Exclusive Interview of Roy Cocciollo

Exclusive Interview

Roy Cocciollo

Principal Broker at Yourmortgageyourway.ca

MBE: Please tell us a bit about your background in this business, how yougot into residential mortgage brokerage and consulting and your earlybeginnings?

Roy: I started in the banking sector in 1998. I started as a CIBC mobile rep. I was there for about a year and then I got hired by Canada Trust. They had a hiring freeze so I left CIBC and I had deals coming in so I went to a friend of mine who was a mortgage broker who introduced me to a broker of record and then I became an actual mortgage broker in 1999. I worked with them for a few years and then started my own little shop: Color Short Mortgages in 2001. Then I was a managing partner at Monster Mortgages for 9 years. Now I am broker & owner of a small, niche mortgage brokerage downtown called Yourmortgageyourway.ca. We have been a company now for about 6 years, we have around 21 agents, we specialize mostly in residential mortgages, we also do some small commercial, some construction loans, some private lenders as well for those that don’t fit the box.

MBE: What are the key things you did that kept you in the business for solong?

Roy: I think there are a couple of things. It can be a very lucrative business. Most people who come into it, see dollar signs and they do things the wrong way early on. I think something that is rampant now in the business is mortgage fraud, costing a lot of people a huge amount of money. I think last year it was around $500M dollars discovered in mortgage fraud. People think it doesn’t hurt anybody but it hurts everybody. It makes regulations tougher. Everyone talks about why mortgage rules are so tough and this is one of the reasons. Home ownership in Canada is a privilege, it’s not a right. I would love to see everybody own a home but you have to make sure you take the right steps in order to get it. Longevity in this business means doing what’s right for the client.

MBE: Home ownership is a very challenging thing to accomplish for first time home buyers. So what is your advice forsuch people who are in the market for their first home purchase?

Roy: The problem you run into, with the guidelines that OSFI puts in place will be the B-20 rules. And you look at, you’d have to have a 25 year amortization, qualify at the mortgage qualifying rate. I’ll give you a great example. I have a client who is a teacher and makes $80,000 a year, she’s got 10% down, and she qualifies only for a $400,000 purchase. Not that she can’t afford more, but with the regulations make it very difficult for her to purchase something at $400,000. I mean what is she going to buy with $400,000? A studio apartment, maybe? So what ends up happening is, you’ve got all these people who can afford to buy, but don’t qualify for them to purchase something that is actually reasonable. I think that if you are a first time homebuyer, try to get the biggest down payment you can, try to have at least 20% whether you get a gift from your parents or maybe have a cosigner so you can actually buy something that is reasonable.

I have found that first time homebuyers, you need to do your homework way in advance, you need to find out if youqualify today even if you are looking at a purchase 2 or 3 years down the road, so that at least you know what you need todo to get there.

MBE: Can you describe the stress test in layman terms for our readers? I think a lot of people talk about it but most don’tunderstand it.

Roy: The stress test is put in place by the government because they feared interest rates will continue to rise. So what they did is, they made anybody who wants to purchase a home to qualify at a much higher interest rate, which is the contract rate + 2% or the MQR which is mortgage qualifying rate set by the government which is 5.19%. So what they want to know is, we know you can pay 2.69%, we know that you can afford it, but they want to make sure you can afford it if the rates go up to 5

MBE: What is your advice to the young professionals aspiring to enter this field? What route they should take in terms ofeducation and experience and what pitfalls they should avoid?

Roy: Firstly, I think it is definitely a viable career but young professionals entering the business have to set their expectations right. I think when I first started it used to take you around 6-9 months to get your feet really rolling and make consistent money. Now it’s closer to 2 years because the market has gotten more competitive. I think you should definitely take your brokerage course if you are interested in entering the field. Seneca College has a course, Mortgage Professionals Canada also has a course you can take. I’ll say get your experience at a bank. Banking will give you leads and help you understand the regulations and guidelines and they will help train you. After getting experience at a bank you can jump into mortgage brokerage.

MBE: What are the most common reasons people don’t get their mortgages approved?

Roy: Credit is one thing and your credit score is very important. Also, their income is a factor. The biggest hurdle for most of us is your down-payment. I spend more time collecting down-payments from clients than any other documentation. So when you are preparing to buy, make sure you have your down-payment organized and paperwork organized. Furthermore, for employment stuff, make sure you have your T4 and if you get bonuses, commissions or hourly pay we will need a 2 year average.

MBE : Can you share some suggestions on how to maintain a good credit score?

Roy: You have to make sure you keep your credit around 75% of the total limit. So if you have a $10,000 credit card, you want to have a $7500 balance rotating every month. Another good thing to do is pay your credit cards more often, smaller amounts, but more frequent payments. So if you owe $200, instead of paying $200 once a month, pay $50 a week, because the more transactions you have in their, the more the repayments, the higher your credit score will be.

MBE : How do you see the projections in the coming few years Roy? Should people wait or buy properties now? Will the market stay stable, or will it go up or down?

Roy: The good news is that rates will be relatively stable. You’re not going to see huge fluctuations in rates. The biggest issue with this country is that immigration is accelerating and we have a housing shortage. In 10 years, we will have a catastrophic housing shortage. That means housing prices will continue to rise gradually, rent will also continue to rise. If you want to get in the market the best time to buy is today, because tomorrow it’s going to cost you more. Affordable housing, the only way that will happen is if the government will allow us to continue to build with less red tape and start creating housing. If you want affordable housing, the government is going to have to allow less bureaucracy and allow builders to build. The only way housing prices will come down is if there is a surplus. If people can’t buy, they rent and if you push more people towards rent the rental market goes up. Housing will never become affordable until the government does something about it and actually allows builders to build more and more until there is a surplus. Then prices will stabilize and will even come down.

MBE: That was very insightful, thank you for sharing your financial advice, suggestions and projections with us today Royand thanks for your time. It was a real pleasure talking to you and we have learned quite a lot from this interview ourselves,we are sure this interview will be very interesting and informative for our readers as well.

Contact Today For A Free Consultation: Roy Cocciollo - Yourmortgageyourway.ca

Email: info@yourmortgageyourway.ca

Phone: 416-640-0930