Financing Trends, Updates and Insights


Brian Hogben

Katherine: I'm really excited to have Brian. He's actually been a part of the REITE club from day one, he's been one of our national partners and one of our national supporters and his expertise, what it is that he's brought to our team has been phenomenal. I personally really enjoy working with him and his team.

He's the owner of Mission 35 Mortgages with over 30 agents and 10 locations. And I think your most recent location is here in St. Catharines.

Brian: Yeah, we opened one up in St. Catharines and we have another one opening in Binbrook actually next week we have a grand opening out there.

Katherine: Great little town. Love it.

Brian: Yeah. It's booming out there. Absolutely booming out there.

Katherine: Brian is also an avid real estate investor with a $10 million portfolio ranging from apartment buildings to single family homes.

He's also an author, a speaker and educator on how to become mortgage-free really fast and is passionate about educating people on the power of real estate investment. Brian was inspired  to start Mission 35 Mortgages after accomplishing his mission of paying off his mortgage by the age of 35.

After opening Mission 35 Mortgages became one of the top mortgage brokers in the first three years that you were open. You're the author of how to get mortgage free, really effing fast.

Brian: Wow. I feel great, Katherine. Thanks for that. That is you just go ahead. That's amazing.  Wow. You’re doing great to have you, and Francois but I don't think Alfonzo and Sarah or anybody. You guys got this now. Okay.

Katherine: There's a lot that's been happening over this little while in financing and mortgages, and you're basically down in the area of from Burlington all the way down into Fort Erie, St. Catharines, Niagara, Burlington, Hamilton, and that area, but a lot of what it is, you do that information can go anywhere, but that's where your specifics are. So, tell us what do we need to know?

Brian: Thanks Katherine and thanks so much for having me here And again, I just love being here with the REITE club. It's my jam. It's my drug. I love what you guys are doing real estate investment has changed my life. And I love sharing with you guys. And especially over the past 18 months, I refinanced my whole portfolio that Katherine was talking about there.

And I bought another building, a cottage, invested in Florida, a couple townhomes, couple condos, and my wife's asking are you going through a midlife crisis right now? And I said, If I am, I could be doing a lot worse things than what I'm doing right now. And the reason why I share that with you is because, when you're going to seek out your financing 90% of our agents at mission 35 are boots on the ground investing.

We don't just know about investing in real estate. We do invest in real estate as well too. And I think there is a big difference there. So, I want to talk to a couple of things. I want to talk about rates. I want to talk about investor trends. You guys are talking a lot about new construction, so there's something there I want to share with you guys, a little tip that we're seeing quite a bit of and some mortgage rules as well.

The first one, when it comes down to his rates unless you're hiding out somewhere, rates are amazing. We all know that. And they're going to continue to be great. Now, someone that I follow quite a bit is a guy by the name of Benjamin Tal, he's the head economist for CIBC. The Bank of Canada said they're not looking to raise interest rates to the end of 2022.

Okay, and Benjamin Tal has been saying, listen, it's not a terrible idea to raise interest rates a little bit sooner. Okay. Now, I'm not advocating that I'd like to pay more interest on my mortgages, but the reality is I think we can all see, Justin just mentioned a 40% increase in London from $470,000 to $660,000.

All cost of goods sold is getting a lot more expensive. And in order to combat inflation, one of the tools that the government will use is to raise interest rates and what Benjamin Tal said, which I do agree that it's better to increase them a little bit over a longer period of time, then really quickly in a short period of time.

And if we do wait, you'd probably see that towards the end of 2022. And the reason why I share that with you guys is don't be surprised it's not uncommon for the government or the Bank of Canada to change what they're going to do to see some interest rates, probably not by the end of 2021, but maybe the first quarter of 2022 to see some quarter point half point bumps.

And don't be alarmed by it either. Okay. We're coming up on the five-year anniversary. I know you're all gonna celebrate the five-year anniversary of the stress test now. Okay. I'm the only mortgage nerd. That's okay. I got it. It's important because in 2017, when the stress test was introduced, we were stress testing it. Rates have not gone up almost five years. And now rates are in the twos with our, cheap money institutional bank lenders, and we're stress testing at five and a quarter. So, the reality is that is affordable for Canadians.

So, that is a good thing. So, if we do see a little bit of interest rate hike it's not a bad thing, it's a good thing. Couple of mortgage rules I do want to share with you guys, which is another cool indication in the market right now.

And it's around the million dollar property. I remember, you'd say something like a million dollars, like three years ago. And I was like, wow, you're like a Kardashian or something. And now you're the Jones. Everything seems to be a million dollars these days. So, finally the mortgage insurance companies have caught onto this and there's a big rule change that hasn't been announced.

But looks to be coming, hopefully by the end of this year, if not beginning of 2022, where mortgage insurance, the default insurance companies Canada Mortgage and Housing, guarantee are looking to raise that benchmark to 1.2 or 1.3. Currently, anything over a million dollars cannot be mortgage default insured, which means you have to have 20%.

