October 19, 2023 • 27 mins
Ever wondered why your credit history matters more than you think, especially when applying for a mortgage? Siobhan Bent, a seasoned mortgage broker, is here to take the complex world of credit scores and interest rates and make them simple. Siobhan brings over twenty years of industry knowledge to our chat, and you'll definitely want to hear her take on how banks, employers, and insurers utilize credit scores. She'll also share her savvy tips on building and maintaining a robust credit history.
Shifting gears, we dive into the nitty-gritty of home buying and financing options. First-time homebuyers, listen up! Siobhan guides us through some appealing financing options you might not even know about, including the First Home Savings Account and the Shared Equity Program. Hear her explanation of the 5% down payment rule and the 20% minimum down payment for million-dollar properties. And for those considering investment properties, Siobhan's insight on managing cash flow is invaluable. Finally, we'll share some outside-the-box strategies to protect and enhance your credit score. So, grab a notepad, and tune in for an episode packed with practical tips and actionable advice to secure your financial future.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Hello everyone.
My name is Carolyn.
Welcome to the Saving for yourFirst Home podcast.
I am the CEO of the FinancialMoment.
We offer money coaching forthose who are ready and willing
to make financial changes intheir lives.
For the most of us, there comesa point in time where we think
to ourselves it would be reallynice to own property, but it
(00:22):
sometimes can feel like a pipedream and not very easily
obtainable.
So I created this podcast togive you all the information and
tools you need to take thesteps forward toward home
ownership.
Take it from me my husband andI started our lives together,
working part-time jobs with ayoung child.
Fast forward, through manyhiccups and failures, we stepped
(00:43):
our feet into our very firsthome.
For us it was a pile of dirt,but eventually our family home
was built on that dirt.
Now we are in the midst ofgrowing our investment property
portfolio.
I created the savings for yourfirst home podcast to give you
easy, actionable tools for youto do the same.
If you have that same gutfeeling that I did and want to
(01:06):
create a life for yourself andyour growing family, but don't
know where to start, you are inthe right place.
Let's do this.
Hello everyone, welcome back tothe Saving for your First Home
podcast.
I'm Carolyn, your money coach.
Now, today we are very excitedbecause we are inviting Siobhan
Bent onto our show today.
(01:26):
She started her journey over 20years ago by purchasing her
very first investment propertyat the young age of 23.
Can you believe that she fellin love with the industry and
after a short time she quit herfull-time job and dove headfirst
into entrepreneurship as amortgage broker.
So I know she understands theimportance of financial literacy
(01:49):
and she is super committed toeducating, empowering her own
community with lots of tools andresources and opportunities
that will create legacy fortheir families.
So let's welcome Siobhan ontothe show.
Welcome, siobhan, welcome tothe podcast.
I'm so glad that you decided tocome on and share your
knowledge with all of us.
Hello.
Speaker 2 (02:09):
Carolyn, thank you for having me.
It's a truly honor to be inyour presence and to speak with
your audience.
I'm so happy that we're doingthe same thing, essentially
right.
So being able to find andconnect with people who share
the same interests, share thesame passion about educating the
masses is truly delightful.
So thank you.
Speaker 1 (02:30):
Yes, again welcome.
I'm excited because you knowthis topic that we're going to
get into is probably one of thehotter topics, I think, out
there right now.
Everybody is thinking aboutwhat the interest rates are
doing to the housing market, andso your knowledge and expertise
is so needed right now, so I'mvery happy to share that with
the community, thank you.
(02:51):
So when do we think aboutcredit history?
You know a lot of people makemistakes as they kind of go
through you know your 20s,you're going through college.
You know you kind of made someerrors here and there.
You've gotten introduced tocredit these types of things
when you're starting to head outof that season.
How do you establish a strongcredit history?
Speaker 2 (03:14):
Well, first of all, you got to know where you're
starting from.
I've had, over my years, I'vetalked to several clients who'd
be like I don't know, I haven'tlooked at my credit in a couple
years.
I'm like, how is that even so?
Right, I believe that yourcredit report is like your adult
report card, and you know, manyyears ago, credit wasn't.
It's always been a thing, butit's never been an essential
(03:36):
tool in the life, and so thesedays, you need credit for just
about everything.
So it's something that you needto be aware of and be on top of
.
So the first thing I would sayis obviously to pull your credit
to make sure where you stand.
How do you build your historyis obviously looking back to see
what things did you doincorrectly, things like using
(03:58):
too much debt right.
A lot of times people areextended credit and think that
it's an extension of theirincome, and so you know, they
live by just paying the minimumpayments and so they're carrying
debt for a long period of timeand over the course of years
that can impact your creditnegatively.
So I would say know where youare.
(04:18):
Then the next thing is reflecton your past behaviors and make
adjustments accordingly.
So if you know that you'vecarried debt for a long time,
make sure that you're trying topay down that debt or pay off
the debt.
Ultimate goal should be to nothave any debt and to just use
your credit in instances that isgoing to help you move further.
Right?
(04:39):
Never buy anything that you canafford to pay for cash.
Pre-chain, pre-chain, all right,and I do understand.
You know the climate that we'rein.
You know incomes aren't movingas quickly as everything else is
, so I do understand wherecredit does play a role in
filling that gap, but definitelyfocus on trying to make every
(05:02):
effort possible to reduce yourdebt as much as possible and
then use it how it should beused.
Use it and pay off yourbalances every month if you can,
right.
Use it and earn some rewards ifyou can, but it's literally to
be used for things that you canafford and not for things that
you can't afford.
Speaker 1 (05:22):
That is so true.
You've hit on some really goodpoints.
I love the point that you madeabout being the adult report
card.
Oh, yeah, right, because oncewe get out of school, we kind of
forget about these thingsAbsolutely.
And that's how the banks arelooking at us right?
They're just pulling it up andsaying, ok, did you get an A or
not?
Speaker 2 (05:39):
Yeah, and even without your permission, exactly
Sidebar.
Speaker 1 (05:44):
It's so true.
