beyond MD with Dr. Yatin Chadha

Ep #103: Smart Moves For Your Next Mortgage Renewal - with Elan Weintraub

• Yatin Chadha • Season 1 • Episode 103

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Renewing a mortgage is more than just re-signing with your existing lender. Today I sit down with Elan Weintraub to discuss everything related to mortgages and renewals. Treat it like a financial checkpoint that aligns with your career, family plans, and cash flow, not just a headline rate. 

We dig into the real levers you control, and uncover key questions you should ask:

Why is a 30 year amortization often a good idea?

Considerations for paying down the mortgage faster

Why every 4% rate isn't the same (interest can compound too)

What do I need to know about adjustable vs variable rate mortgages?

What are the range of prepayment options?

Are tax strategies real or overhyped?

What are the pros and cons of mortgage laddering?

If you’ve got a renewal coming up or want to future-proof your financing, this is a concise masterclass on what actually moves the needle. 

If this helped you, subscribe, leave a review, and share it with a colleague who’s staring at a renewal letter right now.


Arya EHR: https://www.aryaehr.com/


Elan Weintraub:

https://www.linkedin.com/in/elan-weintraub-9683702/

https://mortgageoutlet.ca/


Yatin:

LinkedIn: https://www.linkedin.com/in/yatin-chadha/

Radiology Courses for Clinicians:

https://beyondradiology.thinkific.com/courses/ct-head-interpretation-course

https://beyondradiology.thinkific.com/courses/master-ct-head-interpretation-course

American express referral link (for all Amex cards):

https://americanexpress.com/en-ca/referral/business-platinum?ref=yATINC4uFw&XLINK=MYCP

SPEAKER_01:

In 2021, I jumped in front of a dumpster truck looking for pennies as I signed up for a variable rate mortgage at prime minus 1.4%. I felt like I'd outsmarted everyone. The short term felt amazing, but the mid and long term were painful as I was leaking interest payments. I was hard on myself for that decision. But after I got over that, I realized the answer was to continue educating myself on this topic. Now it turns out that I have a mortgage renewal coming up in January 2026, and I'm determined not to make the same mistakes. So I'm excited to bring you this episode that covers everything mortgages with a focus on mortgage renewals. Buckle up everyone, it's gonna be a fun ride. I hope you enjoy the conversation. So, guys, welcome to episode 103. I'm really happy to bring on my friend and colleague, Elan Weintraub. So Elan is co-founder of the mortgage outlet. He's a very respected voice in the mortgage space, and his opinion is sought frequently, so which is why I wanted to bring him back again onto the show. And it turns out that in the coming months, I will be dealing with a mortgage renewal. So I thought the time was perfect. So, Elan, and I realize I may have been mispronouncing your name for years, but welcome back to the show.

SPEAKER_00:

Thank you. It's a true pleasure to be here.

SPEAKER_01:

So, man, let's just start off with that renewal letter. And I want to emphasize the concepts we talked about today, while we will be talking a bit about renewals, totally relevant to anybody exploring a mortgage, even for the first time. But I'll put everybody in my shoes. I got a mortgage renewal letter recently. And for many people, we will take that letter and we will go back to our existing lender. But it turns out that that may not be the best way to get the best product or get the best rate. So, Ylan, maybe talk to us about why our existing lenders may not be inclined to give us the best rate. And perhaps into this, we can talk about what are some of the differences in dealing directly with a bank and then also engaging mortgage brokers as well.

SPEAKER_00:

