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All About Mortgages
Episode 91 • 26th May 2022 • The Wealth and Wellness Podcast with Kalee Boisvert • Kalee Boisvert
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In this episode, we are joined by special guest Jessalyn Brown, who shares a wealth of knowledge all about mortgages. Your mortgage is a huge piece of your financial life so you don’t want to neglect to do your homework when it comes to getting your first mortgage or when it’s time to renew your mortgage. Rates have been on the move, and Jessalyn talks all about fixed versus variable rate options. She also takes you through the steps to getting a mortgage including documents you will need, your credit rating, mortgage insurance, and down payment requirements. If you are a first-time homebuyer or an existing homeowner you won’t want to miss this episode!

About the Guest:

Jessalyn Brown mortgage broker and part of the mortgage group. As a broker she works to provide her clients with valuable insight and advice, helping them make informed decisions and save money on their mortgages. She works with more than 50 different lenders to ensure there are ample options available so she can find the best product for her client’s unique needs.

Links:

https://mortgagesbyjess.com/

https://www.facebook.com/mortgagesbyjessalyn

instagram: @mortgagesbyjessalyn

jessalyn@mortgagesbyjess.com

About the Host:

I am a financial professional, who specializes in helping people to achieve their financial goals.  My absolute passion is creating new possibilities in people’s lives by showing them the ropes when it comes to money. I’m here to spark healthy and positive conversations around wealth and investment and create a world where nobody is limited by their financial situation. I believe this begins with education and shifting our relationships with money. I love getting to witness people achieving their most ambitious goals and creating new possibilities for themselves and their families! 

 

I love your questions! Reach out to me anytime at:  

Email: kalee.boisvert@raymondjames.ca

Instagram: https://www.instagram.com/kaleeboisvert/

Twitter: https://twitter.com/wealthandwelln2

https://www.facebook.com/kaleeboisvertwealthandwellness/

  

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Transcripts

Kalee Boisvert:

Welcome to the wealth and wellness podcast with

Kalee Boisvert:

me Kayleigh, Bob air. I specialize in helping people to

Kalee Boisvert:

achieve their financial goals. I have a love for all things

Kalee Boisvert:

numbers, and I'm passionate about financial literacy. My

Kalee Boisvert:

goal is to spark healthy and positive conversations around

Kalee Boisvert:

wealth and investment, and create a world where nobody is

Kalee Boisvert:

limited by their financial situation. But wealth is just

Kalee Boisvert:

one piece of the equation of living our best lives. So join

Kalee Boisvert:

me as we explore both wealth and wellness topics. From your net

Kalee Boisvert:

worth, to your self worth. Get ready to take confident action.

Kalee Boisvert:

Hello, this is Kaylee. And thank you so much for tuning into this

Kalee Boisvert:

episode of the wealth and wellness Podcast. I'm excited

Kalee Boisvert:

for today's chat. It's very wealth and money focused and

Kalee Boisvert:

very relevant, I think for where we're at and everything going

Kalee Boisvert:

on. So the housing market has been busy, I think, at least in

Kalee Boisvert:

my city, I know has been very busy to say the least. So with

Kalee Boisvert:

that conversations about mortgages, which are a bit big

Kalee Boisvert:

part of people's net worth, and money decisions. So we're

Kalee Boisvert:

talking all about mortgages today. And I am joined by a

Kalee Boisvert:

special guest Jessalyn Brown, who is a mortgage broker, and

Kalee Boisvert:

she's part of the Mortgage Group. She's been a mortgage

Kalee Boisvert:

broker for five years. Her background is in finance. And

Kalee Boisvert:

she works on a bit of a family team she's created. So it's her

Kalee Boisvert:

and her husband, you said was it who else was involved?

Jessalyn Brown:

So I've got Yeah, hi, super excited. My team

Jessalyn Brown:

is me and my husband, obviously we work together every day. But

Jessalyn Brown:

my sister in law is also a mortgage broker, and my mom, and

Jessalyn Brown:

my mom is really the mentor of the group. She brought us all

Jessalyn Brown:

over. She's trained us all up. And we I feel like we have a lot

Jessalyn Brown:

of experience education people just to call on. Because

Jessalyn Brown:

mortgages can be tricky. Cookie Cutter, every mortgage is a

Jessalyn Brown:

little bit different.

Kalee Boisvert:

Yes. So it's a whole family team, which is

Kalee Boisvert:

something that's fabulous. I love that. And you're right, it

Kalee Boisvert:

is more to a mortgage than I think some people even realize,

Kalee Boisvert:

and it's such a big financial decision. Like it's almost like

Kalee Boisvert:

probably one of the biggest financial decisions people make.

Kalee Boisvert:

So I think it's, you know, not something we can take lightly,

Kalee Boisvert:

we do have to spend some time having these conversations

Kalee Boisvert:

looking into things. So it's good, this is a good session for

Kalee Boisvert:

information for people that are looking to maybe buy a house,

Kalee Boisvert:

people that have mortgages that are looking to refinance, things

Kalee Boisvert:

like that, maybe even people that want to get into owning a

Kalee Boisvert:

rental property. So excited for this conversation. Just to get

Kalee Boisvert:

started, do you want to explain a little bit about kind of the

Kalee Boisvert:

more a mortgage broker and the role of a mortgage broker.

