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The Bank of Canada’s latest interest rate hike, a surprise one-percentage-point jump, means it’s more important than ever for mortgage professionals to focus on affordability, stability, and property use when advising potential homeowners, according to a prominent mortgage executive.
Gary Fooks (pictured top), CEO and broker at 8Twelve Mortgage Corporation, told Canadian Mortgage Professional that the choice between variable- and fixed-rate mortgages was especially significant in the current climate, particularly with further rate increases a seeming certainty down the line.
“Although Canadian families may qualify to debt service their mortgage today, would additional rate hikes cause them financial hardship in making those mortgage payments in the future?” he said.
“If brokers’ clients are going to bed worried about potential additional rate hikes, they should strongly consider a fixed-rate mortgage from the start, even though it may be 2% higher than a variable rate.”
On an average mortgage size of approximately $400,000 across Canada on a 25-year amortization, a 1% hike to the variable rate would lead to an increase of $220, or just under 10%, on monthly mortgage payments.
That means Canadians on a variable-rate mortgage often consider switching to a fixed rate to avoid further rate increases – although for new buyers, the decision should also be based on what the property in question will actually be used for, according to Fooks.
“For clients purchasing rental properties, or properties as short-term investments, they may consider variable-rate mortgages are their primary solution to avoid larger penalties in the event of a sale within their specified term that is normally associated with fixed-rate mortgages,” he said.
The effect of the central bank’s policy rate increases on the housing market had already been clear well before its latest announcement, with sales posting a marked drop-off compared with 2021 and house prices also beginning to waver. That was perhaps to be expected, Fooks said, although he added that another big factor could weigh against a possible contraction in the market.
“Any substantial rate hike will typically have an immediate cooling effect on the overall sales in the market leading to a downturn,” he said. “That being said, it’s important to note that we have a major housing shortage in Canada, so it remains to be seen how these two leading indicators will balance each other out.” While some buyers may be given pause for thought by those climbing rates, they should also keep in mind that there’s never a perfect time to enter the market, Fooks said – and that opportunities remain in the current climate.
“You cannot time the market,” he said. “If your goal is to be a homeowner and you can afford to carry a mortgage, you should consider jumping into the market now with prices currently at 20-25% of the market highs.”
An eventful year
Amidst those market shifts, 8Twelve has witnessed continued growth throughout the year to date and was also named an Excellence Awardee in two categories – Brokerage of the Year (25 Employees or More) and Digital Innovation in a Brokerage – at the recent Canadian Mortgage Awards.
Central to that progress, Fooks said, has been a strong focus on infrastructure and technology, both of which have become indispensable to the daily work of mortgage professionals during the market boom of recent years.
“Mortgages has become a volume game, and to do volume, you need the right technology to be able to handle that volume efficiently,” he said. “The idea is that from the second you get that customer interaction, to processing the file, requesting documents, doing everything through a secure environment, providing updates through emails, text messaging to all stakeholders in the application… you want to be able to do that very quickly and very efficiently so that clients feel like they’re getting that same type of service that they would get with any other five-star sort of organization.”
Not having technology that amalgamates those factors into one means it’ll take longer for brokers to do their job, Fooks added – a key consideration in 8Twelve’s goal of helping brokers avoid having to use multiple technology stacks and channels to service a client.
That’s part of the ever-evolving role of the mortgage broker, he said, with providing the lowest rate far from the only aspect of the mortgage journey to consider when dealing with clients.
“Finding the best rate is one aspect of the process,” he explained. “Making sure you’re servicing the client efficiently and effectively in a timely manner – that’s a whole another aspect. You have to do both: make sure you have all the up-to-date information, whether rates, policy, guidelines from all the lenders, but also make sure your customer’s included in that process in real-time.
“When you do that together, it’s a formula for success. At least that’s what we’ve found at 8Twelve.”
TORONTO, July 12, 2022 – 8Twelve Financial Technologies (‘8Twelve’ or ‘the Company’), a disruptive fintech that provides Canadian borrowers with the largest selection of home financing options in one convenient marketplace, today announced that Martha Durdin has joined its Board of Directors.
