Advisor explains how she walks young investors through the steps of purchasing first home
Buying a home is often the top of a young investor’s priorities. And while this monumental purchase involves a process which is exciting and life-changing, there are a myriad of barriers to jump for investors to achieve their home-buying ambitions.
Brittney Rampersad works mainly with younger clients who aspire to own a home, and says that there is always a tricky tightrope to walk between helping her clients achieve their goals while remaining realistic about a long-term procedure which can be as stressful as it is exciting.
“I like to sit down and listen to see what their are plans for their future. And most often, especially younger clients, one of their goals is to purchase their first home,” said Rampersad, financial advisor at Investia Financial Services Inc. “It's exciting, but it can also be overwhelming. So I sit them down and try and figure out what's the best way to get them there.”
Rampersad says Canada’s exorbitant housing market has given many of her clients pause before they purchase a new home, as they worry about buying into the market at the wrong time.
“The economy and the housing market are just crazy right now,” she said. “Clients are really not sure what to do. Do you wait? Do you not? It can be really difficult to figure out what to do.”
For most of Rampersad’s clients, there is both the ability to be less cautionary in stock markets, yet also the need for large amounts of liquid cash for large purchases like a first home, holidays or a new vehicle. She says that she sticks to a middle ground portfolio strategy which allows for some risk in the stock markets combined with more defensive assets, particularly given the large amount of volatility seen in markets this year.
“When you are younger, you do have some more time to be able to play within the market, versus somebody who's older and who's looking to retire,” she said. “You can be less risk averse, but as we've seen, it's been a little bit crazy. So you want to make sure that if they're ready to make that purchase, they have that money ready to go.”
One of the first thing Rampersad does when she works with a client looking to purchase their first home is help them register a First Home Savings Account (FHSA), which allows clients to reduce their taxation on their first home purchase.
“I think that the FHSA is great because you're able to put your money in and then, like a Tax Free Savings Account, you're able to pull it out with tax free,” she said. “There's so many times, like in an RRSP account, where you'd have to pull it out and you're taxed on it.”
Consistent communication is essential to ensure clients are on the right track towards purchasing a home, according to Rampersad. She emphasizes the need to create a comprehensive financial plan towards the ability to buy a home, followed by regular check-ins. By listening and understanding her clients’ wishes, Rampersad she can provide realistic advice to help with their large purchase.
“I think it’s about being realistic with them and making sure that even if it's going to be hard for them to obtain their goal, you’re making sure that you're there to support them,” she said. “It's important to listen to them and be able to support them in the best way that you can and help guide them along.”
As a young advisor herself, Rampersad says she is able to relate to the concerns and ambitions her clients have, as she has recently gone through the same hurdles herself. She says that by understanding the process her clients are going through, she can connect with her clients on a deeper personal level.
“I feel like when I am talking to clients, it is like I'm talking to, friends or family that are around my age. I'm going through the same stages of life as most of them, too, whether they're looking for their first home, maybe looking to get married, or to start a family,” she said. “I like to use my own personal experiences to be able to talk to my clients.”
Collaborating with mortgage brokers, real estate agents and lawyers is also essential for Rampersad, who says that by ensuring each party is on board, the clients will always reap the best possible results. Delegating certain issues outside is important to Rampersad, who says that while the financial planning component of home buying is crucial, getting expert advice from outside sources is also necessary.
“We always work with lawyers, real estate agents, mortgage brokers, because at the end of the day, I think that it's so important to put the client first,” she said. “I'm always open to collaborating with, let's say, a real estate agent, that way we can work together to make sure that our mutual client has the best possible outcome.