Yeah, I mean, it's funny. As you were um kind of giving that overview, my my energy is already up. Like what a what an introduction. I I have so much to say. The renewal strategy and marketplace is has been changing a lot over the last few years. The just starting at the renewal, I I would take a step back. And you know, a renewal is a great force time to do a checkpoint. And a checkpoint to me means is your career stable? Is your family life stable? Are you going to are your financial needs changing? And and looking at it more broadly. Because oftentimes, well, again, when I look at a bank or a lender, they will take a borrower like you, and some statistician is going to put you into a matrix. And maybe half the time they'll give you a really good rate, and half the time they'll give you a really bad rate. And it's all based on statistics and lifetime value and all these wonderful things. So a lot of times I have clients like you that might come to me and they might say, Hey, Elon, this is the rate that they gave me. And I'm like, wow, that's a great rate. Like, that's great. You should take it. But then half the time you're in the, oh, you got the bad bucket and you're in the bad rates. So, like, right there, what's the starting point? But there's a lot of games, and you know, banks are in it to make money, right? That's what they're there for. Inertia is a very powerful force. They might not want to give you their best rates up front because if you're with bank A and you switch to bank B, they know I'm with bank A and I got a credit card with bank A, and I know the guy there. So they're using inertia against you as they should, right? They're they know that you're not gonna kind of leave for, you know, and I tell my clients this, I would tell you this. I can save you 20 bucks a month, but I'm gonna need a lot of paperwork. Is it worth your time? You're gonna say no. Now, the other part of renewal that's really important is hey, Elon, I'm planning to buy a cottage, or I'm retiring, or my kids are getting married and going to university, or you know, my cash flow is a little tight. So that would be more of a don't just renew, but let's talk about your monthly payment. Let's talk about your needs, your cottage. Now, again, are you with a small lender or a big lender? I like big lenders, I like big banks. Frankly speaking, for physicians, big banks are the way to go or large credit unions or insurance companies. And the reason why is physicians have complex needs, they have a lot of income, they have businesses, they have all these things. A small little lender doesn't does not have the robustness of a big bank or a big credit union or a big insurance company. So when you say to me, hey, Elon, I got this renewal at this rate, and you tell me you're at a very small lender, I'll be like, I can get you that rate or maybe a little bit more, but this lender will give you all these other things. And let me give let me be very specific. Number one, I'm a huge advocate of lines of credit. Now, you can get a medical line of credit, which is unsecured, but also a home equity line of credit. Now, when I talk, I'm gonna talk about what is a home equity line of credit. Well, we all know it's just accessing money and equity from your home. But there's a really nerdy mortgage concept that I love, and it's called the paradox of credit. What is the paradox of credit? The best time to ask me for money is when you don't need it. If you say, hey, Elon, life is good, income is good, family's good, everything is good, amazing time to ask me for money. If you're like, Elon, I'm getting divorced and my basement flooded, and you know, I got laid off from my job and I had to take some losses in my medical corp. By the way, I need money, way worse. So, number one, paradox of credit get money when you don't need it. But also on the on the flip side, bad things happen, but good things happen. Hey, Elon, I could buy into a medical practice and I need the money. You have the line of credit ready to go, you're ready to go. So, again, are you at a small lender? Are you at a big lender? Are your needs changing? What's your rate? What's your cash flow? Now, here's another really cool one, and I think you're gonna like this a lot. I think you're gonna like this a lot. Let's say, and again, obviously the main focus here is physicians. Let's say you're buying um, you know, a home two and a half, three and a half, four and a half million dollars. You've been working hard, building your career, building your business, you're buying a luxury home. And a lot of physicians and a lot of people, they're like, I want a 25-year amortization, I want to pay down this mortgage as quickly as possible. I get that. So my concept is take a 30-year amortization, make your make your monthly payment as low as possible. Why do I want your monthly payment to be low as possible? Because if you have a medical corporation and you're paying yourself$300,000 a year, well, now you could pay yourself$250,000 a year because your mortgage payments are lower. So you're taking less out of your corp and saving taxes because your amortization is 30 years. Now, obviously, you got to talk with your accountant on anything related to tax, but what I'm doing is keeping more money in your corp. So again, it's broader. Whereas your renewal, and again, this is the thing with renewals. If you had a 30-year M five years ago and five years have gone by, most of the time your 30-year amortization will now be 25 years on renewal. So I would stretch it back out to 30. Not to avoid that, not to, you know, not pay the debt back, but very simply to keep profits in your corp, paying yourself as little as possible. So again, like you could see this renewal thing, like, and there's more and more and more, but there's so much to talk about. Actually, I want to I want to say one other thing. Go for it. One thing I always say is always go back to your bank. Start off with your bank. You're with Big Bank A. What did they offer you? If they offer you an amazing rate and you've got a good corporate setup and you have the line of credit, the last thing I want to do is ask you for all these documents to save you. So start off with the um with the existing lender. But here's another catch. There's always a catch. A lot of people right now have a five-year rate of let's say 1.49%. Now the bank is gonna say, hey, we can early renew you at 3.69%, but that rate is effective today. Why would you switch your 1.49% to 3.69 today? Makes zero sense. But the bank wants to switch you, number one, because they have your loyalty, your your five, your new five year. But number two, they're taking you out of a 1.49 and putting you in a what and then they play another game, which is I can't hold the rate for you for the next four months. I can only give you this rate today. So what I would say, no, no, I'm serious. What I would say to that person is I'm happy to hold the rate. You're not gonna switch today for sure. And then in four months, if my rates and offers are better, great. And if not, you just stay with your bank and you're good. But I know I've said a lot and I know you're waiting to ask me some questions. There's just obviously so much to talk about.

SPEAKER_01:

Yeah, I've got a lot of questions. So let's talk about amortization first, and I can start this off with another story. So back in 2021, when I was refinancing, I made the decision of jumping out in front of a dumpster truck and trying to like just scaven for pennies because I had a great fixed rate offer, and I was just like, oh my god, they've given me an even better variable rate offer. Could you believe it? I actually went down the variable route. So now there are going to be people who enjoyed that, let's say 1.5, 1.6% for five years, which is just unbelievable when you think about it. And now they're going to be renewing at a much higher rate. So I can see the argument there for maybe extending your amortization, reducing your financial commitments per month to the house, and also leaving behind more in the corporation. But that's maybe at the expense of listen, I like to pay down my mortgage faster. I it's just one of those things that helps me sleep a bit better at night. It's something within my control. And it's also, Elon, that's it's something that I tend to do a little bit more. Let's say when I look at, okay, what are the investment opportunities in front of me? Let's say the markets are ripping at all-time highs. I personally invest in some ETFs, but more so in stocks. I don't see a lot of opportunities. For me, paying down the mortgage is like a no-brainer in that scenario. And it also helps me to sleep better at night. So maybe in terms of extending amortization, can you talk a bit more about? You've talked about the arguments for, maybe some against. I just want to capture it completely.