And then the other thing isthat I've actually read an
article that your credit scorecan be used by employers as well
.
Speaker 2 (05:52):
Absolutely.
So many different things areused looking at your credit now,
Insurance, something, I say,cell phones Like I've had a
phone for almost 30 years andthey didn't pull my credit then,
had they pulled it I probablywouldn't have it, but that was
not part of the process, right?
And so everything is looking atyour credit as a reference
point to see what type of personare you.
(06:15):
How are you managing your money?
It is debt, but it does speakto in the eyes of the person
who's pulling it.
How do you handle money?
So, yeah, you want to be on topof that.
Speaker 1 (06:26):
Yeah, I just want to stress the point that you made
about habits, because I talkabout that a lot on this podcast
that you can know where youcame from.
But if you don't change thosehabits moving forward, then what
is the point Essentially?
So some really good stuff there.
Now I know that obviously wetalk that credit score is very
(06:48):
tied to a lot of differentthings whether or not you borrow
or you're an employer orwhatever.
But how does it exactly tie tothe mortgage rate that a bank
will offer or another companywill offer?
Speaker 2 (07:02):
So what I like to teach is that the credit score
is a very vital point of theconversation about your
eligibility and qualifications.
However, it's not the be alland end all.
It doesn't stop right there.
Your credit score is only areflection of what's actually
happening in the body of yourcredit.
So how much debt do you have?
How many times are you applyingfor credit?
(07:22):
How frequently are you applyingfor credit?
Where is that credit being held?
Those are all the factors thatimpact the score, and so what
the lenders are looking at isthey're looking at the score as
a measuring stick, but theyultimately are looking at your
debt load.
How long you've had this debt?
Are you making your payments ontime?
And so let's say you've doneeverything that you should be
(07:45):
able to do.
Your score will give you accessto the top tier type of lending
.
So, in terms of a measuring tool, 680 is, I would say, the sweet
spot.
Anything above that, it'sprobably a reflection of your
good spending habits, butanything less than that, I
(08:06):
wouldn't say that it is going todetrimentally affect a score,
unless you've had a verycritical situation where you've
had to go bankrupt or you are aconsumer proposal and you are
now working your way out of that.
But the higher the score, thetop tier.
So there's a wide range oflenders that you can access to
(08:27):
and you don't necessarily haveto say have 900 to get the best
interest rate available to you,but anything over 680 and you
have access to the best rates onthe market.
Speaker 1 (08:38):
That's great, because it's good to have a median and
I think that if someone's aimingfor something, that we know
what the marker is.
And 680 is the marker andthere's so many tools now out
there that you can actuallycheck your credit score without
paying for blacks or trans unionor anything.
You can just check your creditscore and know exactly where you
are, and to have that median isa great measuring tool.
(09:01):
Definitely, I will say that.
Speaker 2 (09:03):
The scores.
Because one question I do getall the time how come I pull my
score and I see different score?
So depending on where you'regetting that information could
reflect a different score, butthey all understand it the same
way 680 is considered great,right?
680 and above is consideredgreat.
So you definitely want to shootfor the stars, but if you hit
(09:26):
the how's it go Shoot for themoon.
If you hit the stars, that'sstill in a good spot.
So if you're trying to get 800,great, but if you get 680 or
even 679, there's something thatyou can do.
You can do different things toget yourself to that space.
Speaker 1 (09:41):
Yeah, so good segue into the next question was are
there specific factors thatthese lending institutions are
looking for?
So you have the credit score,but are there other factors that
they kind of consider, like howmany loans you have outstanding
credit cards, things like that?
Are there other things that?
Speaker 2 (10:01):
they consider so.
Lenders use what's called debtto income ratio, so ensuring
that you're not living off ofcredit.
So utilization your creditcards should not be maxed out.
Any lines of credit that youhave should not be maxed out,
cause one impacts youreligibility and your purchase
power.
But they also want to know thatyou're not living off of credit
, right.
(10:22):
So some of the things that youcan do that make it look
favorable for you is is keepingyour balances low, keeping
utilization low.
So if you do have a fewaccounts and you can balance
those out, that would help.
It'll help with your score one,but also look like you're
utilizing your creditefficiently, right.
Making your payments on time islike the game changer.
Speaker 1 (10:46):
Right.
Speaker 2 (10:47):
Making sure you're making, at the very least, the
minimum payment, gets reportedby the due date.
That will help for sure,because those people don't
understand, as those cause themost hurt, most pain to your
credit making late payments.
And so you know, just a onelate payment can hit you 30, 40,
50, sometimes you know morepoints.
(11:08):
There's no specific number thatwe can know, but it will
definitely affect you if you areapplying for a mortgage and you
see that you have a currentlate payment.
So making sure that yourpayments are paid on time every
month and keeping your balanceas low, I think would be the
best things.
Speaker 1 (11:24):
Great point because a lot of my clients.
Sometimes they get into thiscycle where they see the due
date and they figure, oh if Ipaid the day before.
But you don't realize that ittakes time for that money to get
from your bank to theinstitution and clear the
account, post it.
Yeah, all of a sudden now youhave a late payment.
Speaker 2 (11:43):
I do also encourage my clients five day minimum,
like don't wait till the duedate.
Five day minimum, exactly.
Speaker 1 (11:50):
So important.
All right, so now you knowwe've built our credit, we're in
a good place.
What about actually investingin real estate for investment
purposes and not just for ourprimary residents?
How does that help to kind ofdiversify our portfolio?
Speaker 2 (12:09):
Well, one as an investment.
You're looking at cash flow,right.
So, you have the opportunity.
If it's the right investment,you have the opportunity to earn
income now, but also in thelong term, right?
So if you keep the property forseveral years, you know you're
gonna be paying the mortgagedown right, so your balance is
gonna be reducing while you'recollecting rents right, Because
(12:31):
if it's an investment property,I'm assuming you're gonna rent
it out.
You're collecting rent, soyou're getting cash flow, but
the property is also gonnaappreciate over time, right.
