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MONEYIS4U
Welcome to the MONEYIS4U podcast, brought to you in partnership with Notable Wealth Management Inc. I am Jacqueline Correia your host on this journey.
Through the journey of transitioning from a corporate job to entrepreneurship, I realized that financial literacy and adaptability are crucial in today's unpredictable economy. The moneyis4u podcast serves as a platform for sharing my experiences, insights, and lessons learned along the way.
In each episode, I dive deep into various topics related to personal finance, investment strategies, and the emotional aspects of money management. I invite guests from diverse backgrounds—financial experts, fellow entrepreneurs, and everyday individuals—to share their stories and wisdom. Together, we explore how to overcome financial obstacles, build resilience, and create sustainable wealth.
Moreover, I emphasize the importance of mindset and the power of community support. As a single parent, I understand the struggle of juggling financial responsibilities while pursuing one's dreams. I encourage listeners to embrace their unique circumstances and find creative solutions to their financial challenges.
Through Notable Management, I offer life insurance and investment products, and up coming online courses and workshops designed to empower individuals and small business owners to take control of their financial futures. I believe with the right tools and guidance, anyone can navigate the complexities of finance and achieve their goals.
Join me on this transformative journey as we unravel the mysteries of money, share powerful insights, and cultivate a community of financially savvy individuals. Together, we can turn financial stress into financial success. Tune in to the moneyis4u podcast and start your journey toward financial empowerment today!
MONEYIS4U
Build Your Home Ownership Plan with Expert Guidance
Are you ready to step into the world of home ownership? Our latest episode delves into the essential elements of creating a sound home ownership blueprint. Join us as we discuss the current landscape of the Canadian mortgage market with Aristo Ariyaratnam, a seasoned mortgage broker. In this engaging dialogue, we uncover key trends influencing mortgage rates, clarify misconceptions that often confuse first-time buyers, and share practical advice to equip you for your home-buying journey. Whether you're a novice exploring your options or someone wanting to refine your understanding of mortgages, this episode offers valuable insights to empower your decisions. From the importance of a solid down payment to the often-overlooked closing costs, we break down what you need to know before making one of life's biggest purchases. As the episode unfolds, we also touch on the evolving role of technology in the mortgage sector, showcasing how advancements streamline processes while still emphasizing the human touch in financial decision-making. With expert insights and relatable discussions, you'll gain the knowledge necessary to navigate the complexities of home purchasing with confidence. Don't forget to subscribe, share your thoughts, and leave a review! Let's get ready to turn your home ownership dreams into reality!
You can reach Aristo at 416-881-5927 for a consultation on your mortgage needs.
Visit Amazon to purchase "My Farewell and Final Wishes" planning book to help organize your estate information in one place.
https://www.amazon.ca/Farewell-Final-Wishes-Organizer-Important/dp/1778203507/ref=sr_1_1
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Welcome to the Money is for you podcast brought to you in collaboration with Notable Wealth Management Inc. I am Jacqueline Correa, your host on this journey. Today, we are going to talk about building your home ownership blueprint, and I have a very special guest with me and my circle of influence Haristo, the mortgage broker. Haristo, just tell us a little bit about yourself. What do you do? How long have you been in the business? Let's just get to know who you are.
Speaker 2:My name is Haristo. I've been in the business for 16 years now. I'm a principal broker at McGill and Capital Network. This is my first podcast, so I'm a little bit excited and nervous, but we'll get through it Awesome.
Speaker 1:So let me tell you how my little long, little short story of how Haris and I have had a very long history of work relationship, but I'm also his client.
Speaker 1:I think I told you guys a couple weeks ago about my story of being unemployed for two years, and this is when I actually went to my sister and she introduced me to this gentleman here, aristo, and he pretty much had to clean up my mess after being unemployed for two years and then we started working together. So you know, as part of being a financial advisor and a wealth builder, you find that there are times when your clients need help, and so this is how I bring in Haristo to take this part over to. You know, whether it's refinancing or a new mortgage and whatnot. So I thought this would be a perfect opportunity to bring him in so he can tell you a little bit of you wanted to build bill, to be a home to first-time homebuyer or, if you know, you want to know more about your blueprint and your home ownership. So first I start with what are the currents trends are you seeing in the Canadian mortgage market and how do these trends impact potential homebuyers today?