SPEAKER_00:

Yeah, I mean, again, there's so many questions in there. So again, there's a really nerdy concept. It's called the risk-adjusted rate of return. So risk-adjusted rate of return. So I'll use two examples. Two, three years ago, let's just say interest rates were 6%, and people were saying, should I like, you know, invest or should I pay down my mortgage? Definitely pay down your mortgage. Because, sorry, let me correct my term. After tax, after tax risk adjusted rate of return. So if I rewind two, three years ago, and let's say you had a really good year and you say, Hey, Elon, I have$100,000. Should I dump it into my mortgage or should I invest? So if you take that$100,000 and put it right into your mortgage, your guaranteed rate of return is 6% because that's the interest rate on your, but you're using after-tax dollars on your mortgage. So uh it's almost really like um a 10% return less taxes. And then when you invest in the stock market, you could get a 10% return, but you could get a minus 10% return. So there's a risk involved. So if interest rates are 6%, I would absolutely agree, put the money in your mortgage. But now it's a bit of an interesting time that if rates are 4%, 3%, you need to make a business decision and a person, uh, a psychology decision. And it's funny you said that. It is a psychology decision. There's there's maybe a mathematical answer based on trends and analysis. But again, I'll I'll give you a quick example. Clients say to me, Elon, should I go fix your variable? And then I talk to them, and I'm like, so what I'm hearing is if you take a variable rate, you're gonna be stressed out for the next five years. And they say, Yes, I will. I'm gonna watch the no, I'm gonna watch the news every day. I'm gonna be no, no, but then I'm gonna say, even if I tell you that probabilistically, which is all I can really tell you, I can't guarantee the future. If I say probabilistically, variable is the way to go, but you're gonna be stressed out for the next five years, like that's an easy answer. So, like, like you said, you know, you want to sleep at night, and there are people they're like, I want to pay off my mortgage, like, done. But I want to go back there, and you know, there's an expression there is a way to kind of suck and blow at the same time. And what I mean by that is what I mean by that is I'm a big believer in take other things being equal. If it's a you know it's a very small mortgage, it's different. But if it's like a million dollars, if it's you know, two million plus, always take, I don't like the word always, so I I say it with a little bit of always take a 30 year M. But you can call your bank, you can call your lender, and let's just say your payment is 10,000 a month, let's just say that's what it is, with a 30 year M. And you say, I know my payment is 10,000 a month, I want to make it bi-weekly, and now it's 5,000 bi-weekly or whatever, a little more, whatever. Right there, you're mathematically taking your from 30 years to 27 years bi weekly. And then let's say you get a bonus at work or you've got a really good year and you have, you know, a$50,000 bonus, you can dump it right into your mortgage. So now your 27 years becomes 25. But the reason I always say take a 30 year amp is you are obligating yourself to the bank or to the lender for a as little as possible with your option to give them more, right? Actually, let me give you a funny example. And again, this is why I say the word always. Let's say you're building your career, and then one day someone calls you and they're like, we want you to head up our AI radiology practice, and you know, the salary is 70,000 a year, but you're gonna have options and you're the chief medical officer. Guess what? Your cash flow is massively disrupted. But if you had a 25 or a 20 year M and you start going to the bank, oh, I have this, you're that's not a good place to be in. The five-year-again, I'm oversimplifying, the five-year agreement is a contract. But if you take that 30 year M, you can increase your payments, use your bonuses, do bi weekly to mathematically get you to 25, you know, 22, 18 years. But if you get that phone call and take a$70,000 a year AI chief medical officer job, you're okay to live your life. Or God forbid someone gets injured, or maybe your your you know, your spouse has a baby and they're off. And so it's all about cash flow management, which is why I'm in favor. Again, we're all talking this is all general, but why I always push for the 30-year amortization.

SPEAKER_01:

Okay. One last question on amortization. Let's say I start with a 30-year amortization and then my five-year term comes to an end. Yeah, theoretically, I'm down to 25 years. Yeah, but when I re-approach the lender, can I go back to 30 years?

SPEAKER_00:

So, great question. The very simple answer is it depends. I'm gonna say most of the time, no. There might be times when yes. Most of the time, no. Okay.