Speaker 1 (12:40):
So that's how it will help with your diversification
Cash flow, now that you can alsoreinvest in the property or
into other properties or intoother investments, but also on
the long term aspect, where yourproperty is gonna appreciate,
yeah, I agree totally and Ithink that there's some other
factors that we also need tocommunicate up there for people,
Cause I think a lot of peoplethey wanna invest in real estate
(13:03):
and they think it's you know,oh, rent's coming in, that's
great, but there's so many otherfactors like property tax.
Oh, of course, you know all thedifferent things that come with
a home that you have to beaware of so that you actually
are cash positive, you know.
Speaker 2 (13:17):
And so that's why so?
That's why I use the term cashflow right Cause most people
think just they're renting theproperty.
But no, there's definitelycalculations that you should
factor in even before you signthe dotted line and purchase and
investment property.
Right, you have to know whatthe market rents are.
How much can you actuallycollect from this property?
Is it a two-family property?
Can you collect for upstairsand downstairs?
(13:38):
Right.
And then you obviously have togo through the expenses.
What is it gonna cost?
Over and above the mortgage,the property tax Most times you
know the tenants will pay theutilities.
But what if that property isvacant?
Right, that means you're gonnabe responsible for it.
So you have to make sure thatyou know all of the numbers and
ensure that that investment isgoing to cash flow and that you
(13:59):
won't be in a cash flow negativeposition.
Speaker 1 (14:00):
Exactly, yeah, so important and okay.
So my audience are probably inthe situation where they're just
about to buy their very firsthome.
So it's so exciting, Right.
They're saving, they're doingthe work.
What are some financing optionsthat do they have?
Like, do they always have to goto the top five banks?
(14:22):
Like, what kind of options dothey have to borrow to create
that mortgage?
Speaker 2 (14:27):
Well, so first let me identify what a first-time home
buyer is.
Oh, first-time home buyer isideally somebody who has never
owned property before, right,but there's been an expansion on
that definition.
You could have purchased aproperty before, but as long as
you haven't owned in the lastfour years, you can be
(14:48):
considered a first-time homebuyer again.
There are some initiatives outthere that the government has so
graciously gifted us with.
I mean, the first one beingbeing in Canada.
We do have access to purchase aproperty with a minimum of 5%
as a down payment, and that onlyapplies to a property up to
$500,000.
(15:09):
Anything over and above$500,000, you will have to pay a
10% of the difference.
Speaker 1 (15:17):
That is such a great point because in Toronto, where
we're living in GTA, you can'tget a house for $500,000.
Everything is close to themillion-dollar mark, if not more
.
Yes, people think, oh, I shouldhave saved 5%, but really in
fact you're probably likelygoing to have to save 10.
Speaker 2 (15:37):
And not more.
Anything over a million is 20%minimum, right, but I also like
to stress that it's not just 5%.
You have to understand thatit's 5% of what you qualify for.
Ah, there we are.
So you know, it's up to 5%.
It's 5% up to $500,000, whichwould equate to $25,000, right,
(16:01):
but do you even qualify for$500,000?
That's the determining factor.
So the minimum down paymentrequired is 5% or up to 20% on a
million dollar property.
There's a program that theyrecently launched that I
actually really like and I don'tlike much things from the
government.
Just to say what they'verecently announced, that they
(16:26):
have a program called the firsthome savings account that will
allow first time home buyers tosave their down payment in this
account with after tax dollarsand allow it to grow, meaning it
can be invested and grow, andthen you don't be taxed on the
profits.
Speaker 1 (16:46):
Oh, very similar to a TFSA.
Speaker 2 (16:49):
It's actually TFSA's cousin.
I like to say it.
Right, I like to say it's kindof in the middle between the
RRSP program, the home homebuyers plan and the TFSA, and so
this is specifically for peoplewho are, again, first-timers,
never purchased before or neverowned a property in the last
(17:09):
four years.
There's also, if you arerecently divorced, you also can
reclaim that first-time homebuyer status as well and access
those programs as well.
The other program is called theshared equity program, and so,
again, first-time home buyers,and what this is is that you
will have to have a minimum of5% down payment and the
(17:31):
government will match your downpayment.
So if you have 5% and you arelooking at a resale property,
which is a property that iscurrently lived in or currently
owned, and you're purchasing itfrom the vendor, they will give
you an additional 5% of thepurchase price.
However, there's always a catch.
(17:52):
There's always a catch.
It's called shared equity,meaning that you are going into
a partnership with thegovernment on this property.
Interesting, right, but Iunderstand the concept.
It's, you know, to help peopleget into home sooner rather than
having to wait.
You know, three, four, five,six, you know however many years
it'll take for them to actuallysave up that 10%.
(18:14):
If you are interested in a newconstruction property, they will
give you an additional 10%.
So, in total, you're going intothis deal with 15% down payment
, which would, you know, makeyour monthly payments a lot
lower than had you either onewaited or two go, try to go in
with 5%.
So those are some programs thatthe government has recently
(18:37):
implemented to help first timersIn terms of financing.
You know, any lender can lend upto 95%, again based on your
qualifications, as long as thelender approves your, your
profile, but is also subject towhat's called default insurance.
So we have CMHC, which isCanada Mortgage Housing
(19:01):
Corporation yeah, 23 years, andI still fumble that.
We also have Canada Guaranteeand Sagan, and so these
companies will protect thelender in the event that
something you know you're notable to make your payments.
Then they can recruit, but whatthey that allows them to do is
lend up to 95% of the purchaseprice.
Speaker 1 (19:23):
Okay so that's helpful for someone that doesn't
have the additional Absolutely.
Give them a little bit of aprotection.
I'm guessing.
Speaker 2 (19:29):
Absolutely, absolutely.
Both protects the bank, but itgives you the opportunity to get
into your home a lot quicker.
Speaker 1 (19:34):
Okay, okay, okay.
So now we're ready and we'regetting into this market.
You know it's 2023 and so whatare some of the risks that we
should be worried about or kindof protect ourselves against in
this type of market if we wantedto purchase a home?