Speaker 2:Currently. Obviously, interest rates went up significantly the last two years, but as of June, the government decided to reduce the rates June 2024, and since then they've dropped about 1.75% in the rate, so that's helped a little bit. That has also increased a lot of buyers that are interested in buying, but the people are still nervous. Cmhc also has gracefully increased their limit for first-time homebuyers from $1 million to $1.5 million and amortizations stretched out to 30 years instead of 25, which is limiting a lot of purchases. But on the other side of it, affordability has been an issue. Wages haven't gone up pretty stagnant but cost of living has gone up. Even though they reduced the rates, it's still a higher impact than it was before.
Speaker 2:So, that's having some issues there. Those are the major ones.
Speaker 1:Okay, and what are some of the common misconceptions people have about mortgages, the mortgage process and you have encountered in your time.
Speaker 2:Most of it is, a lot of people are into those first-time homebuyers so they're thinking only 5%, right? So there, it's only 5% for the first 500,000.
Speaker 1:Okay, so then there's a sliding scale.
Speaker 2:So everybody's like, I have 5%. Well, don't always bank on that 5% Um, and I always urge people save as much as you can. More than what you think you need, um, so that's one of the issues. A second time more than what you think you need. So that's one of the issues. Second time is first-time homebuyers. They think that so you could, first-time homebuyers would be the first time, or you haven't purchased a house in four years.
Speaker 1:Oh, okay, it's four. Okay, I thought it was five, no four, so it's four calendar years, so they didn't change that Four calendar years. I believe that's what it is.
Speaker 2:That's the calendar years, but if you bought something with 20% down, that still counts as a purchase. Okay, some people are like well, I never got insurance, but you still bought a house.
Speaker 1:So you're saying so that changes the situation.
Speaker 2:If you purchased the first one and you had 20%, it's still a purchase.
Speaker 1:There's a house under your name. Okay, okay, I got you, but actually what I was thinking? So let's say I had my home and I had the 20%, but I wanted to buy a next one.
Speaker 2:No, you won't qualify. Won't qualify. Okay, they did have. You can have a secondary home with insure. They got rid of that program.
Speaker 1:Okay, okay, okay, all right. So what are some of the? Okay, sorry, I did that one. What advice would you give to a first-time homebuyer in Canada and who are now just starting out? What are the mortgage programs?
Speaker 2:How can they navigate? Historically there was always RSPs you can tap into. Save your RSPs, you can take some money out. Then the government came back with the first time home savings account that you can have at the bank which is separate from your RSVs. So that helps Ideally. I always tell people try to have 10%. 5% is a nice to have like a baseline, but 10% because there's always a cost of closing. People forget about land transfer. I know you get it.
Speaker 2:There's a rebate of $4,000 in the 905 and then 416, about $8,000 max. About $8,475 is a max rebate. But you should also consider closing. You should consider legal costs, you should consider insurance. There's always those costs that people sometimes forget, right right.
Speaker 2:So keep that in mind is a critical thing that I think. And then sit down with a mortgage broker and there's also a misconception that there's a fee associated with it. There isn't, it's a consultation fee. I mean, there's no fees, it's a consultation. You sit down, they at least guide you in the right direction and then from there what we can do is like myself. When somebody comes to me, I'll tell them okay, this is your budget, literally, this is your budget. Max, like you can go up to maybe a million dollars. I try to stay at $825,000. And I'll even have a conversation with their agent just to make sure. Hey, we can go this far, but you're really pushing it. They're going to be stretched out and I try to tell people not to get stretched out because of the home. There's other expenses that come Right right and people sometimes forget about that Property tax, renovations, I don't know additions, remodeling wife wants a new couch. You know things happen, so always keep that in consideration.
Speaker 1:Okay. So and I'm going to come back to that because that's kind of like coming into my area, so when they come to you, do you actually work with them, let's say, to just kind of do the budgeting? Do you provide that service?
Speaker 2:100%. I have no problems doing it. I'd rather do that, because I'd rather make them strong as possible on their first purchase.