Ms. Durdin is the former President and CEO of the Canadian Credit Union Association (CCUA), having served in that role for the last eight years. She also represented CCUA on the board of The World Council of Credit Unions (WOCCU).
First, take a look at the list below to see who’s classified as “self-employed” when it comes to getting a mortgage:
Types of Mortgages Available to the Self-Employed:
The two main types of mortgages available to those who are self-employed are a “Qualified Business for Self Mortgage” and a “Stated Income Mortgage.”
While the Qualified Business for Self Mortgage is what most people want to fall into, it’s a little more of a stringent one to qualify for. That said, it provides the most favourable rates, terms, conditions, and features.
On the other hand, the Stated Income Mortgage provides more flexibility in the qualification process, because it allows for the consideration of other sources of income that may not have been appropriately declared in your tax returns. For example, most of the time it will take into account any provided internal financial statements or plans, business contracts with customers, bank statements with additional cash going into your personal or business bank account, accounting records, and/or other forms of income verification that in general, most banks will not consider. As such, this also makes it a great option for a First Time Home Buyer or someone looking to refinance their home.
The good news is that pretty much anyone can qualify. But just like with any mortgage or loan, there’s a list of requirements you must satisfy.
How to Get Prepared for the Mortgage Process
While you may not require each and every one of these documents in all circumstances, the more prepared you can be to meet your Mortgage Broker, the better. Then it’s simply a matter of signing the application and you’re off to the races!
At the end of the day, each person’s financial profile is unique. It’s best to speak to an expert Mortgage Agent who can give you specialist advice and work out which mortgage best suits your specific situation.
TORONTO, June 14, 2022 – 8Twelve Financial Technologies (‘8Twelve’ or ‘the Company’), a disruptive fintech providing home buyers’ with Canada’s largest selection of mortgages in one convenient marketplace, today announced that David Sharma has joined its Board of Directors.
Mr. Sharma is a recognized global telecommunications leader with over 20 years of senior executive and board experience. He has overseen and supported billions in P&L through his former leadership at TELUS (TSX:T, NYSE:TU) and was a founding board member of TELUS International (TSX:TIXT, NYSE:TIXT).
8Twelve Mortgage CEO & Broker, Gary Fooks told CMP more about the company’s plans for 2022.
Fergal McAlinden of Canadian Mortgage Professional spoke with Gary Fooks of 8Twelve Mortgage Corporation to find out more about the company’s plans this year.
In a mortgage market whose pace has barely relented over the past two years, a common problem faced by brokers and agents alike has been the lack of time available to focus on what matters to them – whether that be a better work-life balance or a greater focus on growing their business.
It was a pitfall to the profession that Gary Fooks (pictured above) recognized upon becoming licensed in 2014, but one that he felt his extensive experience in sales and management left him qualified to address.
Fooks had already cut his teeth building and operating sales and service organizations, including over 250 global contact centres, as well as managing large-scale campaigns for global companies.
After enjoying near-immediate early success as an agent, funding just shy of $100 million in mortgages by his third year, he recognized an opportunity to replicate his own process and empower agents at 8Twelve Mortgage Corporation, the company he founded alongside President and Principal Broker, Akber Abbas.
The company developed its own proprietary technology, featuring everything built into one platform: mortgage application process, client lifecycle management, telephony, secure document management, eDocs signature system, and marketing and text messaging platforms.
“If you’re a large enterprise partner, and you want to trust someone with your clients, it’s very hard to refer them to random mortgage brokers and hope that they do the job right,” Fooks explained.
The name of 8Twelve Mortgage’s end-to-end FinTech platform, INFIN8, was chosen for a very specific reason: to represent the infinite possibilities available to the clients, agents, and lenders using it. According to Akber Abbas, the company’s Co-Founder and President, the platform was developed with the aim of furthering one of 8Twelve’s core goals: to advance the digital revolution in the broker channel with the technologies and processes at its disposal.
