Virtually everyone in the mortgage industry, it seems, is looking to offer some form of tax-deductible mortgage strategy these days.
And it makes sense. As markets cool off across the country, mortgage brokers/agents are looking for new ways to expand their product offerings and attract new clientele.
The problem is, as Henneberry learned firsthand, very few individuals who claim to offer tax-deductible mortgages are actually doing it right.
“I should know – I was one of them,” he says, adding that, when he started brokering in 2004, a lot of his business came through financial planners. “I set up a lot of mortgages structured for tax-deductible mortgage strategies because that’s what the financial planners were asking for. The thing is, at the time, I didn’t fully understand what it meant to have a fully functioning strategy.”
Like many mortgage brokers/agents who try to learn this complex strategy on their own, Henneberry was offering what he refers to as a “mortgage with a line of credit attached to it”. It wasn’t until he met Sandy Aitken, CEO and founder of the Tax Deductible Mortgage Plan, that he realized what he was missing.
“When I saw what Sandy was doing, I was blown away,” he says. “There are a lot of moving parts and a lot of rules associated with a fully functioning strategy.”
Getting certified
While TDMP works with mortgage brokers/ agents to originate tax-deductible mortgages for qualified clients – and financial planners to manage the investment side – the company handles all the back-end work and is essentially a cash-management system.
The company relies on customer seminars to attract the appropriate clientele (see “Making the most of customer seminars”, CMP 3.5), and hosts 20 of them across the country in any given month.
Impressed with the company’s model, Henneberry set out to become a TDMPcertified mortgage broker by taking the company’s training course. The course focused on how to identify a qualified client, partner with financial planners and understand the back-office process so he knew how to hand the file over to TDMP once he completed the mortgage, among other things.
Once he became certified with TDMP, he was eligible to mine his database and invite interested homeowners to a TDMP seminar. Those who were interested in launching a tax-deductible mortgage strategy were asked to simply go through him.
Great response
Henneberry has seen quite a response from the program – today between 70-75% of his business comes from tax-deductible mortgages.
“The industry is seeing a bit of a slowdown right now, but our office is ramping up because we’re not depending on real estate transactions,” he says. “I’d say 95% of our clients are restructuring their mortgages mid-term. They’re willing to pay mortgage penalties to set this up because the benefits of this program are just too great.”
He’s since become responsible for organizing and holding all TDMP seminars in British Columbia – ranging from the Lower Mainland to the Island to the Interior. He encourages other brokers who are thinking about offering tax deductible mortgages to consider TDMP – namely elite brokers with a more mature database.
“This is an opportunity for brokers to participate in a segment of the mortgage business that’s in high demand,” he says. “With the proper knowledge and the right tool, brokers can mine their database and get existing clients to restructure their mortgage.”
He adds that because TDMP has done its research, participating brokers can be confident that they’re abiding by all of Revenue Canada’s rules and offering the best possible service to their clients.