SPEAKER_01:

Now, just in terms of paying down the mortgage, uh I want to make sure everybody understands this. And I'm gonna use some hypothetical numbers here because let's say you have four hundred thousand dollars left over on your mortgage. And let's say the interest rate that you're paying is four percent. If you make a$100,000 prepayment, you're saving 4% of interest on that$100K. So you're saving$4,000, but then you've knocked down the residual principal by$100,000 down to$300,000. So over the next year, instead of paying$16,000 in interest on the$400K, you're paying$12,000, right? Like, so so this is why for me the rate of return is more than just 4%. But I want to make sure that I have explained that correctly. What do you think?

SPEAKER_00:

Like conceptually, yes, there's a little bit of uh, because it's a blended payment, so it's not simple interest. But here's how I would look at it. In the long run, let's let's use your example. Elon, I have 100,000. Should I put it into my mortgage or should I invest it? If you feel that in the long run, you will yield, you know, a seven to eight percent return in the long run, it might make sense for you to not pay it into the mortgage because if you're earning, excuse me, seven to eight percent year over year over year, but your cost of having that money is only four percent, you are getting that spread in the long run. But again, that's a you know, a personal decision, a risk decision, you know, long run versus short run decision. That four percent is guaranteed. The seven percent is not, so there's that element as well.

SPEAKER_01:

Let's move on to some key questions we may want to ask at renewal time, and this is beyond the typical question. So, this next point comes from a story too. I reached out to one of my lenders on a mortgage that I have and I asked them the interest that I'm paying each month, it's not exactly what I expected based on this online mortgage calculator. And then they came back to me and they said, Oh, Yatin, that's because of the way or the frequency at which the interest is compounded. And for me, that was a totally novel concept.

SPEAKER_00:

Yes.

SPEAKER_01:

And then after I dug into it a bit more, it turns out that not every 4% mortgage is exactly the same because of how frequently the interest is compounded. So, can you explain to us this concept and maybe even give us an example of is this significant in today's landscape? Does it really impact things over a five-year term with current rates?

SPEAKER_00:

Yeah, that's a great question. So, by law, fixed rates are compounded, I believe it's either annually or semi-annually, and that's it. So, in general, fixed rates are all the same. Like big bank A, B, C, they're all the same. Now, what some banks do, and this is one micro example of frankly, again, we talked about the fact that I love medical analogies. I don't know anything about medicine, but I love medical analogy. I tell my clients, always get a second opinion. Because your bank, again, when you walk into a BMW dealership, what kind of car are they gonna sell you? Only a BMW. They're not gonna tell you that an Audi is on sale, they're not gonna tell you that a Jeep is better for your cottage, they're not gonna tell you that a Tesla has, you know, a different fuel system. Always get a second opinion. So, like that's a big part. So, this is a micro fine print, and every bank has 30 different levels of fine print. And 90% of the time, the fine print is irrelevant, but it's not relevant unless it is relevant. So, on that note, fixed rates are pretty much the same everywhere. That's by law. Variable rates, and I'll use RBC as an example. RBC compounds variable rates based on the payment frequency. So, what that means is if I have a 4% rate at let's just say Scotia and a 4% rate at RBC, and I pay my mortgage weekly because, like we were talking about you pay by weekly, you pay weekly, you're gonna pay it down faster. So uh Scotiabank will compound the interest semi-annually, RBC is gonna compound the interest weekly. Wow. Compounding is this in this is it's an increase. I'm actually trying to internalize it. I believe Einstein called compounding the eighth wonder of the world.

SPEAKER_01:

100%.

SPEAKER_00:

When you really dig into it, and I'm still like really trying to get it into my bones compounding your career. You talked about your 10 years and and more. That's compounding, right? It's it's it's interest on interest, it's payment on payment. So RBC is saying, oh, well, every week we're gonna add interest on interest on interest. So a 4% RBC variable rate compounded weekly is not the same as a 4% Scotia rate. That RBC rate might be 4.05, 4.1, 4.15. Again, depending on the exact specifics. But we've all been trained by everyone what's the rate, what's the rate, what's the rate? And rate is critical, but you need the broader context. And that's just one example. There are many, many examples.

SPEAKER_01:

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SPEAKER_00:

I want to go back. Yeah. Yeah before I forget. This might be relevant for you. And again, this I could talk about this for an hour, but I won't. You a lot of people like you. A lot of people like you. Listen to the chief economists, listen to the all the news outlets, listen to all the experts, listen to the Bank of Canada. Get a variable rate. Rates will be low for a long time. Now, very quickly, actually, this is also very important. You could see how everything is important. I'm gonna you let me go back to that example of Scotiabank versus RBC on the variable rate side. So we talked about how RBC in that one dimension is worse because they compound based on payment frequency. Variable rate mortgage, variable rate, all the same. But there are two kinds of variable rate mortgages. There's what's called an ARM and a verm. An arm is an adjustable rate mortgage, and a verm is a variable rate mortgage. So what does that mean in English? Three, four, five years ago, you got a Scotia variable rate mortgage, which is an ARM and adjustable rate. Your payment was$3,000 a month, rates went up. Your payment is now$3,300. Now it's$3,500, now it's$3,800, now it's$4,000 because rates kept going up. So literally every month, every two months, Scotia was, hey, your your payment is now$3,200, your payment is now$3,600. RBC and a lot of the other banks, they're like, Don't worry, your payment is still$3,000. Don't worry, your payment is$3000. But all of that interest is accruing in the background, but your payment was the same. So right there, that's a massive difference between lenders in how the payment is applied. But when rates are going down, Scotia is going to lower your monthly payments. RBC will keep it flat. But the thing I wanted to bring out, and I'm not going to talk about it, is which you might have felt is trigger rate and trigger point.

