPEAKER_05: 1:22:27

Um so net worth lending. I spoke about this in the past. It's pretty uh pretty neat. I'll give you a super quick synopsis of what it is. Just I'm gonna pick on you. Uh you come to me and you say I got an income of five, or I got a$100,000 a year salary, and I say, Great, five times that. We can probably approve you for somewhere around a half million dollar mortgage. Say, but I also have this investment account for$500,000. Got$500,000 in investments. And I say, Well, look at that. You can qualify under a net worth program. So the real short and sweet of that is, okay, you can you can get approved for a hundred or five hundred grand with your income. You got five hundred grand in investments, we are gonna add those together, and we're gonna give you a mortgage approval for a million bucks. That's net worth lending. The cool thing about it is the bank doesn't collateralize that money, so they don't say, okay, now Jesse, you can't go and buy a yacht next week with that 500 grand. And they don't say, now you gotta move that entire institution. They just say, show me your statements, show me you got a half a million, and we're gonna increase your mortgage and buy that amount. So fantastic program for well, obviously you gotta have some you gotta have some scratch in the bank. The minimum with a lot of lenders is 250,000 bucks, but for like folks that are semi-retired or something and they may not be pulling a lot of income, but they've got big investment accounts, that's a fantastic program for those folks. We use it quite frequently. There's no it's an A-lending program. Like I do a lot of that with Scotiabank, no rate premiums, you're getting the best interest rates.

SPEAKER_04: 1:23:54

What would be some examples of some unique investments? Like, is it primarily like stocks, bonds, or is there like insurance policies? Like, can you lend on that?

SPEAKER_05: 1:24:04

They won't do insurance policies. Um, like a lot of the A-lenders that do it, it's yeah, it's stocks, bonds, RSPs, like anything like an RSP, they'll give you 70 cents on the dollar. So if you came to be with a million dollars in RSPs, we'd only be able to use 700. But if it's like GICs, tax-free savings accounts, non-registered accounts, stocks, bonds, anything like that, they'll give you the full dollar for dollar. Yeah, super, super cool.

SPEAKER_04: 1:24:27

All my test list stocks.

SPEAKER_05: 1:24:29

Exactly. Yep, yeah. Now they do take for this is for Scotia's policy. Once again, the different banks that have these have different policies. Scotia will do, they used to look at the lowest balance over the last 90 days, now they look over the last year. So everybody that I'm looking at now, I'm going back to like February when the market took a dump. That's that's the number that I'm using. A lot of stuff's bounced up substantially since then, but it's the lowest balance after the last 90 days. But super cool program. And the best part about it is you can do that, and then a couple years later you can do another mortgage and you can use those same assets again to qualify. Yeah, just like stocks, bonds, cash, GICs, yeah. Coming soon. Um yeah, you can't have like gold bricks under your mattress, they won't do that. If it's you know, it has to be something where you can generate a monthly statement. So um, but yeah, super cool program. Use it quite frequently. No, like I said, it's got to be something that you have a statement generated, like you know, your Sun Life Financial or your investors group or Wealth Simple or whatever has to be something that you can actually show that you have those funds with with the A-lenders. Now, this is cool. This came out like a week ago. So CMLS, once again, that is one of those MFCs I spoke about. They have an A lending division which operates under CMLS, and then they have their alternative lending division, which a lot of those companies do. They do both. It's called Aveo, is their alternative arm, and they just came out with a pretty cool variation of net worth lending. So rather than trying to explain it to you, I'll just read you this. So it's different in like that one I explained to you. That's like TD and Scotia and all the banks do that. They just do the dollar-every dollar thing. They use additional income based on the assets. So uh no, they don't show enough income on paper, uses RSPs, TFSAs, stocks, bonds, rifts, and yes, real estate equity. This is what I nobody else has ever done this before to qualify for the mortgage. So, how do they do that? So anything like GICs, TFSAs, money market accounts, they take 100%. Stocks and bonds, they do 75%, that's unique. The other banks take 100% of stocks and bonds, retirement assets, 65%. Like I said, the other banks are 70. Uh, and then real estate, this is the interesting one. Eligible equities is the validated property value, they're gonna get an appraisal done. They'll take 80% of that, and then they minus your existing encumbrances, which is your mortgage debt, and then they do a multiplier on that. So they give you a calculation example. So 100k balance and TFSA, they're gonna use 100% of that, right? So they do a divided by 12, that kicks out$833. That is now income that you can add into this application on top of whatever income that client already has. So, same thing, the RSP, they do knock it down to 65%, same thing divided by 12, 120, that gives you$541 a month in additional qualifying income. Then the real estate example, so we got a property value of a half a mil. There's only a hundred grand mortgage on it, so they got 400 grand in equity, but they have to do the 80%, right? So 500 times 80 gives you 400 minus your$100,000 debt. That's$300,000 eligible under this program, divide by$120,000, and you just got a$2,500 a month boost in income.

