At the start of every year there is an influx of people who begin to contemplate the idea about making their next move. For those of us who work in the real estate or mortgage industry, we are always looking to optimize our client’s position so that they can achieve their homeownership goals.
One of the first steps in making those goals a reality is to engage with a mortgage specialist. Whether that specialist works within a bank or is an independent broker, the rules are generally the same. As with any industry, there are professionals who work hard, are educated and understand how to best position their clients for success. Conversely, there are also those who may have the necessary credentials, but fail at the implementation; therefore, potentially hindering the goals of their clients.
We recently interviewed one of the best mortgage advisors in the GTA, George Bajoon – RBC, to ask him some questions about the mortgage industry, the general process, forecasts and tips on how people can best obtain their goals.
1. What is the primary role of a mortgage advisor?
As a mortgage advisor, my primary role it to find tailored home financing solutions for my clients in a financially responsible manner. I accomplish this in a host of ways, from having details conversations, obtaining necessary documentation, fully understanding their needs and future goals, and working closely with internal staff to best position them as a client.
2. When should someone choose a mortgage advisor through a lending institution vs going through a mortgage broker?
Through my experience, clients tend to choose a traditional bank as they have the opportunity to meet with me face-to-face. They will always know where their mortgage is and who to contact for any inquiries. As well, RBC offers upfront firm pre-approval so our clients do not have to worry about re-qualifying when they have made a purchase. Also, if an appraisal is required, RBC will complete this right away as opposed to waiting right before closing, which can be problematic in some cases. Typical turnaround time for an approval is about 3 business days.
In some cases, a mortgage broker can be useful. For example, when a client’s credit is below average, a mortgage broker can, at times, locate lower tiered lenders who will take on more risk. Keep in mind, obtaining a mortgage through a lower tiered lender will sometimes place more restriction on the mortgage terms, higher rates and make it harder to exit the mortgage contract.
3. What are the most important factors to consider when choosing a mortgage provider?
There’s a lot of factors to consider, but flexibility, brand reputation, ease of doing business are some of the top considerations when choosing a mortgage provider. Clearly, I’m biased toward RBC and firmly believe that we offer the best products and services, but the other top banks are competitive in their own right (some more so than others).
4. What’s the difference between pre-qualification and pre-approval, and when should someone obtain them?
A pre-qualification is a general calculation of what a client will qualify for. A pre-approval is a full mortgage application including a credit check. I review your income documents and I will be able to provide you with firm numbers that will not deviate. With a pre-approval, you have the peace of mind knowing that based on the strength of your income and credit history, you will be approved for a certain amount.
Some people make the mistake of thinking that pre-qualification is the same as pre-approval. This is not the case. Before making a purchase, it is always highly advisable to obtain pre-approval. This will reduce the risk of not qualifying during your financing condition or, in the worst-case scenario, not being able to close on the deal. You really do not want to do that.
5. What are the advantages and disadvantages of fixed vs variable rate mortgages?
I wouldn’t really say that there are advantages or disadvantages. Each option has its own benefits, but it really depends on the client and their experience with mortgages. For example, generally speaking, a First Time Home Buyer may want a fixed rate so they can avoid fluctuations on their mortgage payments. On the other hand, historically, variable rates tend to be lower than fixed rates, but have been increasing steadily over the last couple years. A persons’ risk tolerance will play a large role in determining what’s best for them.
6. What’s the best way to pay off a mortgage quickly
Monthly double up payments and lump sum anniversary payments.
7. What’s the penalty for breaking a mortgage?
The penalty for breaking a mortgage is always evolving. There’s no hard and fast rule that transcends time. It’s best to inquire with your mortgage specialist at the time when obtaining your mortgage.
8. What is your philosophy when working with your clients?
First and foremost, I want to ensure that I am always realistic with my clients. They may have a certain number in their head and that might not be the best thing for them. My job is to ensure that I have put my client in a position to purchase their home and still enjoy it. We have all heard stories about people who have extended themselves too much. By doing this they simply won’t appreciate their purchase and will have a difficult time settling into their new home. I always want to ensure my clients are positioned for success and to be happy with the next chapter in their life.
9. Where do you think the mortgage industry is heading in 2019 and beyond?
Tough one. I expect interest rates to continue to rise in the near future which will make the mortgage stress test harder. There are always new programs coming in to make financing easier for our New to Canada clients and self-employed as well.
We’ve seen the industry change a lot in the last few years and more changes will undoubtedly come. There’s a lot of people who claim to know what will happen, but the reality is that the industry is fluid. At one point in time it’ll appear as if the rates will go up, for instance, but then the industry shifts again. In recent history, the only time we knew without a doubt that something was going to happen was when the GTA market was moving so quickly that home values skyrocketed, buyers were left in the dust and people were leveraging themselves too much.
About George Bajoon, Mortgage Specialist – Royal Bank of Canada
I have been with RBC for 11 years and lending for the last 10 years. I have a great deal of experience in providing tailored recommendations for my client’s home financing needs. Backed by the largest bank in Canada, I always have a solution for your needs.
Direct: (647) 339-3489 | George.firstname.lastname@example.org
For more information on making your next move, contact us at email@example.com or (647) 401-4443