Speaker 2 (19:53):
I think the first thing is to never overextend
yourself.
Right, don't want a home sobadly that you will max out your
budget.
Yes, right, so I canpre-qualify you for a home
that's 750,000, but does thatmean you can actually afford it?
Speaker 1 (20:12):
Mm-hmm.
Speaker 2 (20:14):
Right, when I do go through the qualifications, I'm
only factoring just a few thingsoff of your monthly expenses,
but I don't factor in like youknow, I speak to a lot of moms.
I don't factor in childcare, Idon't factor in daycare or
extracurricular activities.
Those are things that costmoney that doesn't get added to
the application.
Right, so you may be able to,on paper, afford 750,000, but
(20:39):
does it make financial sense?
Speaker 1 (20:41):
Exactly.
Speaker 2 (20:42):
I think that's the first risk.
Speaker 1 (20:44):
Yeah, no, that's a big one, because, you know, in
my realm I teach budgeting andthat is the key right.
You have to understand all yourexpenses, not just what the
bank is telling you.
Oh look, you can buy amillion-dollar home.
Well, you know what?
Speaker 2 (20:58):
Can you really afford it?
I would say the other thing tobe caution of is not all
mortgages are created equally,and so you know, going back to
our credit conversation,sometimes you know people, are
they really, really you reallywant to get into a home and you
know, instead of patientlywaiting to rebuild themselves,
they'll go in and, you know,commit to a mortgage that is
(21:22):
very costly, right On the frontend, on the back end, without
reading any paperwork, right,and so those are things that I
think would be risky making surethat you're very aware of a
deal that you're getting intoright, understanding that
whomever you're working with isexplaining all the costs that
(21:42):
are involved in the transaction.
And then, mainly, do notoverextend yourself.
Speaker 1 (21:49):
Right and understand what the bottom line is.
Right, right, yeah.
And then you know you can goback to your budget and see if
it actually works.
Absolutely so true.
Well, having you on this showhas been so awesome, so why do
you think it's important to havea?
Speaker 2 (22:06):
mortgage broker in your corner?
Oh, that's my favorite question, caroline.
Well, I've been in the industryfor over 20 years and you know
our role in society has changed,right?
We really thought of only forpeople who had bad credit, and
that it couldn't be the furthestthing from the truth.
(22:26):
What a mortgage broker does?
It gives you access to options.
Everyone's situation is going tobe different, and where you are
currently, you know you may befinancially ready, but the bank
may not like how your portfoliolooks right, and so, therefore,
you're limited with what thebank can offer you While you're
working with myself.
(22:47):
I have access to every tier oflending out there.
I have access to the banks.
I have access to trustcompanies.
I have access to credit unions.
I have access to what we callmonoline lenders or mortgage
lenders.
I have access to private fundsright, I have access to so many
different types of lenders thatyou may be able to fit into
their box, right, and getyourself into the home a lot
(23:09):
quicker.
But if you don't have thatconversation with a broker, you
won't know.
We have been taught to go tothe banks for everything.
Right, it's just natural, right?
Speaker 1 (23:18):
That's where I'm coming from you know, took us to
open our first bank account.
Do you know what I?
Speaker 2 (23:22):
mean Absolutely, absolutely.
And I have several clients whohave, you know, been with an
institution for years upon yearsand when they were ready to
purchase they weren't able toget approved with that
institution Right.
So, again, working with abroker will give you a multitude
of options that will help youto get into your home and a
product that works for you.
Speaker 1 (23:44):
Yeah, and, like I said, having someone in their
corner that's actually rootingfor you, absolutely.
Sometimes, the banks are reallytrying to just sell you
something Sometimes, and they'renot necessarily yeah, exactly,
and they're not necessarily onyour side, right?
Speaker 2 (23:58):
Absolutely.
Speaker 1 (23:59):
So yeah, the difference for sure.
Speaker 2 (24:01):
We're building a relationship right.
My goal is to not just get youone mortgage.
My goal is to educate youthrough the process and teach
you how you can get anothermortgage and then another
mortgage right.
And ultimately help you getyour kids' mortgages.
Typically the lendinginstitutions that's not their
business.
Their business is volumegetting as many deals approved
and closed as possible.
They're not really concernedwith your the holistic look at
(24:23):
your financial portfolio.
So that's one of the.
That's the benefit of workingwith a mortgage.
Speaker 1 (24:29):
That is the benefit, Absolutely so where can they
find you?
If anybody wants to reach out,where would they be able to find
you?
Speaker 2 (24:36):
I am available on all social platforms.
Instagram, though, is myplayground.
You go find me on Instagram.
My business page is mortgagesfor moms, using the number four.
I am on Facebook as well.
I'm even on TikTok.
I don't spend a lot of timethere, but I like TikTok.
I scroll a lot more than I putcontent out there.
Yeah, or you can find me on mywebsite at shivanbentcom.
Speaker 1 (25:00):
Absolutely.
It's such a great conversationand I thank you so much for
sharing all this knowledge withus.
Thank you, it's really helpful,especially for a first time
home buyer in the saving process.
Just you know, having thatinformation is golden.
So again, much appreciated.
Speaker 2 (25:17):
Thank you for having me, carolyn.
Thank you, okay.
Speaker 1 (25:23):
So wasn't that a great conversation, a lot of
great points, especially aboutyour credit.
I can't stress enough howimportant it is to protect your
credit score.
As you've heard, it is used foreverything and I know a lot of
you may be discouraged becauseof the market and the way that
it is right now.
(25:44):
Things are expensive, interestrates are up, rent is expensive,
but if we're building afoundation, this is one of the
most important topicsUnderstanding how to protect
your credit, utilizing thegovernment programs that are out
there and then thinking beyond,outside of the box, perhaps
(26:07):
buying property for aninvestment purpose, living and
renting.
You know there's so manyopportunities out there.
So don't get discouraged by themarket conditions right now,
because as you build thatfoundation, you are going to get
better and better and be in aplace when things are right for
you to be able to act on it.