The company itself is made up of three distinct business units: 8Twelve Financial Technologies, the parent company, which develops financial services software such as the INFIN8 platform, 8Twelve Mortgage Corp, a national brokerage with access to all major lenders, and 8Twelve Capital, an administration company that funds private mortgages.
Its forward-thinking, future-focused approach is one of the most striking aspects of 8Twelve Mortgage. Abbas says its founders’ innovation-heavy backgrounds (he worked for various Silicon Valley and technology companies; CEO and broker Gary Fooks has expertise in customer experience) played a key role in ensuring its continued success throughout the challenges of the COVID-19 pandemic.
“Even in 2015, 2016, it was still manila folders and yellow notepads and a lot of paper going back and forth,” Abbas says. “The reason why 8Twelve Mortgage has been growing year-over-year, month-over-month, is because we were pandemic-proof or pandemic-ready. We were ready by being future-forward. We already had the technology to be paperless; we were already working on managing Zoom meetings; we were already working on a remote environment, and we were doing that in 2017, 2018, and 2019.”
That technology-centered approach meant that far from flatlining, 8Twelve’s operations actually flourished during the pandemic, helping it attract new talent and ensuring steady growth while many other organizations were facing upheaval during those uncertain early days of the outbreak in 2020. Central to its success among brokers is that intuitive, seamless system that has allowed the company to onboard talent and help new agents hit the ground running, irrespective of their level of experience.
“The system will take your hand and walk you through the steps of the mortgage; that’s why we’re seeing consistent five-star reviews,” Abbas says. “We have teams in-house that take care of, for example, back-office administration, funding administration, and so on. That’s really where our specialty is and why we’re growing really well. We’re taking a different approach on the mortgage brokerage business and how we’re onboarding and treating our staff as well.”
That ability to walk employees through the process, and take care of time-consuming administrative tasks for them, allows mortgage professionals to focus on the areas of their business that really matter to them, whether that’s developing new relationships or cultivating referrals. While mortgage agents have traditionally been required to find and manage business, working on new leads to the detriment of their productivity, Abbas says 8Twelve’s system lets agents focus on the side of the business that reflects their strengths.
The company has also fully embraced integrations, viewing them as central to the future of the mortgage industry, and it’s always open to new partnerships and enhancements. Its current partners include Filogix, Newton, Zoom, Hellosign, and Docusign; standard email platforms are also built into the company’s technology.
“We’ve created a platform that’s open to connecting to partners today and in the future,” Abbas says. “Our philosophy has always been that great new technologies are being developed out there.”
The company has also built an impeccable reputation with lenders, which Abbas attributes to its team of diligent underwriters, who work with agents to package deals and information correctly.
“Time and again, I hear from our lender partners that when they see an 8Twelve file, they’re bringing it to the top,” he says. “They know it’s consistent [and that] all the checks and balances are done. That increases our ability to collect fees and deliver value for our clients, but it’s also reducing the operating costs for our lenders, which they love. We’re building those deep relationships, time and time again.”
As mortgage products have become more complex the need for independent advice and access to a variety of mortgage products has become a necessity. As a result, digital mortgage brokers have been slowly capturing more and more market share from banks and brick and mortar mortgage originators for the past decade. For Canadian mortgage brokers, the gradual increase in market share from 21% to 47% represents not only more flexible homebuyer attitudes but also is a sign of their growing influence, enhanced services, and increased value of the personal services being offered to first home buyers by digital mortgage originators.
The first time homebuyers’ market includes young (e.g., Millennials, Generation Z) homebuyers, immigrant homebuyers, and those who prefer to shop online for better rates and engage in the personal services of the digital brokers for their wealth-building advice, guidance, and support during the ever-increasingly complex mortgage application process.
Currently, 55% of first-time homebuyers use digital broker channels. 44% of repeat home buyers use digital broker channels. They often select their brokers based on word of mouth from acquaintances, colleagues, and family members. Others select their digital mortgage brokers based on the professional recommendations of other professionals. Notably, first-time home buyers can be divided into three groups. Each group has different levels of familiarity and comfort with digital mortgage brokers. So, digital mortgage brokers must engage these markets using different strategies.