Unknown:

So the difference between a mortgage broker and

Unknown:

just going straight to your bank is, as a broker, I have access

Unknown:

to 40 plus different lenders. So when you go to a broker, it's a

Unknown:

one stop shop. So my job is to work on your behalf with

Unknown:

client's behalf and present your information to the lenders. And

Unknown:

but I can only act on your requests. So in the end, you're

Unknown:

driving everything you're in control. But of course, I'm a

Unknown:

licensed individual. So I'm going to be able to pre approve

Unknown:

you for your mortgage, that you know how much you'd be qualified

Unknown:

for give you advice on what type of mortgage product and so on

Unknown:

that we'll get into later today. But the main goal is just a one

Unknown:

stop shop, whether that's when you go to a bank, they're going

Unknown:

to offer you one product, whatever the bank has, that's

Unknown:

all they can offer you and that's all they're able to offer

Unknown:

you. And they're not mortgage licensed individuals. They're

Unknown:

generally customer service clientele, so they might help

Unknown:

you open a bank account, and they also might help you take a

Unknown:

mortgage. But we work with the big banks to and we work with

Unknown:

the Scotia Bank, we work with the TDS. We work with the local

Unknown:

credit unions and we also work with like 30 plus other lenders

Unknown:

that we call monoline lenders, so they are mortgage only

Unknown:

Institute's they don't have a banking product to them. So they

Unknown:

generally will have lower interest rates, lower penalties

Unknown:

if you break your mortgage and a little bit more flexibility.

Unknown:

Oftentimes I find better customer service, but they're

Unknown:

usually financed from the big banks. So they purchase their

Unknown:

mortgages and they purchase their interest rates from the

Unknown:

big banks. So they're all subsidiaries of each other, but

Unknown:

they just don't have a bank in front that you can go into. And

Unknown:

to access them, you need mortgage brokers. So just we

Unknown:

have access to more lender options, more solutions. The

Unknown:

banks tend to like triple A clientele, which is great, but

Unknown:

you know, sometimes there's past bankruptcies, collections, maybe

Unknown:

you're trying to buy 10 rental properties. Not every lender

Unknown:

likes that. So my job really is to help you educate you, and

Unknown:

then help you find the right solutions, the right products,

Unknown:

and fit you where it makes sense now, but also down the road, not

Unknown:

just right now, we're the middleman I'd call us a licensed

Unknown:

professional, but our services are free. So not a lot of people

Unknown:

know that as a mortgage broker, you don't pay me, we get paid by

Unknown:

the bank once we've placed your mortgage. So services are free.

Unknown:

We we are lucky that way. Cats have taken that ability is easy.

Kalee Boisvert:

Yeah. Yeah. So do Yeah, take advantage of that,

Kalee Boisvert:

and, and do your like due diligence by working with a

Kalee Boisvert:

mortgage broker on your behalf. And like you said, seeing all

Kalee Boisvert:

the options out there, because that's a lot of options for

Kalee Boisvert:

people. And, you know, you wouldn't want to have to walk

Kalee Boisvert:

into or try to find those places. And like you said,

Kalee Boisvert:

they're not accessible to the person directly, oftentimes, so.

Kalee Boisvert:

And getting that independence, because there is, you know, it's

Kalee Boisvert:

nice to just know what is available and things are

Kalee Boisvert:

changing. Like I see it too on my side of things is sometimes a

Kalee Boisvert:

certain person is offering a deal and another one isn't. And

Kalee Boisvert:

so that's why it's it's always nice to kind of have the

Kalee Boisvert:

variety.

Unknown:

Yeah, well oftentimes get like specials, like our

Unknown:

whisper rate specialist, they'll call it that will have access to

Unknown:

that you might not get just walking into a bank or you

Unknown:

wouldn't know right, you're not going to check out 12 different

Unknown:

banks in one day. And I that's what I do all day. So it really

Unknown:

just makes it easy for you one stop shop. And then I get to

Unknown:

handle the stress in the background for it's really

Unknown:

overwhelming, especially when you're first time homebuyer to

Unknown:

know, what kind of documentation do I need? What am I going to

Unknown:

expect? Will you talk to my lawyer for me? You know, what do

Unknown:

I do with my down payment, and it's a lot of education. And

Unknown:

especially as a first time homebuyer hand holding and it's

Unknown:

I love when clients walk the full walk with me when they're a

Unknown:

first time homebuyer because it's so rewarding at the end to

Unknown:

see them getting into their dream house or, you know, buying

Unknown:

a family home and upgrading, you know that they're having kids,

Unknown:

and it's really satisfying. I really get to know my clientele,

Unknown:

most of my clients are turned into really good friends or have

Unknown:

been really good friends.

Kalee Boisvert:

Yeah, yeah, yeah. I love that. Yeah, that

Kalee Boisvert:

client service focus. And, and yeah, you're right. It's there's

Kalee Boisvert:

a lot of different steps. And there's a lot of timeframes to

Kalee Boisvert:

that are oftentimes short timeframes when you find the

Kalee Boisvert:

house you want, and you're closing on it and things like

Kalee Boisvert:

that. So that can be very stressful. So when you have

Kalee Boisvert:

someone on your side, very helpful. So do you want to start

Kalee Boisvert:

by talking about to what it means for people that are

Kalee Boisvert:

looking for getting a mortgage? So what you need to know about

Kalee Boisvert:

qualifying? Hmm,

Unknown:

so we use it's called the five C's of qualifying for a

Unknown:

mortgage. So number one is character character is based on

Unknown:

you the total picture of your application where you work at

Unknown:

your job, your credit history, etc. But your character is kind

Unknown:

of the what they look at first capacity. So do you have the

Unknown:

capacity to pay back your loan capital, the money to pay back

Unknown:

your loan collateral, so the house itself and credit to your

Unknown:

credit score? And we can kind of go into each one and maybe look

Unknown:

at what each one means. But that's the easiest way, remember

Unknown:

it five C's character capacity, capital collateral credit?