(26:30):
So I hope you enjoyed thisepisode.
It was great talking to mycolleague, siobhan, and if you
have more questions, don'thesitate to reach out.
I'm only a DM away on Instagramand you can send me an email.
I would love to hear from youand if you have topics that
you'd like to learn about,please feel free to share them
with me and I will add them toour roster.
(26:52):
Alright, well, we will see youguys next week, thursday, same
time, same place.
Thank you for listening.
We are committed to helping youplace your very first steps
into your new home.
See you next time.
Hello everyone.
My name is Carolyn.
Welcome to the Saving for yourFirst Home podcast.
I am the CEO of the FinancialMoment.
We offer money coaching forthose who are ready and willing
to make financial changes intheir lives.
For the most of us, there comesa point in time where we think
to ourselves it would be reallynice to own property, but it
(00:22):
sometimes can feel like a pipedream and not very easily
obtainable.
So I created this podcast togive you all the information and
tools you need to take thesteps forward toward home
ownership.
Take it from me my husband andI started our lives together,
working part-time jobs with ayoung child.
Fast forward, through manyhiccups and failures, we stepped
(00:43):
our feet into our very firsthome.
For us it was a pile of dirt,but eventually our family home
was built on that dirt.
Now we are in the midst ofgrowing our investment property
portfolio.
I created the savings for yourfirst home podcast to give you
easy, actionable tools for youto do the same.
If you have that same gutfeeling that I did and want to
(01:06):
create a life for yourself andyour growing family, but don't
know where to start, you are inthe right place.
Let's do this.
Hello everyone, welcome back tothe Saving for your First Home
podcast.
I'm Carolyn, your money coach.
Now, today we are very excitedbecause we are inviting Siobhan
Bent onto our show today.
(01:26):
She started her journey over 20years ago by purchasing her
very first investment propertyat the young age of 23.
Can you believe that she fellin love with the industry and
after a short time she quit herfull-time job and dove headfirst
into entrepreneurship as amortgage broker.
So I know she understands theimportance of financial literacy
(01:49):
and she is super committed toeducating, empowering her own
community with lots of tools andresources and opportunities
that will create legacy fortheir families.
So let's welcome Siobhan ontothe show.
Welcome, siobhan, welcome tothe podcast.
I'm so glad that you decided tocome on and share your
knowledge with all of us.
Hello.
Speaker 2 (02:09):
Carolyn, thank you for having me.
It's a truly honor to be inyour presence and to speak with
your audience.
I'm so happy that we're doingthe same thing, essentially
right.
So being able to find andconnect with people who share
the same interests, share thesame passion about educating the
masses is truly delightful.
So thank you.
Speaker 1 (02:30):
Yes, again welcome.
I'm excited because you knowthis topic that we're going to
get into is probably one of thehotter topics, I think, out
there right now.
Everybody is thinking aboutwhat the interest rates are
doing to the housing market, andso your knowledge and expertise
is so needed right now, so I'mvery happy to share that with
the community, thank you.
(02:51):
So when do we think aboutcredit history?
You know a lot of people makemistakes as they kind of go
through you know your 20s,you're going through college.
You know you kind of made someerrors here and there.
You've gotten introduced tocredit these types of things
when you're starting to head outof that season.
How do you establish a strongcredit history?
Speaker 2 (03:14):
Well, first of all, you got to know where you're
starting from.
I've had, over my years, I'vetalked to several clients who'd
be like I don't know, I haven'tlooked at my credit in a couple
years.
I'm like, how is that even so?
Right, I believe that yourcredit report is like your adult
report card, and you know, manyyears ago, credit wasn't.
It's always been a thing, butit's never been an essential
(03:36):
tool in the life, and so thesedays, you need credit for just
about everything.
So it's something that you needto be aware of and be on top of
.
So the first thing I would sayis obviously to pull your credit
to make sure where you stand.
How do you build your historyis obviously looking back to see
what things did you doincorrectly, things like using
(03:58):
too much debt right.
A lot of times people areextended credit and think that
it's an extension of theirincome, and so you know, they
live by just paying the minimumpayments and so they're carrying
debt for a long period of timeand over the course of years
that can impact your creditnegatively.
So I would say know where youare.
(04:18):
Then the next thing is reflecton your past behaviors and make
adjustments accordingly.
So if you know that you'vecarried debt for a long time,
make sure that you're trying topay down that debt or pay off
the debt.
Ultimate goal should be to nothave any debt and to just use
your credit in instances that isgoing to help you move further.
Right?
(04:39):
Never buy anything that you canafford to pay for cash.
Pre-chain, pre-chain, all right,and I do understand.
You know the climate that we'rein.
You know incomes aren't movingas quickly as everything else is
, so I do understand wherecredit does play a role in
filling that gap, but definitelyfocus on trying to make every
(05:02):
effort possible to reduce yourdebt as much as possible and
then use it how it should beused.
Use it and pay off yourbalances every month if you can,
right.
Use it and earn some rewards ifyou can, but it's literally to
be used for things that you canafford and not for things that
you can't afford.
Speaker 1 (05:22):
That is so true.
You've hit on some really goodpoints.
I love the point that you madeabout being the adult report
card.
Oh, yeah, right, because oncewe get out of school, we kind of
forget about these thingsAbsolutely.
And that's how the banks arelooking at us right?
They're just pulling it up andsaying, ok, did you get an A or
not?
Speaker 2 (05:39):
Yeah, and even without your permission, exactly
Sidebar.
Speaker 1 (05:44):
It's so true.
And then the other thing isthat I've actually read an
article that your credit scorecan be used by employers as well
.
Speaker 2 (05:52):
Absolutely.
So many different things areused looking at your credit now,
Insurance, something, I say,cell phones Like I've had a
phone for almost 30 years andthey didn't pull my credit then,
had they pulled it I probablywouldn't have it, but that was
not part of the process, right?
And so everything is looking atyour credit as a reference
point to see what type of personare you.
(06:15):
How are you managing your money?
It is debt, but it does speakto in the eyes of the person
who's pulling it.