SPEAKER_01:

So RBC, I felt it. I know I know.

SPEAKER_00:

But again, that's a one hour topic. I'm not going to get into it, but on a very simple level, your payment is 3,000. Your payment is 3,000. Rates keep going up. Eventually, RBC is going to say, whoa, whoa, whoa, whoa, whoa. Like you've got, like, there's no way. Now we're forced, you've gone so far behind. We're forced to raise your payment. So I'm tying this in to the question about renewals. You there are people that have a 99-year amortization at renewal. Because no, no, like this, it's all math, and I'm glad you're laughing. It means you get it. There are people, and again, you're asking about renewal. So there are people that are like, cool, you're up for renewal. You missed$50,000 of accrued interest. So what are your options? Number one, give me a$50,000 balloon payment. Just give it to me. Number two, I'll throw that$50,000 into the renewal. But now all of a sudden, your your monthly payments are going to skyrocket because now you've borrowed a lot more. So again, there's a lot, even within the concept. And again, one of the biggest mistakes among many, people say, What's your rate? What's your rate? What's your rate? And I'm like, You've got like, what's your new payment? And there's this$50,000 balloon that they've come in. Your and got went from 30 to 25. Your payment might be thousands of dollars more. So you got to look at the rate, the payment, your current needs, the future needs. That's why I say always, always, always get a second opinion.

SPEAKER_01:

I'm really happy you mentioned that, Elan. Yeah. Because I can tell you with one of my rental properties too, I did experience a ballooning of that amortization to about 65 years. And then fortunately, with the rate cuts, it came down dramatically. Now it's normalized. Now we're probably even a bit further ahead of schedule.

SPEAKER_00:

Yep.

SPEAKER_01:

Now let's move on to prepayment options. I think this for people who are incorporated who have a bit more control over their cash flow, this can be an important question to ask. On my last mortgage for our home, it turned out that we did have a 20% prepayment privilege, but not all mortgages are built the same this way. Can you tell us a bit about this and the range that we can expect?

SPEAKER_00:

Yeah. So again, generally, physicians should only be dealing with banks, large credit unions, large insurance companies. Um, I would say at a minimum, it's 10% of the original principle, up to 20%. But again, and this goes back to what I was saying earlier, there's always tricks. And I'm gonna talk very specifically about RBC. Now, RBC lets you make a 10% prepayment only once per year. Other banks might do 20, 15, or 20% anytime. So even if you're, let's say you are a physician and you have some extra money, and maybe your spouse gets a bonus at work in March. If RBC only lets you make a prepayment on October the 3rd, and you get that money from your spouse in March, you're literally sitting on that money until October the third. Other banks will let you make the payment whenever you want. And a lot of them will do 15 or 20%. As your income goes up, as flexibility goes up, you want that ability to make the payment whenever you want. Now, I'll be even more uh specific. Some banks use a calendar year, so 20% per calendar year. Others use what I call a mortgage anniversary year. So if you buy your house on July 15th, then you know on July 14th, you can make a prepayment. On July 16th, you can make a payment. You need to know that. And again, especially if you're buying and selling real estate, there are times where I've said to a client, and again, you need a little bit of luck, but you also need a lot of expertise. You need to go to your bank on July the 14th, make a massive prepayment, then go in on the 17th, make another massive prepayment, which will lower your penalties. So again, it's all part of that broad, and mortgages have become more and more complex, more technical, more intricate. So to your point, number one, 10% versus 20%. Number two, is it only one day per year or is it many times as you want? And um, number three, is it calendar year or is it mortgage anniversary year? Actually, one other thing. Sorry, going back, if you have a mortgage at 1.49%, and this is again psychology versus finance, which is an amazing topic, I would say never prepay your mortgage. Why would you prepay your mortgage at 1.49%? But I have clients that say to me, Elon, no, I want to be mortgage free. I'm taking advantage. So they're literally going and prepaying their mortgage at 1.49%, which I would argue is a horrible thing to do financially. But I agree with that.

SPEAKER_01:

I agree.

SPEAKER_00:

And again, I'll use another medical analogy. I might be the expert, you might be the physician, but your patient, they're gonna decide what they do. You might say, I want you to diet and exercise, and they might like smoke and eat fast food. They're it's their prerogative. You can only do what you recommend. It's the same with me. I would say, don't prepay your mortgage at 149. And they're like, no, Elon, too much stress on paying. That's fine. I'm okay with that. As long as you're making an informed decision.