Speaker 2:My thing is to educate, enable them to get it teach them how to do it and how to manage it. But also, I think, future investment. Nobody thinks about their secondary home, but why don't we plan on the first purchase for the secondary home? And if they're in a good tax bracket you can save on the tax portion. So get a reasonable house. Maybe get a condo as an investment property. That'll reduce your taxes. You've got somebody paying your mortgage. So I look at a holistic part of how we can grow, sort of how live below the means and make an investment, because a house is not an investment unless it's paying you back.
Speaker 2:So when you live there, you're just living there. You're paying mortgages. But if you have somebody paying for your mortgage, it's the better.
Speaker 1:But it's a start. I'm a strong believer that and I mean I talk about the four pillars of wealth building and so I believe real estate is like the number one. I know it don't start, so it's always for my pillar it's the fourth one, because there is a three that before it hits to that, but I'm a strong believer every person that live in Canada should have well, even if it's not in Canada, should own a property, because it's one of the things that will always, always have equity. You will build back that equity and I mean I'm a prime example of what had happened to me and if I did not have my home, I would have been in a lot more trouble Because you know, when you had to clean all my stuff up, first of all, when I moved from a job to self-employed, I was treated very differently from the five banks.
Speaker 2:I was considered like and you were able to tap into your house to clean up help yourself and clean up some bills.
Speaker 1:So, coming back to that, I still believe if I did not have that one asset, I would have been worst off.
Speaker 2:Definitely.
Speaker 1:So I always say these are things that will allow us to, even if we had debt. It helps us to rebuild faster than starting from nothing. As a homeowner, when would it be a good time to refinance your home, and what factors should they take into consideration before making that decision?
Speaker 2:So refinance is a little bit tricky. I kind of shy away from people using it as a credit card. Right, it's not for you to go and go on a great vacation or buy the newest car. That is not the best option for it. When I do consider refinances, if your debts have a higher interest rate than your mortgage most likely it does 99% of the time it is. So if we consolidate great, so say, let's just do simple math you have $100,000 of debt and you're able to roll it to your mortgage, your payments are going to go up, right when they do. What I suggest is because you saved on the $100,000 a month I'm just using numbers. If you saved $1,000, that money, your mortgage payment might have gone up by $200. But why not keep putting the $1,000 into your mortgage?
Speaker 1:Right or into an investment.
Speaker 2:Or yeah, yeah, so invest or whatever, but but I always tell people increase your mortgage payment by $25 a week, right? So I give people options. I talk to them about increase your payment by $25, which saves a lot in the long run. Sometimes people don't think of it. Banks don't offer that, right, because they're in the business of making money. I'm in the business of you doing better, so you can either do something else or I'm in a referral business.
Speaker 1:So, for instance, could they not do it in a situation like that, instead of doing monthly to weekly by weekly?
Speaker 2:So every mortgage has a prepayment option.
Speaker 1:So every year you can pay 10% to 15%.
Speaker 2:It depends who the lender is Right Towards the principal, which we have a client right now. Her father is about to pass and he's decided to. He wants to help the family out, so all the three kids he's getting a lump sum. Nice. So, like as we speak today, they're paying 200,000 towards each other, each mortgage, right right of the kids. So that's a nice to have. It doesn't always happen, but that'll significantly lower her monthly payment if she wants to refinance it, or it stays the same, but her term will be less. She'll pay it off sooner nice, nice um.
Speaker 1:And how do you see the mortgage industry evolving in the next few years, especially with the technology and online lending platforms?
Speaker 2:I know AI is going to be a significant role in the processing time of mortgages, meaning people can get quick updates, quick answers, which is a great tool to have because processing takes the longest. Right right, which is a great tool to have because processing takes the longest.
Speaker 2:Right right Underwriting. You know it might save some of their time, but I think there still needs to be sort of a hands-on approach to it to help navigate things, because there might be something that the system has set of rules and if it doesn't follow it, so the human aspect is still required. I don't think it's going to go away, but I think it will help processing time. Included with that, there could be some cost savings or quicker response on things. Right, um, we are.