How do you handle money?
So, yeah, you want to be on topof that.
Speaker 1 (06:26):
Yeah, I just want to stress the point that you made
about habits, because I talkabout that a lot on this podcast
that you can know where youcame from.
But if you don't change thosehabits moving forward, then what
is the point Essentially?
So some really good stuff there.
Now I know that obviously wetalk that credit score is very
(06:48):
tied to a lot of differentthings whether or not you borrow
or you're an employer orwhatever.
But how does it exactly tie tothe mortgage rate that a bank
will offer or another companywill offer?
Speaker 2 (07:02):
So what I like to teach is that the credit score
is a very vital point of theconversation about your
eligibility and qualifications.
However, it's not the be alland end all.
It doesn't stop right there.
Your credit score is only areflection of what's actually
happening in the body of yourcredit.
So how much debt do you have?
How many times are you applyingfor credit?
(07:22):
How frequently are you applyingfor credit?
Where is that credit being held?
Those are all the factors thatimpact the score, and so what
the lenders are looking at isthey're looking at the score as
a measuring stick, but theyultimately are looking at your
debt load.
How long you've had this debt?
Are you making your payments ontime?
And so let's say you've doneeverything that you should be
(07:45):
able to do.
Your score will give you accessto the top tier type of lending
.
So, in terms of a measuring tool, 680 is, I would say, the sweet
spot.
Anything above that, it'sprobably a reflection of your
good spending habits, butanything less than that, I
(08:06):
wouldn't say that it is going todetrimentally affect a score,
unless you've had a verycritical situation where you've
had to go bankrupt or you are aconsumer proposal and you are
now working your way out of that.
But the higher the score, thetop tier.
So there's a wide range oflenders that you can access to
(08:27):
and you don't necessarily haveto say have 900 to get the best
interest rate available to you,but anything over 680 and you
have access to the best rates onthe market.
Speaker 1 (08:38):
That's great, because it's good to have a median and
I think that if someone's aimingfor something, that we know
what the marker is.
And 680 is the marker andthere's so many tools now out
there that you can actuallycheck your credit score without
paying for blacks or trans unionor anything.
You can just check your creditscore and know exactly where you
are, and to have that median isa great measuring tool.
(09:01):
Definitely, I will say that.
Speaker 2 (09:03):
The scores.
Because one question I do getall the time how come I pull my
score and I see different score?
So depending on where you'regetting that information could
reflect a different score, butthey all understand it the same
way 680 is considered great,right?
680 and above is consideredgreat.
So you definitely want to shootfor the stars, but if you hit
(09:26):
the how's it go Shoot for themoon.
If you hit the stars, that'sstill in a good spot.
So if you're trying to get 800,great, but if you get 680 or
even 679, there's something thatyou can do.
You can do different things toget yourself to that space.
Speaker 1 (09:41):
Yeah, so good segue into the next question was are
there specific factors thatthese lending institutions are
looking for?
So you have the credit score,but are there other factors that
they kind of consider, like howmany loans you have outstanding
credit cards, things like that?
Are there other things that?
Speaker 2 (10:01):
they consider so.
Lenders use what's called debtto income ratio, so ensuring
that you're not living off ofcredit.
So utilization your creditcards should not be maxed out.
Any lines of credit that youhave should not be maxed out,
cause one impacts youreligibility and your purchase
power.
But they also want to know thatyou're not living off of credit
, right.
(10:22):
So some of the things that youcan do that make it look
favorable for you is is keepingyour balances low, keeping
utilization low.
So if you do have a fewaccounts and you can balance
those out, that would help.
It'll help with your score one,but also look like you're
utilizing your creditefficiently, right.
Making your payments on time islike the game changer.
Speaker 1 (10:46):
Right.
Speaker 2 (10:47):
Making sure you're making, at the very least, the
minimum payment, gets reportedby the due date.
That will help for sure,because those people don't
understand, as those cause themost hurt, most pain to your
credit making late payments.
And so you know, just a onelate payment can hit you 30, 40,
50, sometimes you know morepoints.
(11:08):
There's no specific number thatwe can know, but it will
definitely affect you if you areapplying for a mortgage and you
see that you have a currentlate payment.
So making sure that yourpayments are paid on time every
month and keeping your balanceas low, I think would be the
best things.
Speaker 1 (11:24):
Great point because a lot of my clients.
Sometimes they get into thiscycle where they see the due
date and they figure, oh if Ipaid the day before.
But you don't realize that ittakes time for that money to get
from your bank to theinstitution and clear the
account, post it.
Yeah, all of a sudden now youhave a late payment.
Speaker 2 (11:43):
I do also encourage my clients five day minimum,
like don't wait till the duedate.
Five day minimum, exactly.
Speaker 1 (11:50):
So important.
All right, so now you knowwe've built our credit, we're in
a good place.
What about actually investingin real estate for investment
purposes and not just for ourprimary residents?
How does that help to kind ofdiversify our portfolio?
Speaker 2 (12:09):
Well, one as an investment.
You're looking at cash flow,right.
So, you have the opportunity.
If it's the right investment,you have the opportunity to earn
income now, but also in thelong term, right?
So if you keep the property forseveral years, you know you're
gonna be paying the mortgagedown right, so your balance is
gonna be reducing while you'recollecting rents right, Because
(12:31):
if it's an investment property,I'm assuming you're gonna rent
it out.
You're collecting rent, soyou're getting cash flow, but
the property is also gonnaappreciate over time, right.
Speaker 1 (12:40):
So that's how it will help with your diversification
Cash flow, now that you can alsoreinvest in the property or
into other properties or intoother investments, but also on
the long term aspect, where yourproperty is gonna appreciate,
yeah, I agree totally and Ithink that there's some other
factors that we also need tocommunicate up there for people,
Cause I think a lot of peoplethey wanna invest in real estate
(13:03):
and they think it's you know,oh, rent's coming in, that's
great, but there's so many otherfactors like property tax.