SPEAKER_01:

I hear you. Now, that one time a year prepayment with RBC, is that an RBC specific phenomenon?

SPEAKER_00:

I believe. Let me think about this. And part two to the question is I believe I believe it is. I uh it might be, I believe it is maybe national bank, but I believe the other banks are uh, first of all, the other banks are 15 to 20 percent, and then um I believe they are um as many times as you want, and I believe RBC compounds variable um, you know, based on the payment frequency. Don't get me wrong, RBC is an excellent lender. Like they're one of the big banks, they treat their physicians very well. As long as you are making an informed decision. And again, if you and your spouse have a bonus structure or a payout, a fiscal year end in September and a bonus in in RSP in March, that might be a very important feature for you. And therefore, again, you're getting a Jeep, but you need a minivan or an SUV or a Ferrari. A Jeep isn't bad as long as you know you're getting a Jeep. So, like again, RBC is an outstanding lender. You just need to be informed of the relevant clauses and calculations.

SPEAKER_01:

Is there one lender in the group that stands out as being the most flexible when it comes to prepayment? Or would you kind of lump all those other banks into one?

SPEAKER_00:

On the margins, like most of them are 15 to 20 percent. And again, like if you have a million, let's also be practical. If you have a million dollar mortgage, 20% of that is$200,000. Like, most people don't fundamentally have$200,000 every year, and you can each increase your payments. So there becomes a certain point where there's massive diminishing returns. I actually think the ability of doing it, you know, as many times as you want, whenever you want, is actually much more important. And again, let's say your your your one-year anniversary date is is, you know, February 3rd, but you get your money on March 18th, you're gonna have to wait 11 months to put the money into that mortgage.

SPEAKER_01:

Okay. Let's move on to good debt and bad debt. Elon, maybe you can shed some light on tax-efficient strategies for people who have the ability to do so using a HELOC when it comes to their mortgages.

SPEAKER_00:

Yeah, I mean, again, another great question. I'm gonna say, you know, I actually feel like there's a lot of buzz and a lot of sexiness with all these big things, you know. I like to keep things very simple and then we get to the complexity when we need to. Smith maneuver, cash damming, laddering. And I I'll be honest with you, I think these can work in extremely one-off scenarios, but I actually feel like it's the industry trying to like sell things that you know maybe don't they're trying to like sell so much just to get conversations going that I don't necessarily fundamentally believe in some of them for most people. And let me give you a very specific example. Again, without getting into all of the intricacies, uh with a Smith maneuver, if you pay your mortgage down and you re-borrow the money and you use that money for for businesses or for properties, you can write off the interest. But the here's where the math gets a little shady for me. If you came to me today and asked me for a mortgage, let's just say I could get you a rate of 3.7%. But if you reborrow that money from your line of credit, which is what the Smith maneuver is, most line of credits today are at 4.75%, most lines of credit. So if you have a 3.7 rate and you reborrow the money at 4.7, yeah, there's some tax efficiencies, but there's a 1% spread in your cost of borrowing. So again, you're starting to introduce a lot of complexity. Again, if it's a smaller mortgage or there's not, it might not be worth introducing all of that complexity. But if the line of credit was at 3.7 and your mortgage interest rate was 3.7, it could actually become much more attractive. But again, all this stuff, it can work. It's a really good conversation to have on a one-on-one basis. But for most people, I don't necessarily think it's the silver bullet that people think it is.

SPEAKER_01:

Yeah, I do tend to agree with you here. I was looking into and studying the Smith maneuver recently, but my understanding is that this is a strategy that is really meant to be deployed over the long term. Yeah. And it's really a three-pronged approach. Like you will end up growing your investments over time. You will over time end up maybe trimming a few years off your mortgage, and you will be reducing your tax through tax deductions, but it's not going to happen in a year, in two years, in three years. Like this is harm pounding. Usually well, well over a decade. We're talking like one to two decades. So I personally decided for myself it's not worth really looking into. But Ilan, I want to make sure though, is there anything in this bucket that you were like, oh wow, strongly consider this, or still more a case-by-case basis?

SPEAKER_00:

Extreme case by case. And uh, I'm not, again, like in general, you know, it took me many years to learn a very important answer. I have an answer to every mortgage question. The answer is it depends. So, like generic, generically, yeah, I don't I think that this is a lot of buzz and people trying to sell all kinds of fancy stuff. I actually think, and this is an interesting theme, but the more complex a financial product is, the more I dislike it and I distrust it. And that's just my own, again, psychology. I'm not saying it's wrong or right. But I want to talk you, we talked briefly about laddering, and I want to mention something very specific about laddering.

