Volition Meetup 2024 03 Mortgages & Interest Rates – Is The Worst Behind Us_ (Interact w_Hugo Dos Reis).pdf

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www.volitionprop.com
Mortgages & Interest Rates –
Is The Worst Behind Us?
(Interactive Session w/ Hugo Dos Reis)
Mar 27, 2024

@volitionproperties
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Mortgages & Interest Rates – Is The
Worst Behind Us?
(Interactive Session w/ Hugo Dos Reis)

@volitionproperties
Please welcome: Hugo Dos Reis, Vine Group!
Hugo Dos Reis, mortgage Broker and founding Partner of
one of the largest mortgage brokerages in Canada - Vine
Group. He’s provided financial planning education to
thousands of investors and authored several financial
articles. With a focus on real estate investing and
leveraging his financial planning background, he’s able to
create practical and strategic solutions using a “Blueprint”
approach to navigate the various lending solutions
available to Canadians.

LIC. 13511
MORTGAGE UPDATE SPRING 2024
C H A N G E S I N T H E M O R T G A G E I N D U S T R Y
T H A T A F F E C T R E A L E S T A T E I N V E S T O R S
H U G O D O S R E I S
M O R T G A G E B R O K E R
& F O U N D I N G P A R T N E R

Agenda
Recent BOC Announcement
Interest rate forecasts 2024
Tax season tips
Investor friendly lenders
Reverse mortgages
Blueprint approach to real estate investing
Rates and recommendations
General Q&A Session

BOC Update
Bank rate remains at 5% since July 2023
Next BOC meeting April 10th

Inflation down to 2.80% (February)
Previous rates: 2.90% in Jan and 3.40% in Dec
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TH E G LO BE A N D M A I
L,SO U RCE:STATSCA N
Consum erPri
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ndex
12-
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h per
cent
age change
2017 2018 2019 2020 2021 2022 2023 2024
0
2
4
6
8%
CPI CPIexcl
udi
ng f
ood and ener
gy
BOC Update

Inflation stats:
Groceries up 2.4% (down from 3.40% last year)
Rents up 8.2%
Gas up 4%
Shelter costs up 6.5%
Clothing/Footwear fell 4.4%
BOC Update

BOC Update
Canada GDP Growth:
0.20% growth in Q4 2023

US GDP Growth:
3.20% growth in Q4 2023
BOC Update

Tax Season Tips 2024
Self-employed clients - 2-year average
▪ Consider how much income to declare
Rental income
▪ Report rental income earned for each property

Play it like a Chess Game
1 2 3 4 5 6 7 8
MONOLINE
SCOTIA
TD
CIBC
HOME TRUST
1 2 3 4 5 6 7 8 DOORS
CREDIT UNION
NATIONAL BANK

Big bank lenders will typically cap # of properties at 5
▪ NIAT (net income after tax) programs
▪ Net worth programs
▪ Equity programs
▪ Expanded ratios
Investor-friendly Lenders

Common sense lending approach
Allow for higher qualifications
Higher rates
Average 1% lender fee charged
Weaker or bruised credit friendly
BFS friendly (use “stated income” to qualify)
“B” or Alternative Lenders

Self-employed case study:
▪ IT services business with $300K gross
▪ Each applicant can either declare $110K/year of
income on tax return or $50K

$1,000,000 LOAN AMOUNT
“A” LENDER Alternative Lender
Income Required $220,000 $190,000 (stated)
Monthly Payment $6,073 $6,590
Est. Tax Cost $50,000 $14,000
Interest Cost over 12
months
$60,880 $68,677
Fees $0 $10,000
Cost over 12 months $110,880 $73,590
DIFFERENCE OF $37,290 of savings

Credit Union
Provincially regulated and can qualify on ACTUAL rate vs stress test on owner-
occupied properties

MORTGAGE AMOUNT Stress Test Credit Union
$250,000 $85,000 $65,000
$500,000 $145,000 $115,000
$750,000 $205,000 $165,000
$1,000,000 $265,000 $205,000
*Excludes rental income
Mortgage Qualifying
Income

Access money from your home without
selling or any monthly repayments
Minimum age is 55 years
Access up to 55% of home value
Money is tax-free; no impact to
government pensions
Maintain ownership and control of your
home
Reverse Mortgages

Unlock equity to invest
Tax planning
Purchase vacation or investment
property
Gift down payment
Renovate or add additional living space
Reverse Mortgages Uses

Case study 1 (Income supplement):
✓Home value - $1.5MM
✓No mortgage balance
✓65 years old
✓Max borrowing est. $625K
✓Invested at 8% = $50K/year additional
income
Reverse Mortgages

Case study 2
(Rental Income Supplement):
✓Home value (pre-reno) - $1.5MM
✓Reno cost (4-plex) - $1MM
✓Post reno value - $2.8MM
✓65 years old
✓Max borrowing est. $1.1MM
✓Rental income surplus - $7,500/mth+
Reverse Mortgages

Financing Blueprint 2024
BEING STRATEGIC WITH
YOUR FINANCING

1-4 PROPERTIES
(SET UP)
Most lenders have a “Global
Limit” of 4-5 rentals
Features:
▪ Preferred pricing
▪ HELOC’s for rentals
▪ Split mortgages
Initial refinance of personal
residence
Blueprint
Strategic Financing

5-10 PROPERTIES
(REBALANCE)
Reduced lender options
Full portfolio should have DCR of
1.10+
Reporting to personal T1
generals
Some big banks (branch
relationship)
Credit unions
“B” lenders
Consider a REFINANCE before
you buy the 5th property
Blueprint
Strategic Financing

10+ PROPERTIES
(SCALE)
Turn your portfolio into a
business
Commercial blanket across
your portfolio
Up to 75% LTV
Up to 25 year amortizations
Commercial rates + fees
DCR (Debt Coverage Ratio)
ideally 1.25+
Blueprint
Strategic Financing

Variable Rates
PRIME rate is 7.20% (with most lenders)
Average 5-year variable rate is 6.20-6.80% for personal residence
Average 5-year variable is 6.40%-7.20 for rentals
What’s Happening With Mortgage Rates?

3 Year Fixed Rates
Average 3 year
fixed 4.99-5.59%
for personal
residence
Average 3 year
fixed 5.39-6.29%
for rentals
What’s Happening With Mortgage Rates?
• 1-3 year Average Yield
• 5 year Average Yield
5 Year Fixed Rates
Average 5 year
fixed 4.79-5.49%
for personal
residence
Average 5 year
fixed 5.49-5.99%
for rentals

FORECAST
Most bank economists expect the overnight rate to
drop 1.00% by end of 2024
WHAT SHOULD YOU BE DOING?
Consider short-term fixed rates (1-3 years) if risk-
averse
If buying with less than 20% down consider variable
HELOC Financing
Blended variable + short-term fixed rate
VARIABLE OR FIXED?

Thank You.
QUESTIONS?
HUGO DOS REIS
Mortgage Broker & Founding Partner
Vine Group, Lic. 13511
hugo@vinegroup.ca

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Volition Meetup 2024 03 Mortgages & Interest Rates – Is The Worst Behind Us_ (Interact w_Hugo Dos Reis).pdf

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