Figure 2: Existing Relationships Appear Highly Important for Direct Bank Mortgage Borrowers While Word of Mouth Is Relatively More of a Deciding Factor in the Broker Channel
Young Home Buyers: Millennials and Generation Z
Young homebuyers represent a huge market segment for mortgage brokers. They are familiar with IT, working with online professionals, shopping for and comparing services online, and establishing relationships in a non-traditional way. Research shows that although 62% of them are comfortable not having a face-to-face relationship with their mortgage broker they still value human interaction and personalized services. Moreover, this demographic prefers to reach out to mortgage brokers after they have done their own online research. Furthermore, as mortgages increase in complexity, first-time home buyers need professional assistance and emotional support during the application process. Since this trend will continue into the foreseeable future, the role of digital mortgage brokers is expected to continue to grow until it reaches at least 60% market share.
Immigrants are one of the fastest-growing demographics in Canada. In fact, in 2022 and 2023, Canada is expected to increase its immigrant population by 411,000 and 421,000 people, respectively. This is 37% higher than the historic annual average of 303,000 people from 2015 to 2019. Immigrants tend to buy homes two to three years after they have been living in Canada. As the immigrant population grows, it will play a key role in the future mortgage lending market.
Valuing Advice (Increasing Regulations Contribute to Increasing Mortgage Complexity)
There has been a change in how people perceive their primary relationship with their banks and mortgage brokers. In the past, most retail customers would have referred to their bank as the place where they got their mortgage or have their checking and savings accounts. Now, retail customers expect their banks to provide them with valuable financial advice, assistance with increasingly complex financial products, and personalized service and support.
Figure 3: Non-Branch Channels Increasingly Adopted by Canadians for Seeking Financial Advice
There has been a steady decline of people seeking in-branch financial advice from traditional banks, from 54% in 2018 to 43% in 2021. During that same time period, there was an increase in the percentage of people seeking financial advice via phone and online websites which were hosted by traditional financial institutions. This trend will continue to accelerate with further branch closures and a growing number of consumers seeking digital solutions.
As has been the case with other financial services (trading, investing, insurance, etc), consumers are driving innovation in the mortgage broker channel by demanding digital solutions. The industry has responded with a number of large scale, digital platforms that are creating benefits for the customer, lender, and agent alike.
Digital mortgage brokers are able to offer valuable financial advice and a wide selection of products as they are not beholden to one product as would be the case of dealing directly with one financial institution. Furthermore, given the shifting demographics and tightening credit requirement of traditional banks, the “plain vanilla” conventional prime mortgage is in decline and more complex mortgages are becoming the norm in Canada.
Digital mortgage brokers are the future of the mortgage originations in Canada. The use of the digital broker channel is growing, and is the leading way for first-time homebuyers to complete their increasingly complex mortgage applications. Furthermore, the young generation, immigrants, and those valuing financial advice and personalized services are being engaged in a way that meets their needs rather than the traditional “one size fits all” approach. As the adoption of technology continues and people show significantly less preference for face-to-face interactions and relationships, there will be ongoing gradual growth of the sector.
Source: BMO Capital Markets, CREA, Statistics Canada, CMHC, Bank of Canada, OSFI, Company Reports
Posted January 25, 2021
Canadian wallets have taken a wallop as a result of the COVID-19 pandemic. According to a recently released Financial Literacy Month survey from the Financial Planners of Canada:
Although the country’s economic recovery is underway, many Canadians may feel uncertain about their employment prospects, especially as local coronavirus flare-ups disrupt business activity.
Planning ahead can offer some peace of mind during uncertain times. Here are 5 coronavirus relief programs every homeowner should be aware of: four government programs that can help make up for financial shortfalls arising from illness, childcare responsibilities or lost wages; plus one additional option – mortgage deferral – that’s worth thinking hard about with the help of a mortgage professional.
Who qualifies: Workers who logged a minimum of 120 insurable hours during the past 52 weeks, who lost their job through no fault of their own, or who left work temporarily due to maternity or parental leave, sickness, etc.