Kalee Boisvert:

Perfect, okay. Let's go into them. Okay, so

Unknown:

number one, income really is going to determine how

Unknown:

much you can qualify in a home, your income versus your debts.

Unknown:

So income is important for capacity. So how much money do

Unknown:

you have to pay back your loan? That's what the bank cares

Unknown:

about. And also, how much income versus the housing debt. So they

Unknown:

will allow they as in the government, or the Bank of

Unknown:

Canada will allow you to have 39% of your income, go towards

Unknown:

your housing debt, and 44% of your total income going to total

Unknown:

debt. So house plus any other credit cards line of credit

Unknown:

student loans,

Kalee Boisvert:

is that sorry, the intro is that net income or

Kalee Boisvert:

Gross?

Unknown:

Gross income? Okay. So if you are an M employee that's

Unknown:

on a salary, or you're getting regular paychecks, it's your

Unknown:

gross income. If you're self employed, it is a little bit

Unknown:

different self employed, they look at your net claimed income

Unknown:

on a two year average. So self employed can be tricky, but

Unknown:

there is programs for self employed individuals, which

Unknown:

could be a whole topic in Excel. But like yourself, like me, like

Unknown:

a lot of, you know, women entrepreneurs out there being

Unknown:

self employed, it's great when your accountant can write off a

Unknown:

lot of your income and save you money on taxes. But it's

Unknown:

actually not good for mortgage qualifying, the government and

Unknown:

the Bank of Canada. They want to know they look at your net

Unknown:

income, you can't get away with not paying them taxes and then

Unknown:

not paying for your mortgage. They want to see your net

Unknown:

income, but there is solutions out there. So if you will get

Unknown:

into downpayment but if we can adjust downpayment and then

Unknown:

it's, then there's more options. So the higher your downpayment,

Unknown:

the more lender options that are available to you by net income

Unknown:

when you're self employed gross income when you're an employee.

Kalee Boisvert:

So before tax when your employee after tax

Kalee Boisvert:

when you're self employed. Guess Oh, thanks,

Unknown:

kind of. Um, number two, I'd say the most important

Unknown:

is credit. So your credit score, like government regulated in

Unknown:

Canada minimum for a traditional mortgage is 600, the minimum

Unknown:

beacon score, but many lenders will actually have a minimum

Unknown:

score of 650. But CMHC will get into a little bit later to be

Unknown:

they have a minimum of 600. So I work with a lot of a lot of

Unknown:

people to help them boost their credit score. Lots of people

Unknown:

also don't even know what their credit score is when they come

Unknown:

to me, so that on top of gathering your income, then we

Unknown:

talk about credit, you know, what type of credit items do you

Unknown:

have, lenders want to see, at a minimum, two credit lines,

Unknown:

reporting for at least two years clean, no missed payments in a

Unknown:

perfect world. And ideally, you want to have your limits at

Unknown:

$2,500 or higher. It's kind of just like the minimum playground

Unknown:

that they look at. If you don't have credit, at the time of

Unknown:

application, say you're you know, newly out of school, newly

Unknown:

out of high school, newly out of university. Sometimes they'll

Unknown:

let us use alternative credit, like cell phone bills, or rent

Unknown:

payments. Or if you're new to Canada, there's programs when

Unknown:

you're new to Canada and only have a one year credit history

Unknown:

in Canada, they'll let us use alternative credit like cell

Unknown:

phone bills, utility bills, lease payments, and so on. But

Unknown:

one of the biggest things they do is honestly really boosting

Unknown:

people's credit scores, to help them purchase a home. Some of

Unknown:

the most important things to know about boosting your credit

Unknown:

score, trying to make sure that your balances on your credit

Unknown:

cards, lines of credits, and so on are 50% of the limit or less

Unknown:

at all times. So when the bank offers you a pre approved credit

Unknown:

increase, that's a good thing, take it but don't use it. It

Unknown:

just shows you can manage your credit well. Number two is never

Unknown:

missed a payment course. And learning to set yourself up on

Unknown:

automatic minimum payments. I have a lot of people that I see

Unknown:

that have missed payments on things like cell phone bills,

Unknown:

that they don't think that matters, but it does they see

Unknown:

you're missing, you know, 15 payments on a cell phone,

Unknown:

they're gonna wonder, you know, are you going to make your

Unknown:

mortgage payment, so really not missing minimum payments? Yeah,

Unknown:

and the third most important one is keep your credits open. So if

Unknown:

you have a credit card from 10 years ago, even if it's like a

Unknown:

$500 limit, you don't close it, the length that you have credit

Unknown:

open for plays a big part in your credit score.

Kalee Boisvert:

If you have like a card you don't even use, you

Kalee Boisvert:

can kind of scrap the card maybe but don't close the account.

Unknown:

You still ideally want to use it a little bit. So

Unknown:

credit card company doesn't close it on you. But yeah,

Unknown:

generally speaking, try to keep your credits open. If you've had

Unknown:

it forever, you're not really using it, they might just give

Unknown:

you a boost to the credit limits. You're pre approved

Unknown:

credit limit, and you can start using it more. The only time I

Unknown:

tell people to close credit is if they have like 20 lines open

Unknown:

and they really aren't using anything. Then you can

Unknown:

consolidate a little bit. But generally speaking, if you've

Unknown:

got thin credit like don't close old credit odds are you opened a

Unknown:

brand new one and you close your ones you had like for 10 years,

Unknown:

it just isn't as good keeping them over 10 years is important

Unknown:

get one and keep it take third item down payments. So down

Unknown:

payment in Canada, the minimum amount of downpayment you need

Unknown:

is 5% 5% can come from a really great program, of course is your

Unknown:

RRSPs. So as a first time homebuyer having an RRSP of

Unknown:

growth like Kaylee and setting that up to take out money from

Unknown:

your RRSP for for using for your downpayment, you have to be a

Unknown:

first time homebuyer and you can use up to $35,000 for your

Unknown:

downpayment. It's interest free, you pull it out without paying

Unknown:

your taxes, and you need to pay it back over 15 years. So number

Unknown:

one program I see for downpayment, people using their

Unknown:

RRSPs it's like double dipping. Say Kaylee can probably explain

Unknown:

that better for us, but I always tell people, you don't have an

Unknown:

RSP setup set one up, and you need the money in there for at

Unknown:

least 90 days for you can use it for downpayment. Yeah. So in

Unknown:

Canada, we regulates 5% minimum downpayment. It's, like

Unknown:

regulated by the government. But if your purchase price is over

Unknown:

500,000 It's actually 5% on the first 500,010% of anything above

Unknown:

that, up to $1 million. So a $700,000 purchase you're looking

Unknown:

at $45,000 Down Payment kind of works out to like six and a half

Unknown:

7% up to 999999. Anything over a million or higher. You have to

Unknown:

have a 20% downpayment government regulated so in

Unknown:

markets like Vancouver and Toronto, you got to have 20%

Unknown:

downpayment. We're pretty lucky in Calgary, you can still get

Unknown:

really good properties for under million dollars.

Kalee Boisvert:

Yeah, yeah, under that 999 99 and other

Kalee Boisvert:

sources of downpayment. So you said RBC RSP is a great source

Kalee Boisvert:

but anything right any like cash on hand, they have or you know,

Kalee Boisvert:

can come from their TFSA ease or things like that, but it's it's

Kalee Boisvert:

cash on hand that they probably have

Unknown:

saved. TFSA is cash on hand investments RRSPs gift from

Unknown:

family members, as long as it's an immediate family members so

Unknown:

parent, grandparent or sibling can give you down payments. And

Unknown:

you want to make sure you're you know, extra money set aside as

Unknown:

well for closing costs. So down payment, they're going to look

Unknown:

at of course your minimum downpayment, or however much you

Unknown:

want to put for down payment. And they're also going to make

Unknown:

sure that you have a little bit extra money set aside for a

Unknown:

lawyer, extra cost to be a lawyer, I always tell people to

Unknown:

estimate around $2,000 a home inspection. Another three $400,

Unknown:

depending on who you're using, a home appraisal can oftentimes be

Unknown:

required. Again, another three $400. If you're purchasing a

Unknown:

condo, you might want your condo documents reviewed, moving costs

Unknown:

itself, title insurance, home insurance, there can be a lot of

Unknown:

expenses. If you're coming from a renting environment to

Unknown:

purchasing your first home, they want to just make sure you have

Unknown:

some fallback at all sudden you move into this house, now you

Unknown:

have $0 in your bank account, you might not be able to make

Unknown:

your first mortgage payments. Yeah, having that extra Fallback

Unknown:

is really important to see or just support to and that's where

Unknown:

oftentimes gifts from family members will come in. If you're

Unknown:

a young first time homebuyer and you have some family support,

Unknown:

that it's they like to see that an application, you know, maybe

Unknown:

they're just gifting you money for the lawyer, and so on just

Unknown:

to show that you have some extra family support is helpful. One

Unknown:

thing to note on the down payment, so 5% is the minimum.

Unknown:

And it's when you have a five less than a 20% down payment.

Unknown:

Your mortgage is subject to the default insurance fees. These

Unknown:

fees are government regulated, and they're added to your

Unknown:

mortgage balance, but not paid out of pocket. So it does

Unknown:

increase the amount your mortgage will be once you have

Unknown:

it, and it will increase your mortgage payments per month.

Unknown:

It's a protection for the lenders. So if you were ever to

Unknown:

default on your mortgage or not pay your mortgage and walk away.

Unknown:

The lenders are are paid out by the insurance company, the most

Unknown:

famous in Canada's CMHC, the Canadian Mortgage and Housing

Unknown:

Corporation, but there is a few in Canada and they they're the

Unknown:

ones that regulate these purchases with less than a 20%

Unknown:

down payment. We spoke a little bit earlier about how there can

Unknown:

be some flexibility for self employed individuals or unique

Unknown:

scenarios. You have to have a 20% downpayment, to be able to

Unknown:

bypass those CMHC regulations. So if you get that 20% down

Unknown:

payment, it opens up a lot of opportunities to purchase

Unknown:

properties. So that's where the rental purchases come in, or

Unknown:

private lenders or alternative lending. When you hear people

Unknown:

saying like, Oh, like, they were able to get a mortgage with

Unknown:

barely any money and no income, no credit, how did they do that?

Unknown:

It's because they have at least a 20% downpayment. And they're

Unknown:

using alternative lenders.

Kalee Boisvert:

Okay, awesome. That's good to know. So 20% will

Kalee Boisvert:

just give you more flexibility.