SPEAKER_04: 1:27:44

I should have asked. Are we allowed to take photos?

SPEAKER_05: 1:27:46

Yeah, sure. I could just you can just I could send you the whole thing. You want to email me, I'll just send you the whole slide. Yeah, I'll probably or the whole slideshow. So, pretty cool. Like I said, nobody else does it with real estate equity, they all want to see money in the bank. But once again, alternative lending. A lot a lot more flexible, but it's more expensive. Um, some of the details here, if you are qualifying under that net worth program, they are going to limit your loan to value to 70%. So if you want to buy anything, you gotta cough up a 30% down payment. Good for purchases and refinances, good for owner-occupied properties and rentals. If you ever see OO in uh mortgage land, that's owner occupied. Uh extended ratios. This is cool. 5555, so allows your ratios to go high. Unit else keeps your debt servicing ratios low, long amortizations. Everyone else caps you at 30, they'll go to 40. And they don't do a stress test for this product. So no 2% above contract. So this and this both keep your ratios low, and they'll let your ratios go all the way up to 55. You cannot do any properties under this program in a corporation, you gotta hone own it personally.

SPEAKER_03: 1:29:00

Yeah.

SPEAKER_05: 1:29:02

Well, shucks. There may be other options there for you, depending on your scenario. But um the rates. So, like I said, most alternative lenders only do a 1% lender fee. For this particular program, they do a 2% lender fee. And the rates are probably about a half a percent higher than most uh programs. And you'll see this a lot when you're looking at rate sheets. Loan to value. You know, the lower the loan to value, right? You got a million dollar house and the mortgage is only 300 grand, you got a 30% loan to value. Any lender looking at that's like, yeah, that's pretty safe. You stop paying your mortgage, I got$700,000 worth of equity to work with. So they're gonna give you better rates with a lower loan to value. As those loan to values creep up, the rates creep up, and then same here shittier your credit score is, the higher your rates are. So, you know, you don't want to be down here. Ideally, you're up here with a good credit and relatively low loan to value, you're gonna get the most aggressive interest rates. And then there's some more fine print here. On this particular program, they jam you an extra 50 points if it's a rental. Three-tier locations, that's like a smaller city center. They're gonna a little bit higher risk, they just think that that's more difficult to remarket, and they're gonna put a small premium on it. That's the other thing about alternative lending, super flexible, but they are for anything like a remote location. A lot of them want to see like population centers of 50,000 or more. So if you're in the middle of nowhere, a lot of times it's very, very difficult to find a uh alternative lender that'll go to you know a 5,000 population base, three hours north of Cam Loops, kind of thing, especially if it's a rental property. Owner occupied, they might do it, they might limit you to a 65% loan to value, but they generally like to be in bigger city centers. Then they'll give you the best loan to values, best interest rates, no problem doing a rental property. But yeah, there is limitations around that kind of thing. Uh so yeah, that's cool. Net worth lending. Like I said, I've done a bunch of files like that, but I've never seen anyone offer it with real estate equity. It's a little more expensive, but it's a lot cheaper than private. That's a good question. I know I know the property, pardon me. Like if you had a I think they'd consider the equity in properties owned by your corporation, if you obviously are the owner of that corporation, but if you wanted to buy a new property under this program or refinance a property under this program, it would have to be a personally held property. Once again, this just came out like a week ago. In the world of mortgages, there's always exceptions. You don't know if you're gonna get an exception unless you ask. If it's an exceptionally strong client profile, they might make an exception and allow that, but it's on a case-by-case basis. But I'm just going off, like I haven't done one of these yet. It's brand new. Um, I'm just going off their fact sheet that they sent me an email on. So that's where I'm getting that information from.