SPEAKER_01:

I have one quick question on a HELOC before laddering. Can I I just want to ask that? Is there a way to structure a HELOC in such a way that, let's say, somebody is interested in something like the Smith maneuver? Yeah, case by case basis, obviously. But let's say you prepay the mortgage$50,000. Can you then go in and just extract$50,000 right away from a HELOC, even in the early days? Like, is it possible to structure it? Or only once you have accumulated enough HELOC room or withdrawal ability?

SPEAKER_00:

Again, the answer is going to be it depends, but in general, you should be able to readvance it. And that's something that would be really like you want to make sure because different lenders have different policies, and there's a bunch of actually new regulations related to this, but in general, you should be able to readvance it.

SPEAKER_01:

Okay, let's go to mortgage laddering. You wanted to talk about this. Go ahead.

SPEAKER_00:

Sure. So, first of all, what is laddering? And I'll use an investment parallel. The investment parallel is dollar cost averaging. So let's say you win the lottery, you have a million dollars. Do you go out and buy a million dollars of Microsoft today? Well, a lot of investment advisors would say, don't do that, because what if tomorrow they have a bad earnings call and the shares go down by 30%? So the dollar cost averaging on the asset side is, you know, put$200,000 in Microsoft today and$200,000 in a month and$200,000 in a month, or whatever your kind of strategy is for dollar cost averaging. Laddering is actually the same concept, but on the liability side, not the asset side. So what does laddering mean? Let's just say I need a million dollar mortgage today. I'm gonna take a five-year term at$200,000 and a four-year term at$200,000 and a three-year term at$200,000, and a two-year term milk,$200,000, and a one-year term milk,$200,000. So that way, if there's any kind of interest rate shock, um, I'm I'm theoretically diversifying or dollar cost averaging my cost of borrowing. But what people don't think about is the downside. So what is the downside to laddering? Well, number one, the rates are not all the same. So, like if you take a lot of my clients are taking a three-year rate now, let's just say it's 3.7%. A one-year rate right now might be four and a half to five and a half percent. So, right there, you're paying more for that one year. That's based on bond yields and all these wonderful things. So that's one problem is you're not sort of taking that three-year low rate, you're paying a lot more. But here's the thing, and again, this is I believe in simplicity and first principles. Banks want to tie you up. They use the word loyalty. I use the word prisoner. And that's a that's a marketing word, that's like an MBA word. What does the word prisoner mean? When you get a cell phone contract with Rogers for three years, you are a hundred percent loyal to Rogers. Why? Because if you leave, there's a massive penalty. So the you're loyal, but it's not emotional loyalty, it's behavioral loyalty. You are a prisoner to Rogers. So if you ladder up with a bank, how can you ever leave that bank? Because you're gonna have all these penalties. The banks are always gonna have full, by definition, by construct, you're gonna have four mortgages that are not maturing. If you have a three-year term, it's done, and then I can shop you around. But if you have a one year, a two year, a three year, a four-year, five year, 80% of your mortgages are not renewing. And it will be extremely hard to take you to a new lender that has some crazy promotion because you're stuck with them. So again, I love the word. It's an MBA word, but it the word is prisoner. You are their prisoner because you cannot leave them.

SPEAKER_01:

And I would say the downside of the strategy, in addition to what you just discussed, is also like a lot of mortgages, a lot of moving parts, right? It's a much more active strategy, in my view, too. That may not work for some people. Yeah. Hey everyone, you may already know this, but I did create a crash course on CT head interpretation for my clinical colleagues, especially those in emergency medicine. I did this because I fundamentally believe everyone should be able to navigate a plain CT head and reliably exclude an emergency. If you are interested in learning more, feel free to check out my course links in the show notes. Now back to the episode. Let's talk about mortgage best practices. You already touched on changing your payments from monthly to bi-weekly.

SPEAKER_00:

If you want to take a simple accelerated bi-weekly or even accelerated weekly, if you can.

SPEAKER_01:

Yeah. Any other low-hanging fruit to pay off the mortgage a bit faster?

SPEAKER_00:

I mean, that's a big one. Again, if you find you have extra cash flow and the extra well, so I would take a step back. I think this decision is in the context of your overall financial picture. And again, I have tons of medical analogies. If you come to me with a broken arm, you know, well, I want an MRI, CAT scan, EKG, blood pressure. I want everything because I want to know if you need, no, no, I'm serious. If you need surgery, I want to know if you're diabetic or if you have cardiology issues or whatever. So I would never advise someone in the pure silo of mortgages, what if they have credit card debt? What if they're about to, you know, give their kids$100,000 for a down payment? So the first thing is what is going on financially, income, assets, family, goals, plans, aspirations, all of that. And then, you know, and again, I have clients when I when I talk about the renewal process, Elon, I make a lot of money. I don't have any goals, everything is stable, stable, stable. Like, that's a very different conversation than I might do this and I might do that, and we're thinking about retiring. That's a very different strategy. So, probably the first tip, and again, like for a physician, look at globally what's going on. And it, where can you optimize your debt? If you've got a 149 rate, I would say talk with your accountant, talk with your financial advisor. But I would say don't pay down your mortgage or have that discussion, make an informed decision. And then when we're like five layers in, and it's like Elon, I got my mortgage two years ago, it's a 6% rate. Then, okay, let's make lump sums, let's pay accelerated weekly. Um, you know, if you find that you've got extra money, like just I'm a I'll tell you something, and this is behavior, psychology. I'm a set it and forget it guy. I don't like I don't look at my stocks every day. So it's like if your monthly payment is 3,000 a month and you've got a lot of extra cash, just call the bank and say, I want to change it to 3,600, set it and forget it. Done. Like, I love that because, like you just said, you're not actively managing, it's a mortgage, it's boring, right? So, like that would be, you know, if you can increase your payments, use your lump sums. There is this option I call the Canadian option, which is you contribute to your RSPs, you get a tax refund, and you take the tax refund and put it into your mortgage. So, again, there's all these things that that you know can really help you pay your mortgage down faster. And uh, I actually just did a five-part series on my social, but I talk about paying your mortgage down faster.