Unknown:

Yeah, that's kind of the magic number. Also, it'll

Unknown:

lower your mortgage payments, once you hit that 20% down

Unknown:

payment, you won't have the CMHC or the default mortgage

Unknown:

insurance payments, and then your mortgage payments are

Unknown:

lower. And you also have the opportunity then to extend the

Unknown:

amortization of your mortgage to the length that you're paying it

Unknown:

over. CMHC regulates that you can only pay it over 25 years,

Unknown:

the maximum, so your total mortgage balance is paid and

Unknown:

amortized over a 25 year schedule. If you get to the 20%

Unknown:

down payment, we remove the default insurance, you can

Unknown:

stretch your payments over 30 years. So it it really drought

Unknown:

actually drastically decreases your mortgage payments. In a

Unknown:

perfect world, I tell people, you know, if you can get to a

Unknown:

20% down payment, it's great, it's really going to help your

Unknown:

cash flow, it's gonna help your budget, it's going to help you

Unknown:

be able to just save other money and regular investments. But if

Unknown:

you can't easily come up with 20%, then you know 5%, there's

Unknown:

nothing wrong with that either. It's that's what most buyers do,

Unknown:

especially on their first of all, maybe a 5% down payment.

Unknown:

Okay, that makes sense. Next one we look at is the house itself.

Unknown:

So collateral houses is really important. The lender wants to

Unknown:

know that, you know, the house value is what we say it is, and

Unknown:

that the location and property is marketable. So the bank wants

Unknown:

to know, if you were to walk away from your mortgage or not

Unknown:

going to pay your mortgage, they're stuck with this house,

Unknown:

they're going to take the house from you. So they want to know

Unknown:

that they could sell it get their money back from it. So

Unknown:

just you know, you're the realtor comes in here. That's

Unknown:

where the realtor is really important to help you find the

Unknown:

right neighborhood the right property. If it's a condo, you

Unknown:

want to know that your condo board is well managed. Do you

Unknown:

have a good reserve fund? Right now we really are in a seller's

Unknown:

market, housing prices are high demand is way exceeding supply

Unknown:

right now. Which is driving prices up. And it's creating

Unknown:

people to go in over asking price. So I mean, I've seen

Unknown:

$100,000 over asking price on offers a lot of unconditional

Unknown:

offers, meaning they're going in with an offer and saying if it's

Unknown:

accepted, like I'm not backing out no matter what, even if I

Unknown:

can't find financing, even if the appraisal isn't there. And

Unknown:

it puts a lot of buyers at risk. This is scary market for buyers

Unknown:

right now. And they're feeling desperate. And there's a lot of

Unknown:

people coming over to Calgary from I've noticed from

Unknown:

Vancouver, and from Toronto, selling a house they're buying a

Unknown:

couple year, you're really driving your market. And I tell

Unknown:

people you know, I tell people not to make unconditional

Unknown:

offers. Because it puts your deposit at risk. If you can't

Unknown:

secure financing after your offers live, or the appraisal

Unknown:

value doesn't come in, you're gonna have to come up with extra

Unknown:

cash to close your mortgage or you're going to need that 20%

Unknown:

down to go to a private lender. And it's I've you know, luckily

Unknown:

personally, I've never seen someone lose their deposit on a

Unknown:

house. But we hear stories about it all the time within our

Unknown:

office. And it's, you know, you don't want to lose a $25,000

Unknown:

deposit just because you rushed into try to buy a house?

Unknown:

Absolutely. Yeah, it's working with a good realtor, I find it

Unknown:

is really important. And you know, going through the steps

Unknown:

and going through a true pre approval. So when you get a pre

Unknown:

approval beforehand, we gather all of your income documents,

Unknown:

and we run a full application ahead of time to make sure that

Unknown:

your credit looks good, your income looks good, everything

Unknown:

looks good on your application. And then we send it into a few

Unknown:

different lenders to review ahead of time and get your rate

Unknown:

hold. They'll do it's up to four months that they'll hold on

Unknown:

rates and a general pre approval. It doesn't mean that

Unknown:

you're 100% approved if you have a pre approval and that's

Unknown:

oftentimes a misconception. They say Oh, I had this pre approval

Unknown:

letter. It just means that the bank They've seen your

Unknown:

application, and they're okay with it. And they've given you a

Unknown:

rate hold. But your full documentation package isn't

Unknown:

reviewed by the lender and the Audit Department until you

Unknown:

actually have a live offer and a house, okay.

Unknown:

And some of the documents that we'll look at can be consumed

Unknown:

like a lot, especially if you bought a house 10 years ago,

Unknown:

when it was you were just breathing and you could get a

Unknown:

mortgage. Now, they're gonna look at your letter of

Unknown:

employment, pay stubs, 90 day history of downpayment, and they

Unknown:

look at every single line and your down payment. So having if

Unknown:

your money's in investments, like with your TFSA, or RSP, is,

Unknown:

having a good investor in your pocket that can get you a

Unknown:

detailed history is important. I've seen a lot of people not be

Unknown:

able to access their statements or, you know, they only have

Unknown:

quarterly statements from three months ago, and it can be a pain

Unknown:

for them. So we need full detail, 90 day history, it's

Unknown:

anti money laundering regulations, it really gets a

Unknown:

lot of people. And then if you're self employed, there's

Unknown:

even more documents, your full T one General's your notice of

Unknown:

assessments or T fours, if your T foreign yourself, voter ID. If

Unknown:

you own properties, we need the mortgages, property tax bills,

Unknown:

lease statements, if you're renting properties, it can be a

Unknown:

lot of documentation that I try to get ahead of time, so that

Unknown:

when you have a live offer, it makes the process smoother,

Unknown:

easier, stress free, and you have everything done ahead of

Unknown:

time.

Kalee Boisvert:

Yes, that's a lot. A lot of a lot of homework,

Kalee Boisvert:

a lot of heavy lifting. Yeah, but having someone help you like

Kalee Boisvert:

yourself, like a mortgage broker to work with that helps walk you

Kalee Boisvert:

through, it kind of breaks it down. So it's less less

Kalee Boisvert:

overwhelming.