Speaker 2:Our brokerage is definitely heading towards more of the ai automating things, uh, even for our internal staff, how to flow things. So everybody's on one system, right, those things will help. Um, we have a great tool where going forward this year, like if our brokerage was to update something the lawyer, the client everybody gets the same notice, gets up-to-date information okay, so I can log into a portal that I can give you and you could see where your deal is instead of calling me a hundred times. Right, you know, some people are just nervous.
Speaker 1:They want to know. They want to know, but it's all life, so so is that means that they work with a set of lawyers that you already have in place, or they can still have their own.
Speaker 2:It's basically you can communicate with any lawyer. Okay, they don't have to have that platform. It's our platform that everybody can access to okay, so you just give access through your client yeah, okay, and then the client just goes through right, so we're trying to streamline things, which wasn't a thing before right.
Speaker 1:So is that? Is that when because I know most of the times the lawyer is the last person that comes in?
Speaker 2:yeah, but sometimes there's communication that needs to be like lawyers say, hey, we need this this instead of just letting us know when they communicate it. The client can know okay right or as soon as they get instructed on deal. It's all done. Lawyers got instructed, but the lawyer still has to fulfill things which they have to go back to the client, or sometimes I might have it so I can just upload it.
Speaker 1:Right right.
Speaker 2:Right. So it creates transparency kind of alleviates stress of the client and I think communication will help to see where the deal is for the client.
Speaker 1:Right, I know sometimes, especially, you know, as entrepreneurs, we kind of lose the leverage than having a job right, meaning that they treat sometimes we're treated different. So how is what are the difference between um an employer being employed? How do you um assess them? Compare to a person that is an entrepreneur or have a small business?
Speaker 2:the the benefits of the employee is you get a t4, okay, you get a pay stub, you get a regular cycle of pay, so it's easy to prove it's provable income at the end of the day. But if we, if we um, if we go for self-employed, um, most of the self-employed are trying to shave away their tax uh requirements. How can I pay less tax self-employed? So they expense a lot of things, right? So the lender essentially is kind of hesitant to lend on when you're like oh, you say you make 500 000 but on your taxes you show 35 right right right, and that's where the biggest problem is but I was under the impression that they take the gross compared to.
Speaker 2:They take the gross when you're employed, right, they take the gross when you're self-employed also, but they want to know what you claim.
Speaker 1:Gotcha, gotcha. So you still have to.
Speaker 2:So that's the benefit of being self-employed, is you get to write off a big portion of your income.
Speaker 1:But it affects you though.
Speaker 2:But yeah, so you try to save on the taxes, you're getting affected on the mortgages, right? That's why sometimes I believe, if we plan it out and explain that to you know, a self-employed wants to buy a $2 million house. Great, you can buy it, you can probably afford it, but your taxes doesn't reflect it. To walk through what we need to do, how you need to claim your taxes, what you need to push out, um, and then you know, then there's option of a b lender. Right is it? Is it is it cheaper?
Speaker 2:to go one percent higher interest rate and pay less taxes? Okay, or is it? You know, are you going to pay a million dollars 13 on a million dollars, right? Or pay that one percent extra on your mortgage? So some people have a difficulty with that going oh, I want to save on my taxes, or they want a lending, but they're like, hey, this is what you could have done. Now, if you look at it, you're saving a lot more money doing the way you're doing your business.
Speaker 1:Right, because you get more to write off as an expense.
Speaker 2:So that tax portion is much higher than that 1% interest. So again it's educating. So again it's educating.
Speaker 1:I was just going to say that. So, like, when you sit with that client, do you actually? I mean like someone like myself, if, like, I come into you and I'm like, oh, but you know, the A lender, he's giving me that 1% less, and sometimes what I've come to realize is a lack of knowledge, right? So how would you? Or, like, would you actually break it down on paper?
Speaker 2:definitely. I'll say look, a lender might give you this, but based on your income. You won't get approved based on how you claim right, because a lot of people get pre-approved and think it's over right. It's not so. We've had this discussion, jackie and I, several times. Regards to this Pre-approval does not mean it's approved.
Speaker 1:I know it is a very soft approval.