SPEAKER_01:

So, as we wrap up, I I do see a lot of mortgages for doctors, medical professionals. Like that term gets thrown around a lot, but I'm curious, you know, you doing what you do, is there anything for us in this space that is truly standing out today?

SPEAKER_00:

I mean, I don't think there's anything standing out other than you can generally get, you know, a great rate, you know, you can generally borrow whatever you want. So it's not that side. To me, it's more like if you're getting a BMW, should you maybe have gotten the Audi? And a lot of the, you know, the one of the traps is a lot of physicians, whether it's in medical school or coming out, they align with one bank or one lender and they're like, yeah, they're good, they're good. And again, it's just that informed decision, it's that five-minute conversation of like, well, wait a minute, you should think about this, you should think about that. Again, the other thing is as are you kind of like, I just want one house and I'm pretty stable, or I have aspirations to build a property ladder or to do all these things, the more complexity you have, the more you know, each lender, because let me let me say something very uh very clear. All the banks are 96% the same, right? And let me be even more clear Google RBC sucks, Google Scotia Bank sucks, Google TD sucks, Google CIBC is amazing. They're all amazing and they're all terrible. Like that's just they're big banks, they're they're part of our society and all that stuff. But it's like, uh, do you know what you need to know to make the right decision? And in general, that's like a five-minute conversation, a lot of times.

SPEAKER_01:

Now, what is the lowest rate you've seen these days?

SPEAKER_00:

I would say like mid threes. So, like, well, three, like three, four, nine to three six nine, but maybe a bit higher. And again, there's always promotions, there's always, you know, things going on. There's been some promotions that just ended. So the rates might be a little bit, you know, closer to the mid or mid or high threes. But again, there's a funny analogy here. When people ask me what's your lowest rate, which is absolutely the right question, it's kind of like me saying, Well, how much is a BMW? You could buy a$40,000 one and a$200,000. So let's make sure we're talking about the right thing because there are certain mortgages where I have lower rates, but I would never recommend them to you. I would never give them to a friend, a family member. You know, be careful. You get what you pay for. I like, especially for physicians, big, robust lenders, they handle the complexity, they handle the changing needs, starting a practice, you know, buying and selling real estate, building a property lander. They're just more geared up for you.

SPEAKER_01:

Now, Elon, how do people follow you, the work that you do and the content that you post? And then finally, some closing thoughts as well, if you'd like.

SPEAKER_00:

Appreciate that. Yeah. So I try to be active uh on social media. I try to, you know, be opinionated, be very practical, put my own flavor on it. I mean, if you've liked this conversation, this is I am me. Like I'm very, this is who I am. So I'm I'm very active on Facebook, LinkedIn, Instagram, and uh, I'm trying to get on some of the other ones. I'm gonna try to start uploading some stuff on YouTube. Like I have a one-hour seminar, never renew your mortgage. It's a one-hour seminar about renewals. I have one, we didn't talk about this, but new construction is imploding. People bought condos in 2022 for you know,$1,700 a square foot. Four years later, it's ready and it's appraising for$300,000 less. So I have, you know, help I can't close on my new construction purchase. So I'm gonna try starting to put that stuff on YouTube. But the simple answer is Facebook, LinkedIn, Instagram for now. And uh again, as you can tell, I love talking about mortgages.

SPEAKER_01:

So yeah, well, that's why I like to bring you on the show, and that you are opinionated but very open, and you are you, Elon. So thank you, man. Thank you again for making time for us today and educating us.

SPEAKER_00:

Thanks so much.

SPEAKER_01:

Okay, man, take care. I really hope that episode had something in there for you as you navigate your own mortgage process. Wishing everybody success in this, and if you feel like you know somebody in your network who could use this information as they navigate mortgage renewals, please consider sharing with people in your network because by doing so, you're adding value to others around you. Thanks again for tuning in. We'll see you in a few weeks' time. Stay well, stay savvy.