Unknown:

Yes. Right. And we I try to make it in bite sized

Unknown:

chunks. It's like, Okay, step one, let's, let's, let's just

Unknown:

talk about what you want to do. Step two is gather some

Unknown:

documents, so you know how much you can afford step three, then

Unknown:

we'll pull your credit, get an application and, and step four

Unknown:

is then you know, then we'll talk about lender options. The

Unknown:

difference between using you know, a Scotia Bank or a TV and

Unknown:

then then versus a local credit union is, you know, can be a lot

Unknown:

of information that we having a broker in your corner,

Unknown:

especially when you're a first time homebuyer just to break

Unknown:

down each category and make it seem less overwhelming. My job

Unknown:

is to really just, and some people don't care. They're like,

Unknown:

honestly, just tell me what you need. I don't want to be

Unknown:

involved in the process, make it easy, great. I take care of

Unknown:

everything for them. Some people really want to be involved all

Unknown:

every step of the way, and do all the information. Great. And

Unknown:

we'll go through all the information. It's really up to

Unknown:

what you want.

Kalee Boisvert:

Absolutely. Okay. Love it. Are we through

Kalee Boisvert:

all the steps? Are there more?

Unknown:

No, I'd say that's a good wrap up, you know, once you

Unknown:

get to that pre approval, then then you know, we can relax a

Unknown:

little bit at the beginning is a lot of information.

Kalee Boisvert:

Yeah, heavy lifting. Okay. So that's kind of

Kalee Boisvert:

qualifying for new homebuyers as a lot of information, really

Kalee Boisvert:

good information, especially I like the part about credit score

Kalee Boisvert:

and things like that, because there's a lot of misinformation

Kalee Boisvert:

out there about that. So and then next big thing when it

Kalee Boisvert:

comes to mortgages, whether it's first time or renewing is fixed

Kalee Boisvert:

versus variable rate.

Unknown:

Yes, that's the big topic of discussion right now.

Unknown:

fixed versus variable rates, especially, you know, post

Unknown:

COVID. So before COVID. Historically, in Canada,

Unknown:

variable rates were, we're gonna say always, but we're generally

Unknown:

the choice to save more money on your mortgage. Historically,

Unknown:

speaking, variable rates have always been lower than fixed

Unknown:

rates. Until COVID, then everything bottomed out, and

Unknown:

fixed rates hits, record lows, you know, I saw, like 1.5% on

Unknown:

five year fixed rate mortgages, which were unprecedented. So now

Unknown:

that things are starting to open up and inflation and the war and

Unknown:

COVID and everything that's happening in our world, interest

Unknown:

rates are rising. So both fixed and variable rates are rising

Unknown:

right now. Fixed rates, they're all over 4%, I'd say standard,

Unknown:

you can still get maybe shorter terms 123 year fixed under 4%.

Unknown:

We're looking at 3.5 to 3.99. The standard five year fixed is

Unknown:

you know four to 4.5% even depending on primary residence

Unknown:

versus rental purchase. Fixed rates are up You know, there's

Unknown:

variable rates are still reasonable, say variable rates

Unknown:

are almost 1% Lower. But let maybe a little bit more than

Unknown:

fixed rates right now. But she probably a little bit more, I'd

Unknown:

say they're actually almost 2%, lower 2.3%, you know, kind of

Unknown:

standard on a CMHC insured mortgage versus around 4%. So

Unknown:

like 1.7%, lower by their speculation that the Bank of

Unknown:

Canada's gonna continue to increase its prime lending rate.

Unknown:

So variable rates are influenced by the prime lending rate in

Unknown:

Canada, and fixed rates are influenced by bond rates in

Unknown:

Canada. So both have been increasing steadily over the

Unknown:

last six months. And you know, you just really have to weigh

Unknown:

out the pros and cons of both to decide what makes sense for you.

Unknown:

But a fixed rate is going to give you a fixed payment, and a

Unknown:

fixed interest rates over your term, most popular term is a

Unknown:

five year fixed, but you really have between a one year and a 10

Unknown:

year fixed, even if you wanted it. So it's gonna give you

Unknown:

stability, and it's going to help you budget. That's the

Unknown:

beauty of a fixed rate mortgage, you know exactly what it is

Unknown:

today, that's what it's going to be next year or next year until

Unknown:

you renew your mortgage at the end of your five year term. The

Unknown:

like negatives, or cons of a fixed rate is your interest rate

Unknown:

is higher right now. And if for some reason, during your term,

Unknown:

if you took a five year fixed, you decided to sell your house,

Unknown:

or you wanted, you know, property values are off right

Unknown:

now, a lot of homeowners are refinancing their homes to

Unknown:

access some of the equity to do that breaks their current

Unknown:

mortgage and you're refinancing. And on a fixed rate, the

Unknown:

penalties are much higher than a variable rate. So they do it's

Unknown:

an interest rate differential. So the difference between your

Unknown:

rate now and return the market at that time, but they times it

Unknown:

by how long is left on your mortgage. So if you have four

Unknown:

years left, your penalty is four times higher. On a variable

Unknown:

rate, the pros are right now, it's lower than a fixed rate.

Unknown:

And it gives you more flexibility. Because if you did

Unknown:

sell your house or refinance, that penalty is only three

Unknown:

months of interest. That's the smallest penalty and a variable

Unknown:

rate. So it's, it's good when you're, you know, what am I only

Unknown:

keep this house for two years, you're not sure you might take a

Unknown:

variable rate. Another pro is you can lock a variable rate

Unknown:

into a fixed rate later on. If you change your mind you want to

Unknown:

lock in, but you're subject to interest rates at that time.