Speaker 2:They don't look at everything deeply. Based on your income, what you say, based on what you're trying to buy, this is what you approve, Right. But then there's like I've had a client who literally bought a car a month before closing Three months ago. He was approved, yes, and that threw my whole ratio off.
Speaker 1:That's right, because that's new debt, that's an end debt.
Speaker 2:Yes, and the lender has the right to pull a credit bureau, even like a week after closing, you know, or the week before closing. So those are the things, that pre-approval and pre-approval things could change Right. Right, maybe you get a better deal or your life situations have changed, right.
Speaker 1:So the other thing is I know also you know some of the things I tell my clients is the fact that when you work with a broker, you have choices right. I mean you suggested. I know you've been in this business a long time, you have a lot of connection, so share with us, like, the difference between an A lender, a B lender, a C lender, a D lender. I know you have a lot of connection, so share with us, like, the difference between an a lender or B lender or C lender or D lender. I know you have the different levels right.
Speaker 2:So yeah, so a lender is typically excellent credit. Anything over like 650 and higher income makes the debt income ratios, you know, line up so you know you make it, make a certain job.
Speaker 2:You have one property. It's a cookie cutter situation. You're limited to whatever A B lender will look at your actual income. You know, if you have mostly self-employed people or your bruised credit, it still gives you an opportunity to get into the market and sort of work your way out of it. So you can go to B to A. There is a higher interest rate, obviously, and there is a fee associated with it.
Speaker 2:But you're in the real estate game that you're trying to get into and it also people fall into hard times. Things happen like you were in a situation. Not that you're a bad person, not that you're bad with money, you weren't gambling but things happen. So be lenders, sort of help. You sort of get back in, give you an opportunity, opens the door, understands a bigger picture. It's not and we're able to negotiate due to our relationship with the lenders.
Speaker 1:And then you have private lenders too, right so?
Speaker 2:there's private lenders and it's picked up really in our market lately. The last five years has been an upward trend of private lending. Private lending used to be you know, you have equity, no problem. That's what it used to be. I was having a conversation in my office regards to this like b lending has become like a lending, because all the requirements and private now is asking for hey, what's your cash flow? Can you afford this?
Speaker 1:and I don't blame them yeah absolutely don't blame them, because they still want to know that they're going to get back their money.
Speaker 2:Well, that's the thing. So people, so people got into a really bad habit and that was prepayment. So you get a $2 million mortgage. We have a scenario right now Client had a paid off house, he decided to build a house for $2 million, but he only makes $85,000.
Speaker 1:Mm-hmm.
Speaker 2:Prepaid, no problem. He lived in this big, gigantic 5,000 square foot house custom made, beautiful, but he only makes $85,000. Now the mortgage is due, it's $15,000 a month.
Speaker 1:Wow.
Speaker 2:Wow. And he can't even make the first payment that's due Right. So now he's panicked to sell. But to sell a $2 million house, the market's not that easy right now to unload a $2 million house. So now here's a man who was in a comfortable position, got a bigger than thing, was private, didn't make him feel it Right. For one year he had no mortgage.
Speaker 1:Okay, so, so.
Speaker 2:Because they prepaid the mortgage for a year Right Out of the equity.
Speaker 1:Okay, so, okay, so how? I mean, I know that is a short-term fix, because I do have some clients that they had to do that and that's a short-term fix. Now how?
Speaker 2:It's not even a short-term fix. It's a short-term, delusional ability to keep a property that you can't afford.
Speaker 1:Okay, I like the way you said that, but sometimes there's some emotional attachment to, to our home right, um, all right, and I mean, to be honest, the market is not the greatest for a renter today. I mean 15 000 is a lot. But I'm just saying let's talk about the standard normal person. When you look at the two buckets, right, like you know, you know I'm paying $4,000 here for this rental when I'm in this house, and I'm having to pay the same $4,000, right, and I do understand. There you're saying but you can't afford it on paper. But if they were to leave this house, they still had to go find that rental property. Right, it's like a rock and a hard ball house they still had to go find that rental property right.
Speaker 2:It's like a rock and a hard ball a ball no after in the last 20 years.