Approximate benefit amount: At least $500 per week, $300 per week for extended parental benefits
How to apply: Get more program details on the federal government’s Employment Insurance and Leave page.
Who qualifies: Workers who aren’t eligible for EI (including self-employed freelancers and gig-economy workers), who can’t work, or whose income has dropped by 50%, as a result of the COVID-19 pandemic. This benefit replaces the Canada Emergency Recovery Benefit (CERB), which ended in late September.
Approximate benefit amount: $500 per week for up to 26 weeks
How to apply: Learn more about CRB on the federal government’s Canada Recovery Benefit page.
Who qualifies: Workers who are unable to work because they caught COVID-19; or who must self-isolate due to COVID-19-related reasons; or who must stay home due to another condition or medical treatment that makes them more susceptible to COVID-19.
Approximate benefit amount: $500 per week, with a two-week maximum
How to apply: Find out if you qualify for CRSB on the federal government’s Canada Recovery Sickness Benefit page.
Who qualifies: Workers who have to stop working or who must work less than 50% of the week due to caregiving a child/family member under age 12 whose school or daycare is closed due to COVID-19, or who is sick or required to quarantine for COVID-19-related medical reasons.
Approximate benefit amount: A maximum of $500 a week for up to 26 weeks per household
How to apply: Learn if you qualify for this income support program on the federal government’s Canada Recovery Caregiving Benefit page.
TIP: Don’t forget that some COVID-relief benefits are considered taxable income.
Finally, let’s take a look at one non-government COVID-relief program that was in the news a lot this last year:
Who qualifies: Homeowners experiencing financial hardship can apply for up to six months of mortgage-payment deferrals from participating lenders. Deferred payments (including principal and interest) are added to your mortgage and repaid (by you) down the road. This means that you’re likely to end up paying more over time than if you had not sought a deferral.
One alternative worth considering is mortgage refinancing .
Refinancing at today’s lower interest rates may lower your monthly payments, with or without extending your amortization period.
If you’re also carrying high-interest consumer debt , refinancing allows you to pull equity from your home to pay it off. You’re trading high-interest “bad” debt for low-interest “good” debt and eliminating a couple monthly bills that may have been causing you financial stress.
A mortgage professional can help you determine what mortgage solution is best for your situation.
Approximate savings: Varies
How to apply: Visit the 8Twelve Mortgage site for more info or to reach a Mortgage Strategist who can offer personalized advice tailored to your circumstances.
If you have concerns about your financial health and wellness this November, research your options today – you’ll feel more secure knowing what help is available should you need it.
Posted January 18, 2021
Canadians have faced surprises and uncertainty in 2020, reinforcing the value of basic financial awareness and planning. Here are 5 things you need to know right now to get ahead in 2021.
FAST STAT: Canadian households owe $1.77 for every dollar of disposable income. (Source: Statistics Canada)
If the idea of tallying up your debt makes you want to bury your head in the sand, first, know that you’re not the first person to feel this way. Second, fight the urge and add it all up.
The most common forms of debt include mortgages, car loans, personal loans, lines of credit, credit cards , student loans and money owed to Canada Revenue Agency (CRA). Knowing how much you owe – and at what interest rates – allows you to prioritize debt reduction goals and strategies .
FAST STAT: The average Canadian household spent just over $86,000 on living expenses in 2017, the most recent year for which data was collected. (Source: Statistics Canada)
Subtracting your fixed and variable expenses from your income will help you determine whether or not your spending habits are sustainable and if they align with your short-, mid- and long-range goals. Check online for budget worksheets or download one to your smartphone to get started.
If you’re not doing this already, adjust your budget so you can allocate savings to a household emergency fund to cover you in the event of job loss, illness and other unforeseen circumstances. The FCAC recommends saving three to six months of income or of living expenses (whichever you prefer).