Unknown:

There's some pros there. But the cons, of course, is you we don't

Unknown:

know what's going to happen with time. And it's been increasing.

Unknown:

So during COVID, if you had a variable rate, your your

Unknown:

interest rate was very low. But now it's gone up, you know,

Unknown:

almost 1% Over the last six months. And it's speculated to

Unknown:

go up even more. So just knowing knowing for sure. You have to be

Unknown:

able to budget correctly if you have a variable rates and just

Unknown:

have to have a you know, a bit of a plan through with your

Unknown:

property, you know, next three to five year plan is important

Unknown:

and making decision and fixed versus variable. And knowing

Unknown:

what's going to stress you out more the stress of thinking, Is

Unknown:

my mortgage rate and payment gonna go up this week, or is it

Unknown:

going to stress you out knowing that you're, you've paid a

Unknown:

little bit of extra money to interests in your fixed rate

Unknown:

over the last six to 12 months, which option stresses you out

Unknown:

more. Because if you can ride the waves of a variable rate, it

Unknown:

might go down. So that's the benefits, but it might go up and

Unknown:

it might go up and up and up. Right before COVID interest

Unknown:

rates were rising, and the prime was a high as it had been in a

Unknown:

long time. Now a lot of people lost their variable rates into a

Unknown:

fixed rate. And honestly, within like six months, everything

Unknown:

bottomed out with COVID. So it just goes to show we really

Unknown:

don't know what's gonna happen. And I get a lot of questions.

Unknown:

What should I do? What should they do?

Kalee Boisvert:

It's like, I wish I had the crystal ball.

Unknown:

Yes. And real estate really is like Hindsight is

Unknown:

2020. Like if I only bought now or sold then you'll never know

Unknown:

they'll always be ups and downs with real estate. So you just

Unknown:

have to know like, Can you ride the ways we tell people if you

Unknown:

do take a variable rate mortgage, pay it like a fixed

Unknown:

rate to make extra pay Minutes, like it was a fixed rate, or

Unknown:

just set extra money aside, every month in a slush fund, you

Unknown:

know, throw it in your investments. And then as rates

Unknown:

go up, you have some extra money set aside as a cushion, if you

Unknown:

need it to help you pay your mortgage payments. Or there is a

Unknown:

few lenders who they'll put you in a variable rate, but your

Unknown:

mortgage payments won't actually change. So even if Prime goes up

Unknown:

or down your mortgage payments don't change just the amount

Unknown:

that you're paying towards principal versus interest

Unknown:

changes. Okay, that makes sense. Yeah. Yeah. So that's a, it's a

Unknown:

really good, that is a really good option for people that want

Unknown:

that variable rate. But not a lot of lenders offer it. Because

Unknown:

if interest rates continue to rise, the length of the mortgage

Unknown:

or the amortization extends, because we're not paying it down

Unknown:

in proportion. So after five years, you may have only paid

Unknown:

off two and a half years worth of payments.

Kalee Boisvert:

Yeah, thinking that you had done five or

Kalee Boisvert:

something like that. It had been five, yeah, yes.

Unknown:

So there's a you know, there's pros and cons to both

Unknown:

options. I'd say, if you are very skeptical or nervous, fixed

Unknown:

rate is really always the way to go. Just because stability. And,

Unknown:

you know, the Bank of Canada is meeting what, 2345 more times

Unknown:

this year, June 1, July 13, September 7, October 26, and

Unknown:

December 7, and they're speculating at least point

Unknown:

seven, five, but probably even more over the next six months.

Unknown:

Okay,

Kalee Boisvert:

that's good to know, for people, and, and a lot

Kalee Boisvert:

of information for them to consider but helpful knowing

Kalee Boisvert:

too, that you can kind of help just give them things to think

Kalee Boisvert:

about, like, you know, it's tough to like you said, we don't

Kalee Boisvert:

have a crystal ball, you probably can't tell them exactly

Kalee Boisvert:

what the the right thing to do is not knowing the future, but

Kalee Boisvert:

at least you can talk them through, okay, if you're feeling

Kalee Boisvert:

this way, or have you considered that and that might kind of help

Kalee Boisvert:

bring about the answer of okay, what is a better fit for you?

Unknown:

For sure. And it's, you know, real estate is an

Unknown:

investment, right, as I've heard you say a lot, it's like

Unknown:

diversify your portfolio. They and keep it long term, their

Unknown:

goal with real estate, you know, you have to view it as a long

Unknown:

term investment to you and your family, or maybe down the road,

Unknown:

it is, you know, you're going to have it as a retirement savings.

Unknown:

Part of that total package and wealth planning is your

Unknown:

property. You can't just put all you can't put all of your money

Unknown:

into your property and not have it anywhere else, because

Unknown:

property values go up and down. You need to diversify. And you

Unknown:

need to have a long term strategy.

Kalee Boisvert:

Yeah, yeah. Like really think about these and

Kalee Boisvert:

weigh your options. Again, it's a really big decision. And so

Kalee Boisvert:

don't just kind of quickly you know, feel rushed into it, sign

Kalee Boisvert:

the paperwork and all that, like do consider all the the

Kalee Boisvert:

different kinds of variables and things like that involved in

Kalee Boisvert:

your situation. Anything else that people need to keep in

Kalee Boisvert:

mind?