Speaker 2:This is probably the safest time to rent, in a sense, where you're actually probably gonna, if you're in something you can't afford um and and I mean afford means comfortably, afford right, like literally like you have a little bit of money for breathing and not taking from credit card to the line of credit to this, and that Cost of living has gone up so much. It's really a tight balancing act and if you're balancing like that, it's not good for you, you're not going to be happy, emotional instabilities, it's just going to be sort of you're digging yourself further.
Speaker 1:It's a hole. So what you're saying?
Speaker 2:saying you don't recommend it no, so private mortgage is good. Right with a plan okay some people fail to plan okay.
Speaker 1:So let me just come back to that private mortgage, because private mortgage, um, could be where it's like a line of credit or a loan right, which is a small portion compared to private lending. Is the whole house like?
Speaker 2:no, so there's private lending. You can do whole house one one first mortgage okay, you can do second mortgages, and then there's third, and you know.
Speaker 1:So that's when I see what you said, I'm just thinking um like secondary loan. Yeah, yeah, yeah even that.
Speaker 2:so you get that secondary funding. Um, I know the last few years people have fallen into trouble where they've got a secondary funding. The property has gone down in value, right. So you can't refinance out Million dollar house. You've got to appraise that million dollars. You've got a $700,000 mortgage Now you've got a $100,000 second mortgage Now that million dollar house is worth $900,000.
Speaker 1:Right.
Speaker 2:Now you're a 90 90 loan. To value minimum you have to have 80 for refinance so.
Speaker 1:So how do you deal with that? I'm just trying to figure out, like if we had a client now that's listening to this show, what would you recommend at that stage? Because I mean you're pretty honest I know you.
Speaker 2:You say you call a spade a spade I think in the last two years I've, in the last six months, I've literally told people you're better off selling. Wow, get rid of the house Because you're not going to get out of it. Start off fresh. You have all your debt, then you can do with the 10% down Right Instead of it eating away every month.
Speaker 1:Right right.
Speaker 2:So you're eating away your equity. You're hoping for the market to change it will eventually, but maybe this is the normal Right. What we were used to was just a blessing. 12 years ago, when I had a mortgage, the rates were like 6%, 7% anyways.
Speaker 1:Right.
Speaker 2:So this is 4.5%, 5%. Maybe that's the normal.
Speaker 1:But you know the unfortunate thing with humans we get comfortable really fast and we've had good interest rates for the probably decade or two but it wasn't realistic.
Speaker 2:Maybe okay right. Well, no prices were going.
Speaker 1:I was just gonna say, but we did not have the cost of living so high, right?
Speaker 2:so so the low rates of demand went up. Obviously immigration helped right with that, or you know help that demand it's a touchy subject, it has helped and it's it's helped and it's sort of put some dampers on certain things but it made things tougher too I don't think we have the infrastructure to open the gates and say absolutely absolutely but people were let in and uh, here we are that's a whole nother story.
Speaker 1:You know that's another political. We're in a little bit political turmoil right now because of because of it we don't have political turmoil right now. Because of it. Because of it we don't have a head right now because of it. So tell me. If somebody needs to get a hold of you or they want to sit down and discuss this, just tell them how they can reach you.
Speaker 2:You can reach me. I'm on every social media platform possible. My phone number is 416-881-5927.
Speaker 2:And we're also going to put you on the no problem and I tell everybody, before you buy a house, sit down with a broker it doesn't cost you anything and plan your day. Make a plan of what you're going to get, how you're going to afford it worst-case scenario. And then obviously the other aspect is see Jackie for your insurance and lately we've had to pay off some insurance clients. People have passed in the last two years. Suddenly, you know, we had a person who was struggling financially and they were in a pretty tight position and on top of that the husband passed away. Suddenly he was found out with stage 3 cancer and he passed out. We had to pay out and close him. But insurance is an important aspect people sometimes forget Very much it is. He was found out with stage three cancer and he passed out. We had to pay out and close him. But insurance is an important aspect.
Speaker 1:People sometimes forget Very much. It is, I call it the love, the love that we give back to the people that are left behind. So I want to thank you for coming on the show, and we definitely need to do this more often. So stay tuned for more to come, and thank you for watching. Goodbye.