What does that mean for us? It means that more people are going to be able to afford in that price point with a lesser down payment. And what does that mean? That's going to probably create more demand. And as we all know, and Justin said, and we've heard probably lots of times, there's a shortage of land in Southwest Ontario. There's a shortage of properties and a lot of places. So, there's not more supply coming. So, that's going to actually push a lift up in the higher price points a bit. Okay. The second thing this million dollars and the banks. And this has come into effect now and it used to be with banks that they would only finance 80% of the first million dollars and 50% of anything over a million.

Okay. So, I'll use a $2 million price point. Okay. Just for simple math. Okay. But this is important when you start to get into the Hamilton area, Burlington areas, and some of the higher end areas that are getting over that million dollar mark. If it were a $2 million property, the banks would typically only finance 80% of the first, which is 800 plus 50 of the next it's 1.3. So, that means that you'd have to put down $700,000 or get a 65% loan value mortgage. Okay. So, now what does it mean that now they're changing it and they've already changed? A lot of the lenders will go 80% of $2 million. So, now if you had a $2 million price point 20% downs, 400,000, so you can get a mortgage at 1.6 instead of 1.3 it's a $300,000 swing. 

Why is this important Brian? I don't live in a $2 million house. Wow. Maybe you will one day. Okay. Number one, people are going to be getting into higher priced homes. Now the move up buyer, it's going to push that market up. Okay. Because when people are able to afford more, the biggest trend that we're seeing right now is because of stress test because the things people are buying it, their maps, it is not often out of the thousands of mortgages that we see.

People are not dialing back what they can afford. They're purchasing for their max and that's for investment properties, that's for everything. So, that's going to push that price point. The second thing, which is really important for you guys. If you have a house that's worth over a million dollars, you can now access more equity there.

It's very important, as we've seen prices increase. So, if you were in that 2 million, I'm using that just for simple math previous to this rule, you could only access 1.3. Now you could access 1.6. That's a $300,000 swing. That could be another investment property, or that could be two in St. Thomas possibly or Thomasville. Okay. 

So, if you haven't done that refinance thing yet, and you're in that million dollar plus category, you've got the opportunity to take out some more cash there so you can reinvest it. So, it's a great opportunity to do that. Okay. And number three, the third one, which I actually love about this, I always look to people smarter than me to identify what's going on.

Now. We've been in a market environment for the past five years where we've seen constricting mortgage policy, they haven't made it easier for money flow. This is two indications that mortgage default insurance and banks are signaling saying we're comfortable with prices. They're basically saying the risk departments in the banks are saying, Hey, you can leverage more in this higher price point. We will let you put down less to leverage more. What does that mean? It means they're not crying. The sad bubble song. Okay. I'm sure nobody is by now, but just in case there are any still naysayers in there by the banks acknowledging that they will leverage more money. That means that there's a lot of confidence in the bank's risk.

For those types of loans. So, for price points that makes me come through as well too, saying that people are comfortable with where they're at. Are they going to continue to go up by 30, 40%? Not, but will they stabilize? Like we now see lender trends, what we're seeing right now with the banks. Okay.

I'm going to preface this right now with the headlines that if you read the paper, what did they say? Banks made 2 billion. I'm just saying it for the point of billions of dollars in profit. And I'm not hating on the banks. Okay. Per quarter. So, banks are making billions per quarter right now.

So, to put this into perspective, again, some of the banks met 12 months of their goal in six. Why is that important? It means that in our industry right now, They are not making exceptions. They can cherry pick the mortgages that they see fit. They do not have an appetite for the person that doesn't meet the guidelines, because if you don't meet the guidelines and this is what the normal banks and trust companies that's okay, there's 10 or 15 other people that do that they can lend their money out for, and they've already made their profit.

So, that cascades down specifically. In properties right now, which we're seeing a lot, this is Southwestern Ontario and across the board where we're seeing more and more appraisals just about every rental property is going to get appraised.

Having those appraisals get done, it's just going to be a fact of life and part of business. If you're doing private financing, sometimes you don't need it, but the trust companies and the banks and the institutional cheap money, always going to want to see appraisals and if there's something wrong with the property. Okay. Cause I know the BRRRR strategy has worked out phenomenal over the past 12, 18, 24 months. Like it's worked out great, but if there's something wrong with the property where there's no kitchen, there's no bathroom something where it is not habitable, you jeopardize losing that deal with an institution involved.

They're going to look at and say, Hey Brian, there was no bathroom. I'm not financing it. And if I try to go into again, an exception, they're very, they're much less likely to grant it because of the amount of profit that they've seen. Okay. It's not impossible. We have saved some deals through holdbacks purchase plus improvement programs.

The reality is it is very few and far, so don't be surprised with more appraisals. Don't be surprised if there are issues with the property. If you have to finance it privately, if it's not habitable and you're going to BRRRR it and then refinancing it out afterwards. The other trend that we're seeing is with rural properties, A lenders, we call them the banks, the cheap money lenders.

They have no issue with rural properties whatsoever. Private lenders have no issue with rural property as well to the middle ground are what we would call the B lenders are trust companies, credit unions, the ones that are maybe one to two points above the market rates right now, which are still ridiculously cheap, right?