Oh, of course, you know all thedifferent things that come with
a home that you have to beaware of so that you actually
are cash positive, you know.
Speaker 2 (13:17):
And so that's why so?
That's why I use the term cashflow right Cause most people
think just they're renting theproperty.
But no, there's definitelycalculations that you should
factor in even before you signthe dotted line and purchase and
investment property.
Right, you have to know whatthe market rents are.
How much can you actuallycollect from this property?
Is it a two-family property?
Can you collect for upstairsand downstairs?
(13:38):
Right.
And then you obviously have togo through the expenses.
What is it gonna cost?
Over and above the mortgage,the property tax Most times you
know the tenants will pay theutilities.
But what if that property isvacant?
Right, that means you're gonnabe responsible for it.
So you have to make sure thatyou know all of the numbers and
ensure that that investment isgoing to cash flow and that you
(13:59):
won't be in a cash flow negativeposition.
Speaker 1 (14:00):
Exactly, yeah, so important and okay.
So my audience are probably inthe situation where they're just
about to buy their very firsthome.
So it's so exciting, Right.
They're saving, they're doingthe work.
What are some financing optionsthat do they have?
Like, do they always have to goto the top five banks?
(14:22):
Like, what kind of options dothey have to borrow to create
that mortgage?
Speaker 2 (14:27):
Well, so first let me identify what a first-time home
buyer is.
Oh, first-time home buyer isideally somebody who has never
owned property before, right,but there's been an expansion on
that definition.
You could have purchased aproperty before, but as long as
you haven't owned in the lastfour years, you can be
(14:48):
considered a first-time homebuyer again.
There are some initiatives outthere that the government has so
graciously gifted us with.
I mean, the first one beingbeing in Canada.
We do have access to purchase aproperty with a minimum of 5%
as a down payment, and that onlyapplies to a property up to
$500,000.
(15:09):
Anything over and above$500,000, you will have to pay a
10% of the difference.
Speaker 1 (15:17):
That is such a great point because in Toronto, where
we're living in GTA, you can'tget a house for $500,000.
Everything is close to themillion-dollar mark, if not more
.
Yes, people think, oh, I shouldhave saved 5%, but really in
fact you're probably likelygoing to have to save 10.
Speaker 2 (15:37):
And not more.
Anything over a million is 20%minimum, right, but I also like
to stress that it's not just 5%.
You have to understand thatit's 5% of what you qualify for.
Ah, there we are.
So you know, it's up to 5%.
It's 5% up to $500,000, whichwould equate to $25,000, right,
(16:01):
but do you even qualify for$500,000?
That's the determining factor.
So the minimum down paymentrequired is 5% or up to 20% on a
million dollar property.
There's a program that theyrecently launched that I
actually really like and I don'tlike much things from the
government.
Just to say what they'verecently announced, that they
(16:26):
have a program called the firsthome savings account that will
allow first time home buyers tosave their down payment in this
account with after tax dollarsand allow it to grow, meaning it
can be invested and grow, andthen you don't be taxed on the
profits.
Speaker 1 (16:46):
Oh, very similar to a TFSA.
Speaker 2 (16:49):
It's actually TFSA's cousin.
I like to say it.
Right, I like to say it's kindof in the middle between the
RRSP program, the home homebuyers plan and the TFSA, and so
this is specifically for peoplewho are, again, first-timers,
never purchased before or neverowned a property in the last
(17:09):
four years.
There's also, if you arerecently divorced, you also can
reclaim that first-time homebuyer status as well and access
those programs as well.
The other program is called theshared equity program, and so,
again, first-time home buyers,and what this is is that you
will have to have a minimum of5% down payment and the
(17:31):
government will match your downpayment.
So if you have 5% and you arelooking at a resale property,
which is a property that iscurrently lived in or currently
owned, and you're purchasing itfrom the vendor, they will give
you an additional 5% of thepurchase price.
However, there's always a catch.
(17:52):
There's always a catch.
It's called shared equity,meaning that you are going into
a partnership with thegovernment on this property.
Interesting, right, but Iunderstand the concept.
It's, you know, to help peopleget into home sooner rather than
having to wait.
You know, three, four, five,six, you know however many years
it'll take for them to actuallysave up that 10%.
(18:14):
If you are interested in a newconstruction property, they will
give you an additional 10%.
So, in total, you're going intothis deal with 15% down payment
, which would, you know, makeyour monthly payments a lot
lower than had you either onewaited or two go, try to go in
with 5%.
So those are some programs thatthe government has recently
(18:37):
implemented to help first timersIn terms of financing.
You know, any lender can lend upto 95%, again based on your
qualifications, as long as thelender approves your, your
profile, but is also subject towhat's called default insurance.
So we have CMHC, which isCanada Mortgage Housing
(19:01):
Corporation yeah, 23 years, andI still fumble that.
We also have Canada Guaranteeand Sagan, and so these
companies will protect thelender in the event that
something you know you're notable to make your payments.
Then they can recruit, but whatthey that allows them to do is
lend up to 95% of the purchaseprice.
Speaker 1 (19:23):
Okay so that's helpful for someone that doesn't
have the additional Absolutely.
Give them a little bit of aprotection.
I'm guessing.
Speaker 2 (19:29):
Absolutely, absolutely.
Both protects the bank, but itgives you the opportunity to get
into your home a lot quicker.
Speaker 1 (19:34):
Okay, okay, okay.
So now we're ready and we'regetting into this market.
You know it's 2023 and so whatare some of the risks that we
should be worried about or kindof protect ourselves against in
this type of market if we wantedto purchase a home?
Speaker 2 (19:53):
I think the first thing is to never overextend
yourself.
Right, don't want a home sobadly that you will max out your
budget.
Yes, right, so I canpre-qualify you for a home
that's 750,000, but does thatmean you can actually afford it?
Speaker 1 (20:12):
Mm-hmm.
Speaker 2 (20:14):
Right, when I do go through the qualifications, I'm
only factoring just a few thingsoff of your monthly expenses,
but I don't factor in like youknow, I speak to a lot of moms.