SPEAKER_06: 1:31:58

Uh, what do we got next? So did anyone see this tweet a week or two ago? No. Anyone see it? Yeah, no? Sorry, is that Julie back there? Yeah.

SPEAKER_05: 1:32:17

No, it's all doom and gloom. This was only two screenshots. It goes on for several more tweets. But um, yeah, if you've taken a minute to read it, it's yeah, very much doom and gloom. The banking regulator finalized new mortgage rules. So make it impossible for the average Canadian to build a small rental portfolio. When I read this, I'm like, shit, that's me and a lot of my clients. Won't solve the housing crisis, it'll make it worse by handing the entire market over to large institutional investors. Darn those institutional investors. Uh yeah, in 26, the way banks handle mortgages will fundamentally change. Under the old rules, you could use salary plus a portion of your rental income from property one to help prop qualify for property two. We talked a lot about this tonight. Under the new rules, if you use your salary for property one, that income is completely off limits for qualifying for property two. And I'm reading this, I'm like, that doesn't sound right. That's that sounds ridiculous. Anyway, this is a local broker that's got a pretty good uh he does a lot of social medias. I don't do that because I don't even know how to post a reel. Um don't follow me, I'm not exciting. Uh anyway, he posted this, and the problem is like he's got a pretty decent following. A lot of other brokers follow him. So, what do these other brokers do? They repost it. What do the realtors do? They repost it. And then it literally went everywhere, and I had like probably seven or eight people call me from like Ontario, BC, Alberta, seeing this shit, whether it was from him or somebody that picked it up and reposted it, calling me being like, what's going on? And I'm like, nobody knows anything, because he all got this from like a quote in passing taken in a context. Here's the initial quote. Mark Joshua, the director of capital and liquidity standards, says the intent is to ensure that income that is used for one mortgage is not then again used a second time for another one. So that income that was used on the first mortgage is removed or corrected for when assessing additional properties. That already happens in the way debt service ratios are calculated. You're already accounting for any existing debt obligations. So I'm reading this quote. I'm like, where are you getting that from? Anyway, the whole thing was completely blown out of proportion. Um here's some clarification. So we had Mr. Rob McLister from Mortgage Logic News reach out for clarification to Offsi, and their response was there is no underwriting implications of this guidance. It is solely for the purpose of determining whether mortgage needs to be classified as material dependent on cash flows generated by the property. So, in short, OFSI wants to know the income-producing residential real estate exposure, IP R R E S, for all lenders it regulates. A loan will be deemed income-producing if 50% of the income used to qualify comes from the property itself after stripping out income already used for other mortgages. So pretty much every lender is already on this, anyways. The only lender that I'm aware of that still allows an offset, this is talking about an adback, is a credit union, and they're not federally regulated because they're a credit union. So they can they don't have to follow this. Specifically, a property that's classified as material dependent on cash flows generated by the property for capital purposes means the mortgage relies heavily on money generated by