They're not loving rural property. And again, it comes down to, it may have met their goal in the first six months. They do not need to take a risk on what they deem or determine a more risky property. Now don't shoot the messenger here. I'm not saying that real properties are that they don't like them.

They deem it based on marketability as to how many days on market, which just mentioned how quickly they can sell it. Typically properties in major urban centers is where more people can live and want to live. They will lend more aggressively in those areas. If you're not in an urban center, they basically do it all based on population size.

If you're in a smaller market, I believe for some lenders it's under 10,000. They're going to land severely clawed back loan to values maybe 65% or maybe not at all. So something just to be aware of and something that I don't see them getting more aggressive on in 2022. Okay. The real focus for lenders in 2022, and we've seen it in the election and we will not talk election right now.

Okay. Whether it's red, blue, green, or purple. Is first-time home buyers and trying to get people into, get more supply on the market and trying to get affordable housing out of the door. There's no platform that says, you know what? These real estate investors are just not making enough money and we should really get some better programs for them to make it easier for them to buy up the world.

Joke, but not joke. So, you're not going to see that part of it get easier, unfortunately. So, just be aware of that and be leery of that. And while the getting is good and I believe it is right now, refinance the house and end up purchasing there. The last investor trend that we're seeing align.

Now I loved how Justin and then Katherine and Francois mentioned new construction. We're seeing a lot of new constructions finally come to fruition out close. We've seen some there was LJM I would think it was Stoney Creek Grimsby. We've seen some new constructions and Kitchener-Waterloo that I've come to close.

We've seen some Beamsville, Hamilton, especially. So there's one issue that we see here. And the good news is that prices have gone up, right? You bought a place for 350,000 3 years ago. A condo now it's worth 500,000. The challenge is that lenders, the majority of lenders will always finance the lower of the purchase price or the appraised value.

So if you go out and buy a house, a resale house, you buy it for 500. All let's be real. It's $700,000 and it gets appraised at 680. The lenders are going to to base the financing off 680 in new construction. It's the same. It can be a praise for 500, but the purchase, they will only do it based off the purchase price because it's lower.

And I do hope it will change, but not yet. They want to see skin in the game. So what do you do? So the three-step process for this one, if you have new constructions closing into the future. Okay. You got to close the deal as is. If you can close it in cash, hallelujah.

I know RBC does have a phenomenal long-term flows program. So, if you close it out because they will do approvals of sometimes two to three years in advance, they'll pre appraise it. And as long as you meet every single condition ahead of time, they don't look at it again. It's actually a great program and I'm surprised they still do it, but close it.

Get the mortgage. Okay. So whether you can do it with cash, hallelujah. If she can do it with a bank, get an open mortgage or get a variable rate mortgage. The reason being is because I'm trying to go from the cheapest to most expensive. So have you closed it with an open, you can turn around and pay it out the next day, no penalty or a variable rate mortgage.

You only have a three month interest penalty, so it's cheaper to break. So once you end up breaking that mortgage, then you want to refinance it within 30 days. And then you can take out all that lazy money, all that lazy equity there. So we end up putting it where I'll give you a quick example there. We had a client she bought for $350,000.

The new purchase and the as is value was 500. So, she was able to close the deal. With a private mortgage. And then we refinanced her for 80% of the 500, which was a $400,000 mortgage. So, that gave her an extra $50,000 to play with for the next property. So, it's a two-step process and it's like a long-term BRRRR. I don't know if there's a name for it.

It's to be like, Maybe Francois, you know the name, maybe it's like a buy new, bill, rent, refi, maybe like a BNBR BHB. I don't know. I don't know. It's slow BRRRR yeah, slow BRRRR.

Francois: A question I had about pre-construction and I knew a lot of our members were wondering what do you do with this massive appreciation? How do banks see it? There you go. We have the answer there.

That's nice and clear. A slow BRRRR. Question for you, Brian, just before we part ways. What are your top three tips for investors? You mentioned a lot, but your most important three tips.

Three Tips for Investors:


  1. Number one is do it now. I think you know what I know, sometimes we can get analysis paralysis, and I've been guilty of that as well, too. And I think if you're approved now, do it. Because I've seen so many new mortgage rules come into play over the years where you got priced out of the market stress tests out of the market. Something happened where you weren't. So, do it now. And that is with buying.


  1. And also number two is refinance now. If you've got equity in your home right now, take it out and use it because again we never know what government intervention is going to look like. And I've seen it over years and it can completely game change. So, take it out. 


  1. And then I think the third one is to do it now

Yeah, you know what? I'm a big believer. I love the slow BRRRR. I love the BRRRR. I'm a buy and hold guy. So, I've not necessarily made all the right purchases in my time, but like the Warren Buffett strategy, I'm a firm believer and he's done fairly well for himself buying and holding. 

And I think if you take that mentality, if nothing else, buy it and hold it and continue it and you'll do.

Francois: Yeah, excellent advice in the best time to look for money is when you don't need it. So, just like your midlife crisis, you didn't really need it, but you saw an opportunity and you seized it.

So, this is excellent. Thank you so much. So, Brian Hogben, if you want to get a hold of him, and also on and at our events.