I don't factor in childcare, Idon't factor in daycare or
extracurricular activities.
Those are things that costmoney that doesn't get added to
the application.
Right, so you may be able to,on paper, afford 750,000, but
(20:39):
does it make financial sense?
Speaker 1 (20:41):
Exactly.
Speaker 2 (20:42):
I think that's the first risk.
Speaker 1 (20:44):
Yeah, no, that's a big one, because, you know, in
my realm I teach budgeting andthat is the key right.
You have to understand all yourexpenses, not just what the
bank is telling you.
Oh look, you can buy amillion-dollar home.
Well, you know what?
Speaker 2 (20:58):
Can you really afford it?
I would say the other thing tobe caution of is not all
mortgages are created equally,and so you know, going back to
our credit conversation,sometimes you know people, are
they really, really you reallywant to get into a home and you
know, instead of patientlywaiting to rebuild themselves,
they'll go in and, you know,commit to a mortgage that is
(21:22):
very costly, right On the frontend, on the back end, without
reading any paperwork, right,and so those are things that I
think would be risky making surethat you're very aware of a
deal that you're getting intoright, understanding that
whomever you're working with isexplaining all the costs that
(21:42):
are involved in the transaction.
And then, mainly, do notoverextend yourself.
Speaker 1 (21:49):
Right and understand what the bottom line is.
Right, right, yeah.
And then you know you can goback to your budget and see if
it actually works.
Absolutely so true.
Well, having you on this showhas been so awesome, so why do
you think it's important to havea?
Speaker 2 (22:06):
mortgage broker in your corner?
Oh, that's my favorite question, caroline.
Well, I've been in the industryfor over 20 years and you know
our role in society has changed,right?
We really thought of only forpeople who had bad credit, and
that it couldn't be the furthestthing from the truth.
(22:26):
What a mortgage broker does?
It gives you access to options.
Everyone's situation is going tobe different, and where you are
currently, you know you may befinancially ready, but the bank
may not like how your portfoliolooks right, and so, therefore,
you're limited with what thebank can offer you While you're
working with myself.
(22:47):
I have access to every tier oflending out there.
I have access to the banks.
I have access to trustcompanies.
I have access to credit unions.
I have access to what we callmonoline lenders or mortgage
lenders.
I have access to private fundsright, I have access to so many
different types of lenders thatyou may be able to fit into
their box, right, and getyourself into the home a lot
(23:09):
quicker.
But if you don't have thatconversation with a broker, you
won't know.
We have been taught to go tothe banks for everything.
Right, it's just natural, right?
Speaker 1 (23:18):
That's where I'm coming from you know, took us to
open our first bank account.
Do you know what I?
Speaker 2 (23:22):
mean Absolutely, absolutely.
And I have several clients whohave, you know, been with an
institution for years upon yearsand when they were ready to
purchase they weren't able toget approved with that
institution Right.
So, again, working with abroker will give you a multitude
of options that will help youto get into your home and a
product that works for you.
Speaker 1 (23:44):
Yeah, and, like I said, having someone in their
corner that's actually rootingfor you, absolutely.
Sometimes, the banks are reallytrying to just sell you
something Sometimes, and they'renot necessarily yeah, exactly,
and they're not necessarily onyour side, right?
Speaker 2 (23:58):
Absolutely.
Speaker 1 (23:59):
So yeah, the difference for sure.
Speaker 2 (24:01):
We're building a relationship right.
My goal is to not just get youone mortgage.
My goal is to educate youthrough the process and teach
you how you can get anothermortgage and then another
mortgage right.
And ultimately help you getyour kids' mortgages.
Typically the lendinginstitutions that's not their
business.
Their business is volumegetting as many deals approved
and closed as possible.
They're not really concernedwith your the holistic look at
(24:23):
your financial portfolio.
So that's one of the.
That's the benefit of workingwith a mortgage.
Speaker 1 (24:29):
That is the benefit, Absolutely so where can they
find you?
If anybody wants to reach out,where would they be able to find
you?
Speaker 2 (24:36):
I am available on all social platforms.
Instagram, though, is myplayground.
You go find me on Instagram.
My business page is mortgagesfor moms, using the number four.
I am on Facebook as well.
I'm even on TikTok.
I don't spend a lot of timethere, but I like TikTok.
I scroll a lot more than I putcontent out there.
Yeah, or you can find me on mywebsite at shivanbentcom.
Speaker 1 (25:00):
Absolutely.
It's such a great conversationand I thank you so much for
sharing all this knowledge withus.
Thank you, it's really helpful,especially for a first time
home buyer in the saving process.
Just you know, having thatinformation is golden.
So again, much appreciated.
Speaker 2 (25:17):
Thank you for having me, carolyn.
Thank you, okay.
Speaker 1 (25:23):
So wasn't that a great conversation, a lot of
great points, especially aboutyour credit.
I can't stress enough howimportant it is to protect your
credit score.
As you've heard, it is used foreverything and I know a lot of
you may be discouraged becauseof the market and the way that
it is right now.
(25:44):
Things are expensive, interestrates are up, rent is expensive,
but if we're building afoundation, this is one of the
most important topicsUnderstanding how to protect
your credit, utilizing thegovernment programs that are out
there and then thinking beyond,outside of the box, perhaps
(26:07):
buying property for aninvestment purpose, living and
renting.
You know there's so manyopportunities out there.
So don't get discouraged by themarket conditions right now,
because as you build thatfoundation, you are going to get
better and better and be in aplace when things are right for
you to be able to act on it.
(26:30):
So I hope you enjoyed thisepisode.
It was great talking to mycolleague, siobhan, and if you
have more questions, don'thesitate to reach out.
I'm only a DM away on Instagramand you can send me an email.
I would love to hear from youand if you have topics that
you'd like to learn about,please feel free to share them
with me and I will add them toour roster.
(26:52):
Alright, well, we will see youguys next week, thursday, same
time, same place.
Thank you for listening.
We are committed to helping youplace your very first steps
into your new home.
See you next time.
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If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.