the property itself, such as rental income. The ramifications are that the lender needs to hold more capital to protect against potential losses. So they're just recognizing these as they could be higher risk because that client doesn't make a whole lot of money. All of their revenue, you know, maybe they're retired and all of their revenue is coming from rental income. If they stop getting rental income, higher risk, right? So yeah, that kind of makes sense. I don't think I've ever seen an application come through where this would actually qualify because pretty much everybody has a day job or they have a pension or they have some other stream of income, not only rental income. So it was a total nothing burger, once again, no underwriting implications. Um, so anyway, it'd be nice if the gentleman had did this little bit of homework before he blasted that out to the entire country, and then I hold a whole bunch of people waste my time calling me and freaking out about it, and then only like four days later we actually have this information, and then he had to make another post being like, I was wrong. Sorry. So, anyways, but I was worried for a second because it would impact, it would be it would be doom and gloom if that was actually the case. But once again, just a quote out of context got blown way out of proportion. So if you did read it, Julie, and you were freaking out, you can go home and rest easy tonight. You good? Okay, yeah, no underwriting implications. So we had a similar thing last year. Uh around this time they were talking about LTI requirements, which is loans income. And the bank wanted to, or the regulators wanted to limit the number of loans that were going out that were 4.5 times or higher that borrower's income. So you make$100,000 a year. If you got a mortgage for more than$450, you are above that threshold. There's a lot of doom and gloom about it, and it has turned into absolutely nothing. Because I think every single mortgage I've applied, well, not every single one, but probably 80% of the mortgages I've approved this year are above 4.5% loan to income, which actually became a lot easier to do when they allowed 30-year amortizations. So it's like here's the policy, but we're gonna make it easier to do that with this policy, anyway. Stuff. Um, I'll touch on this real quick because it's free money. I think most people have heard about this by now. Um, came out in 2023. If you know anybody that is a first-time home buyer, that doesn't necessarily mean they've never owned a home. If you haven't owned a home or lived in a home that you or your spouse owns for the last four years, that resets and you are now considered a first-time home buyer again. So absolutely worth doing. How many people have heard of this before? First home savings account? Yeah, a couple of you. So it's free money, right? You make a contribution of$8,000, and just like an RRSP, when you make a contribution to your RSP, you get a tax refund because it lowers your taxable income that year. So depending on your marginal tax rate, you're getting money back that you wouldn't have gotten otherwise. Now, once it's in that account, it grows tax-free just like a tax-free savings account. And then when you pull it out, it is also tax-free. So it kind of combines the best of both worlds from both the TFSA and the RSP. If you're eligible, you should absolutely do it because it is free money. Um, you can carry one year of contribution room forward and you're up, you're good for up to eight grand a year to a maximum of 40,000 bucks. Or own the house. No, I think I think you'd have to be, what do you mean, own what house?