Unknown:

Um, yeah, some different things. When we're

Unknown:

choosing lenders, we kind of spoke about the difference

Unknown:

between the big banks versus these monoline lenders. But each

Unknown:

lender will have different terms. So each lender will allow

Unknown:

you to make pre payments on your mortgage, if you choose to

Unknown:

standard is about 15% of your mortgage balance every year. If

Unknown:

you are thinking you want to make extra lump sum payments on

Unknown:

your mortgage, some lenders will let you some lenders won't. So

Unknown:

it's you know, if you plan to make big, big lump sums is

Unknown:

something we want to consider portability of your mortgage. So

Unknown:

if you decide to move mid mortgage term, but you don't

Unknown:

want to break your mortgage, you can actually take your mortgage

Unknown:

from one property and port it to a new property, just the balance

Unknown:

of your mortgage needs to stay the same or increase. They won't

Unknown:

let you decrease that mortgage loan without breaking it or

Unknown:

without paying a penalty on it. And just knowing that you know

Unknown:

so if you are looking for something like portability,

Unknown:

there's a difference between like a credit union and monoline

Unknown:

or a bank. So there's different types of lenders out there and

Unknown:

each lender is going to have different mortgage products to

Unknown:

it. One item we never really touched on today but there's

Unknown:

there's home equity line of credit that you can access

Unknown:

easily access A lot of the equity in your home, especially

Unknown:

in today's market, as your property value increases,

Unknown:

instead of breaking your mortgage, you can access it in a

Unknown:

line of credit. But not every lender allows for that. So just

Unknown:

knowing you know, having some information or an idea of what

Unknown:

you want to do down the road is really helpful in placing those

Unknown:

the right mortgage products. And not everyone knows, but just

Unknown:

being able to have someone in your corner to answer those

Unknown:

questions or give you some things to think about is really

Unknown:

important. And I tried to be really accessible, so people

Unknown:

can, you know, message me or DM me on Instagram, it makes it

Unknown:

really easy and I know you're really accessible on Instagram

Unknown:

as well it just creates ease ability for clients. And if you

Unknown:

just have a quick question, I'm always answering you know, text

Unknown:

messages, phone calls, emails, DMS and just having that team

Unknown:

behind me to bounce ideas off of so if you feel like there's a

Unknown:

really unique scenario or you've been declined in the past

Unknown:

telling you between the four of us we have done a lot of tricky

Unknown:

mortgages or just made it feel easier when you're declined by

Unknown:

your bank doesn't mean you're defined by every lender out

Unknown:

there there's so many more options out there I always say

Unknown:

you know don't give up it's worth a phone call. Yeah,

Kalee Boisvert:

absolutely. Yeah, cuz it's more and more

Kalee Boisvert:

people are you know, considering this independently and after

Kalee Boisvert:

maybe it's after divorce and things like that and there can

Kalee Boisvert:

be some insecurities of like, is this gonna work for me? Am I

Kalee Boisvert:

gonna get approved? So it is kind of it is that that

Kalee Boisvert:

vulnerable moment to if you are, like declined or that doesn't

Kalee Boisvert:

work the first time but knowing Yeah, give it a try and and, and

Kalee Boisvert:

have someone in your corner just to help you out there and see

Kalee Boisvert:

and it sounds like you help educate people on what they need

Kalee Boisvert:

to do to get there if they're not there yet.

Unknown:

Totally. And that's I tell people are always saying,

Unknown:

you know, I'm so sorry, I'm not ready yet. Like that is my job.

Unknown:

I am I love. I've been working with his one young couple for

Unknown:

like, years for like it took me three years of working with them

Unknown:

to help them reestablish their credit to get to a point where

Unknown:

they could buy a property. And then now now they own three in

Unknown:

the last year. They owned a primary residence here in

Unknown:

Calgary. They own a investment property in radium, and they

Unknown:

just bought guess they're moving. They'll have a rental in

Unknown:

Calgary and he bought another primary residence here in

Unknown:

Calgary, so they'll have rental in Calgary rental and radium.

Unknown:

And they just thought it was never possible for them. And it

Unknown:

is.

Kalee Boisvert:

Yeah, I love that. Yeah. So yeah, don't ya

Kalee Boisvert:

don't think it's not possible for you. If you're in that boat,

Kalee Boisvert:

reach out to Jessalyn what is the best way then? So you're

Kalee Boisvert:

said you are very accessible. So for people looking to reach out?

Kalee Boisvert:

How should they reach out to you?

Unknown:

Instagram is the easiest to find everyone's on it

Unknown:

at mortgages by Jessalyn on the show notes there. But honestly,

Unknown:

anything write on my Instagram pages, my phone number, my email

Unknown:

address, I have a website, you can contact me on call email

Unknown:

texts, I always tell people whatever is easier. Lots of

Unknown:

people prefer a quick text message. That's okay, too.

Kalee Boisvert:

Okay, perfect. And I'll include Yeah, I'll

Kalee Boisvert:

include that in the show notes. Thank you so much. I feel like

Kalee Boisvert:

there's there is so many different elements we could talk

Kalee Boisvert:

about, we'll have to do another one in the future. This is

Kalee Boisvert:

really good information, though. I was like listening intently to

Kalee Boisvert:

because these are important conversations. It's a big part

Kalee Boisvert:

of people's full wealth picture, their mortgage. So it's really

Kalee Boisvert:

good information to know. So thank you so much Jessalyn

Kalee Boisvert:

thanks for having me do and thank you everyone for listening

Kalee Boisvert:

in. And I will catch you on next week's episode. And bye for now.

Kalee Boisvert:

I hope you found value in this episode. And because I'm such a

Kalee Boisvert:

proponent of taking confident action, I want to pose a

Kalee Boisvert:

question to you the listener. What is one action that you feel

Kalee Boisvert:

inspired to take after listening to today's episode? If you enjoy

Kalee Boisvert:

listening, please subscribe and share with your friends and

Kalee Boisvert:

family. Thank you so much and I will catch you next time

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