How brokers can help clients with New Year's resolutions

While there's nothing wrong with resolving to join a gym in the New Year, brokers can help their clients develop some financial strength and agility

How brokers can help clients with New Year's resolutions
While there’s nothing wrong with resolving to join a gym in the New Year, brokers can help their clients develop some financial strength and agility.

To do that, says Frances Hinojosa, a mortgage broker and managing partner at Tribe Financial, creating a household budget is of the utmost importance. While nobody enjoys the monotonous process of budgeting their finances, saving a few dollars here and there can go a long way towards exemplary mortgage payments.

“Everyone hates creating a budget—even I hate creating a budget—but I do it every year,” she said. “Figure out what you have to spend and then look at what you’re wanting to spend, and then create a budget. Even if you can squeeze out a few dollars per month from your budget, you can save thousands in prepayments towards your mortgage.”

Hinojosa says brokers can help their clients figure out appropriate RRSP contributions to maximize tax refunds.

“So plan ahead and talk to an accountant and find out what you’d have to contribute, or what you could contribute, to your RRSPs to max yourself out and get the maximum refund back on your tax return, and use that refund as a prepayment to your mortgage to pay it down and save interest,” she said. “You can save thousands towards your mortgage.”

As a starting point, borrowers need to figure out how much money they’re willing to put towards shelter before even looking at purchase prices or trying to figure out how much mortgage they can qualify for. Basic budgeting can yield pleasant surprises.

“I think a lot of consumers out there would be pleasantly surprised if they sat down with a mortgage professional to run through numbers,” said Hinojosa. “They’d actually probably qualify for a home even when they didn’t think they would. Even next year, it will be the same thing. The (B-20) rules are what the rules are, but there are enough solutions out there, so don’t worry about the interest rates and your budget, because that’s really what’s going to matter at the end of the day—what’s coming out of your account.”

Given the exorbitant appreciation of home values over the last five or so years, many homeowners are finding themselves in fortuitous positions.

“I have a lot of clients who have equity positions in their homes of 50% or more because prices have increased significantly over last five years, and now’s the time to sell that home and buy that dream home because you have enough of a down payment,” added Hinojosa. “Or you can restructure your debt because that mortgage that fit you five years ago may not fit you today.”

Hinojosa says it is unfortunate that some prospective homeowners will be precluded from entering the market under the newest B-20 regulations, but she says that could present an opportunity for people in better financial standing.

Peter Van Sluytman, a mortgage agent with mortgageoutlet.ca, agrees. Not only does he expect fewer bidding wars next year, he also believes buyers will have more bargaining power than they have in recent years.

“People will have a chance now to make a more sensible purchase,” he said. “They can get a home inspection and financing clauses so that they can make a logical choice. Before, people had to put in clean offers and they were finding problems with the homes they didn’t know existed. Now they can really evaluate what they’re buying.

“People will see some softening of the high-end of houses. Some of the condos are going to maintain their value but some of the stuff over $1-mln will probably soften and come down modestly.”


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