SPEAKER_04: 1:38:52

Like the house you buy or was it was that what it was based off of if you lived in a house for four years that it was owned by you?

SPEAKER_05: 1:39:00

That's a good question. The the the wording on that is like if you've owned real estate in the past, but you haven't lived in a house that you or your spouse owns for the last four calendar years, then you'd be considered a first-time buyer again. If you live in a house right now that your corporation owns, that's a good question. Have you running that one, Brian?

SPEAKER_06: 1:39:19

Pardon?

SPEAKER_05: 1:39:28

Theoretically, yeah. I think you might be considered a first-time buyer if you're living in a house that a corporation owns.

SPEAKER_04: 1:39:34

I'll look into the rest of it.

SPEAKER_05: 1:39:36

That'd be a that'd be a good lawyer question. Yeah, I don't want to step out of my lane. Um, but anyway, there was something that was brought to my attention recently by a guy on our team that's also a um CFP. There's a little double dip trick you can do with the old RRSP for the right clients. Brian, you've heard of this one? Yeah, yeah, yeah, yeah. So there's an RRSP home buyer's plan. So you can tax-free pull$60,000 out of your RSP, and that's per borrower. If you're a first-time home buyer, yeah, you can pull all that money out tax-free for your down payment on your house. You do have to pay it back over the course of 15 years, though. Otherwise, the tax ban comes for you. Now, if you had a bunch of money in your RSP, you had room in your first home savings account and didn't have extra money, and you had an offer on a house that is an eligible purchase, you know, being that it's a first home for you, you can pull that money out of your RSP, plop it in your first home savings account for a few days. That's going to generate another tax return because when you put that money in your RSP in the first place, it generated the tax return. You're pulling it out tax-free under this home buyer plan, you plop it into your first home savings account, and guess what? That triggers or it generates another tax return, and then you can pull it out immediately and use it for your purchase. The nice thing about the first home savings account is there is no time requirement for the funds to sit in there under this home buyer plan. That money has to be in there for 90 days before you can pull it eligible without tax implications. First home savings account, it could be in there today, and then you can pull it out tomorrow and it's it's good to go. There is no time requirement. So makes sense once again for clients with lots of RSPs that they were planning to use for the down payment and have HFSA room, but they don't have any other cash on hand. So if you had other cash on hand, you could just do the same thing and still generate the tax return. But yeah, my buddy that's a CFP said this is fully on board with CRA, even though it sounds like it wouldn't be. He said it's good to go, so I'll take his word for it. He also checked with several accountants on it, so did his homework. And I think that's that's it. That's all I got for you. Thank you. So yeah, if you guys have any financing or mortgage-related questions, then fire away.

SPEAKER_00: 1:42:09

I tell you what, Craig, we'll have a 10-minute networking break. We'll do upcoming, we'll do some announcements after that.

SPEAKER_05: 1:42:16

Okay.

SPEAKER_00: 1:42:17

And then get them back up for questions. Good?

SPEAKER_05: 1:42:21

Cool. Sounds good.

SPEAKER_00: 1:42:23

Awesome. Thanks a lot, some good ones.

SPEAKER_05: 1:42:25

Thank you.

SPEAKER_00: 1:42:26

Yeah, 10 minutes, everybody. Started again. Um we are going to start again. I'm closing the door for all of you listening. I'm narrating. Narrating. That's good. Okay, everyone. How about this information so far? Pretty, pretty amazing, huh? I hope I hope this is working. Just gonna have to trust. Sometimes you just gotta trust God. Put it in his hands. Right? Am I right? Okay, um so what I'm gonna tell you about our upcoming events, and I'm gonna let you all know that I need to leave at 8 45. But Christine. All right, Christine, give away, she's gonna handle everything else. Okay. You don't have to leave at 9, but they will come kick you out. Big guys in black uniforms. So I don't want that to I don't want that to happen to you, but that's usually what what happens at about nine o'clock. Okay? So have I okay, trying to keep track, trying to keep track. First things first, we're gonna do open mic. So this is for O-reg members only. If you have a lanyard, you are a monthly O-Rig member. And what you can do is come up for 90 seconds and talk about a deal, an opportunity, maybe a service that you provide, or even share a success story. So it's always easier to talk to 20 people at once like this than it is to have 20 different individual meetings. And so I am going to start. And then I'll open it up for the rest of the crowd. My name is Julie Hoffman. I help people with rent-to-own homeownership strategies. And so here's the deal: you can move into the home that you want today, and you can take the next five years to clean up your credit, or save more for a down payment, or create more income so that you are at a higher income level. And the starting point for this is only$15,000 down. I have one property left. I had three last month, and now we have one property left. And you get the keys right away, and you can start your home ownership journey. So this offers a lot of flexibility. It also comes with kind of a rehab program because I've used this strategy myself to become a homeowner after going through a fairly big business loss and having a terrible credit score and starting on a rebuilding journey. It can work for a lot of different folks. So if this might work for you or somebody that you know or love, then reach out to me, 778-215-7653. That's 778-215-7653. And that's what a 90-second infomercial sounds like. That should be 60 seconds because I asked Chad GPT to make it only 60 seconds. But I didn't time myself. Any other O-REG number?

SPEAKER_03: 1:46:12

Going one? Next time.

