Buying a home and arranging a mortgage for that home go hand in hand. Having someone with experience to help out can make the process go smoothly.
Most homebuyers head right for their personal lending institutions, but is that the best approach?
REALTOR® Nick FitzGibbon sat down with Paul Gazzola from Guelph Mortgage Architects to discuss how to get the most competitive rates, what first-time homebuyers should consider, and some strategies for those who dream of being mortgage-free.
NF: Paul, let’s start by introducing your business, Guelph Mortgage Architects. What services do you offer and what would you say makes you unique?
PG: Guelph Mortgage Architects is a family-owned and operated mortgage company that has been serving Guelph and the surrounding area since 1986. We believe we are unique because we have access to a vast network of over 50 lending institutions—including major banks, credit unions, trusts and other national and regional lenders. This allows us to provide tailored solutions and options to our clients.
NF: The past couple of years have been interesting times in real estate, as you know firsthand. How do fluctuations in the market affect your business? Does it change the advice you give to clients?
PG: The ever-changing housing and rate markets do have an effect on our business and change the advice we share. Our suggestions to clients are to consider budget planning, potential impact on income and forecasting factors that may determine product selections.
NF: You’ve put together a great team of mortgage professionals. What are the advantages of going the broker route rather than dealing with a traditional bank?
PG: The broker route ultimately provides consumers with more options. When you walk into a bank, for example, you have access to a few rate options that they individually offer. When you work with a broker, not only are you getting access to that bank’s rate, but also all 5 big banks, credit unions, monoline lenders, etc.
These lenders are competing for our business and this is how we see more competitive rates, more product options, greater flexibility, lower penalty calculations, and so on. We also are able to follow different qualifying regulations and have multiple products that allow us to help people who work for themselves, are new to Canada, or who may be looking to repair their credit, etc.
NF: Do you have any special advice for first-time homebuyers?
PG: Our recommendations for first-time homebuyers always include the following:
- Plan: Ask questions, build a budgeting plan, build a savings plan, and look into the First-Time Homebuyer incentives
- Deal with existing debt: Student loans and car loans are liabilities that can surprisingly take up a lot of qualifying room
- Structure your down payment options: Take advantage of your RRSPS and TFSAs, pay off debt vs. putting more towards a down payment, income tax refunds
- Pre-approval: We help you determine your qualifications or provide you with numbers based on your budget, particular situation, and lifestyle desires.
NF: How often should homeowners be reviewing their mortgage strategy?
PG: Statistically, the average Canadian breaks their mortgage every 3 years. We like to recommend that our clients review their mortgage strategy every 18-24 months—or sooner if their personal finances have changed—to see when and if developing a new strategy, managing debt, or if potential interest rate savings are available.
NF: What are some of your top tips for those who are looking to be mortgage-free?
PG: It’s very hard in today’s day and age! However, for those consumers where this is a feasible goal, always retire the highest interest rate debt first. Once achieved, we recommend 10% of net take-home pay be applied to investing in oneself.
For example, RRSPs can potentially create income tax refunds that you can then apply to pre-payment privileges of the mortgage. This will allow borrowers the ability to pay off up to 10-25% of their mortgage each year, without penalty, either through lump sums or increasing payments. Another tool is accelerating your mortgage payments. These differences go directly to the mortgage principal and can be advantageous to the borrower.
NF: Are there any other ways you are able to help homeowners?
PG: We also help people rebuild credit and provide consolidation opportunities to reduce monthly cash-flow outlays. Employing both of these strategies open doors to our clients to obtain best pricing in the market, which can create significant savings.
NF: Thanks for sharing that great advice and your time, Paul.
Connect with Nick Fitzgibbon to talk all things real estate online here.
Learn more about Paul Gazzola and Guelph Mortgage Architects online here.