FAST FACT: 29.2% of mortgage holders increased their credit score in the first quarter of 2020. (Source: Canada Mortgage and Housing Corporation)
Strong credit benefits you in a number of ways. If you’re a homeowner (current or aspiring), it’s your ticket to the best mortgage rates . If you’re a tenant, it can make or break your rental application. As a consumer, it can impact whether or not you’ll be approved for a credit card , car loan or line of credit.
According to Equifax, one of Canada’s two primary credit reporting agencies: “credit scores from 660 to 724 are considered good; 725 to 759 are considered very good; and 760 and up are considered excellent.”
Monitor your credit score regularly to ensure you’re on track with your financial goals.
Back this up by ordering your credit report annually and checking to ensure all listed creditors are legit; this can alert you to potential identity theft.
FAST STAT: Canadian employment income fell by nearly 9% in the second quarter of 2020, but household disposable income grew by 11% as a result of government support programs. (Source: Statistics Canada)
As Canada experiences the second wave of the COVID-19 pandemic , the government and many financial institutions continue to address financial concerns stemming from illness, reduced income and/or job loss.
Plan ahead by knowing what support you may be entitled to if your income is impacted by the pandemic:
FAST STAT: Canada regained 378,000 jobs in September 2020. Pandemic-related job losses are down to (a still-significant) 720,000 jobs compared to pre-pandemic February 2020. (Source: Statistics Canada)
The good news is that Canada is well on the road to economic recovery. But, as the country continues to respond to regional virus surges with actions including business restrictions, it’s good to plan for the unexpected.
This may include an honest assessment of your employment prospects: the restaurant, entertainment, hospitality and tourism sectors don’t look great right now, while tech, gaming, groceries and home decor all are booming.
Consider what skills could help you transfer to a new industry, or if now would be the time to get more training or education. Consider how you might fund more education – mortgage refinancing or a CHIP reverse mortgage are two options.
Could you build your income by taking on a side hustle like food or grocery delivery, starting an Etsy shop or starting your own business walking dogs or tutoring online?
A Plan B can provide peace of mind during uncertainty, but another side benefit is, it may just lead you to fulfilling new opportunities you hadn’t even considered.
Want to learn more about financial literacy? Visit the FCAC’s Financial Literacy Month site.
Posted January 11, 2021
Home equity is one of those terms you hear a lot. You may have a general sense that it’s a good thing that’s tied to homeownership, but not know the nuts and bolts of it. No fear: here’s an explain-it-to-me-like-I’m-12 look at home equity.
Home equity refers to your ownership stake in your home. It’s calculated as the home’s current market value less what you owe on the property via your mortgage and any liens.
For example: If your home’s market value is $500,000 and there’s $240,000 remaining on your mortgage, your home equity is $260,000 or 52% of its value.
Home equity changes over time. Examples of how this works are:
It’s also possible to lose equity, say, if housing values drop or if the home itself loses value due to disrepair or bad renovation choices .
If that $500,000 home we talked about earlier now has a market value of $450,000 and the same $240,000 mortgage, your home equity is now $210,000 or 46.6% of the property’s value.
Fortunately, home values generally tend to appreciate (increase) over time.
Home equity can be used as collateral in a home equity loan or a home equity line of credit (HELOC), also known as a second mortgage.
Another way to use your home equity is to borrow additional funds at mortgage renewal time, or by refinancing your existing mortgage.
Canadians over age 55 can leverage their home equity with a reverse mortgage .
Because these types of loans are secured against home equity, they are offered at interest rates well below unsecured loans such as credit cards or personal lines of credit. Many Canadians leverage their home equity to boost their overall financial health. Examples of this include:
Although you’re adding to what you owe on your home, it’s money well spent because, to use the examples above, you’d either be saving money outright (elimination of high-interest debt), be boosting future income (education and training) or building home equity in the mid- to longer term (the other two examples).
Home equity is a financial tool you can leverage if it is needed – or simply watch grow!
With today’s low-interest environment, 2020 can be a great year if you’d like to utilize some of the equity you’ve built in your home.
Got questions? Contact 8Twleve Mortgage for personal advice and product recommendations specific to your needs and lifestyle.