SPEAKER_00: 1:46:32

Okay, Samantha Ashley. Sorry, she's going by Samantha Ashley. That's she's married now, she has a new last name. It's it's fine, don't worry about it. Samantha Ashley, she's a new sponsor, and she runs a uh program with commercial space, offering it uh flexible terms for office spaces. She's actually going to be one of our speakers. And Orig members now get access to her boardroom that's in the landmark campus, and there's going to be another boardroom available at um on Ellis closer to downtown. So I just want to you know give Samantha a quick shout out. She is already on our sponsorship page. And if you ever want it, if you want more information about uh her spaces or about uh if you're an Orig member, because some ORIG members are not here, if you're listening to this, then just reach out to me or uh Samantha, I keep forgetting her last name, Samantha Ashley. I'm gonna get better at that. Good. And I also want to highlight uh Ian and Megan Tomlin who are here tonight, although they're not coming up for a 90-second of commercial, which is perfectly fine, there's no pressure, okay. Uh they are the owners of Property Guys West Kelowna South. So all the way down to Asoyez. Okay. And so if you are looking to sell your house on your own, then it saves some money. It makes sense for some people. It doesn't make sense necessarily for a lot of people, but it can make a significant dent in the amount of money that you end up getting when you actually sell the property. They're helping a lot of people do this. And Ian also offers full-time realtor services. So the full gamut of any other kind of realtor that you would work at work with. So reach out to uh Ian or Megan, and if you need to find them, then also reach out to me, I can help you find. Okay? Super. Anyone else change your mind while I was doing those uh other 90-second ho commercials? No? Okay, upcoming events, November 20th, Megan Steel. The topic is short-term rental strategies for today's real estate investor, specifically in the Okanagan. December 11th, we have an O-reg Christmas party, which is always a good time. It's just a fun social where we dress up and eat yummy food and network and have fun. And there's a cash bar. It's great. January 15th, like I said, Samantha is going to be coming to talk about flexible office-based commercial strategies. She's got this dialed in, she's doing it, excuse me, extremely well. Her uh vacancy rate is like 5%, and for this type of business model, it's usually 20%. So she really knows what she's talking about. It's it's absolutely fantastic information. February 19th, Nolan Sisset, who is a local real estate investor, is going to be talking about lessons and strategies that he learned in building a successful real estate portfolio to 55 doors from the ground up over the last two decades. So there's gonna be lots of lessons there. March 12th, we have Calvin Hexter, who is Edmonton's most handsome. I mean, who is a realtor from Edmonton. When you see this guy, you guys, I am telling you, he should be on a magazine. He's not. I don't know why. He's a realtor and he works with mostly real estate investors. So he's coming from a perspective of not only working with real estate investors, but also talking a lot about Alberta, why Alberta might be a huge advantage to a lot of people. I know a lot of people are looking at Alberta as that option. And he's um he's worked with a lot of out-of-town investors, so he's got so much information to share. April 16th, we have Getz Revest, who is a local builder. So he's gonna be talking about stories and strategies about building homes in the Okanagan, which is uh, and and some of the lessons that he's learned along the way. All right, now if you want to join Oreg, there are three different types, well, basically four different types. The first three I'm gonna talk about all include online access to thousands of hours of real estate investment and business content. It teaches about strategies on how to do creative deals, how to do low money down, no bank financing deals. Um, and again, it's just thousands of hours of really, really valuable information that we have recorded since 2018 when we started recording these these um these events. And this event is being recorded. And so in addition to all of that online information, you get to do 90-second infomercials, which yes, it's easier to talk to 20 people at once. And these recordings also go out to my uh email list that has thousands of people on it, as well as all of my social media, as Craig said. All of my social medias. So cute. I know how to do a real.

SPEAKER_04: 1:52:06

I need a lesson today.

SPEAKER_00: 1:52:08

That's about it. Okay. Okay, that's about it. I'll give you a lesson, sure. And then you all also Oreg members get access to this boardroom, which is of it's just a step above, it's it's a nice step above meeting somebody at a coffee shop. Still have access to coffee and tea and amenities, and it's a nice big, beautiful meeting space, and you you have AV equipment, and it's really, I know it's gonna be very handy for a lot of you folks. Okay, all right. So part-time membership means you only see yourself attending six or less times per year, that's$47 a month. Full-time membership's$97 a month. That's obviously if you think you're going to be attending more frequently. Uh, and then we I have full-time BOGO, which is for two, you uh it's$147 a month with access to everything that I just talked about. And then if you just don't, if you just want to kind of pick and choose, hey, that's totally cool too. We have uh$147 one time uh where you can attend three different events over the next uh year. Okay, so those are your options. They are on Q code QR QR codes that are around here. And finally, that's it. So I need to wrap up, but Craig's gonna come up for more questions. And I'm sorry, but I need to take my phone with me, so these questions will not be recorded. And that is one of the benefits, people, of attending live events. I'm talking to the people listening. Uh yes, it's definitely it's so good to be here. We have such quality people. I mean, by the way, this is Tony, he's been around forever. He's absolutely an amazing guy. He's been around Kelowna, literally, since for how many decades? He's not old. That's not what I'm saying. He he knows every house in the city on this side and and in West Kelowna. He told me that once. I know I'm telling the truth. Great guy to know. Go talk to Tony. If you want to you want some questions answered. So uh as I wrap up, I'm glad to see you, Tony. Hi, fam. And they brought their daughter. How cool is that? Welcome. I hope you're having a good time. Okay, good. I'm really excited to share something so important. We are about to uh work with a local charity to help the homeless. And uh while we get all these partnership details ironed out, there's there are things that you can do in the meantime. So last winter, um, I was getting a coffee at Tim Hortons, and it was one of those weird, odd days. We have like two-week cold snap where it's like minus 15, and this young man who could have been my son was out there shivering in a really light sweatshirt, no gloves, no toque, cardboard sign. And so, and I'm not telling you these stories to brag. I'm no angel, okay. I I do have a couple medals, but this isn't one of them. I got out of my car and I gave him my coach, I gave him my toque, and I gave him my mitt because I have a heated seat, steering wheel, and heat in my car. And then I just said, Are you hungry? And he said, Yeah. So I went and I got him some stuff from Tim Hortons. And um since then, whenever usually whenever I see somebody outside a drive-thru, a homeless person, I get out of the car, I talk to them, I say, Are you I always ask, Are you hungry? And I've never had somebody not be hungry. So I ask their name. Sometimes I pray with them, I always pray for them. I ask what they want, I go get it, I drop it off. And any any of us can do that, can do this, and be a brighter light in somebody's day. Before I started doing this, I would get a little scared. I'd be like, oh what a f they they're all suffering from mental problems, okay? I've never I've only experienced warmth and kindness and gratitude. And um it it's just something we can all do. Because these people are your sons and your daughters and your brothers and your sisters and you know, your aunts and your uncles, and sometimes even your parents. Some of these people out there are very are old. Um and if I have cash, like at the intersection, you know, where the guys walk up and down the intersection, I give them cash. And some people say, Don't do that because they're just gonna put it up their nose or in their arm, and I get that, but I'd rather give them cash than have them do something terrible in order to earn the cash that they want so desperately. And I think you know what I'm talking about. So those are things that we can do in the meantime. Um doesn't have to be huge, but it can really change uh somebody's life for the better. And soon, through this O-reg partnership, we're gonna have lots of different ways to get involved. And I'm really excited to share those with you. So uh thank you all for being here. God bless each and every one of you, and we will see you November 20th. Okay, now let's bring Craig back up and uh answer questions. And if I duck out, you all know it's nothing personal. I'm pick I've picked my son up at basketball. My son, my husband's not feeling well. Okay. Thanks, guys. Thank you, Craig.