Choosing between a fixed and variable mortgage in the Lower Mainland’s pricey housing market is a decision that requires careful consideration and with guidance from an expert who considers tax planning, insurance, investments and more in their analysis.
With over 20 years of experience, including 17 in Toronto—BMO Nesbitt Burns’ Senior Wealth Advisor and Portfolio Manager David Wright takes this big picture perspective even further, by including his client’s own financial behaviour. “I like to incorporate behavioral coaching deeply into our practice. We try to nudge clients in ways that will improve their financial wellbeing, whether that’s staying the course when the markets are volatile or helping them start a savings plan,” Wright explains.
One of the biggest life decisions a person can make is a home purchase, and this is even more true in the Lower Mainland’s housing market where a few percentage points can add thousands of dollars to a client’s monthly mortgage payment. Bank of Canada interest rate changes are a hot topic, but not even the savviest wealth advisor can predict the future. Wright does, however, have a strategy for helping clients make a fiscally sound decision that works for their situation and risk tolerance. It includes carefully assessing different possible scenarios, and, if they were considering a variable mortgage, analyzing whether they would be prepared for a situation where rates went up three percent like they did in 2022.
Wright reviews all relevant documents, including cash flow statements, to determine the client's budget flexibility. He then walks clients through the pros and cons of fixed and variable rate options, with fixed rates offering predictable payments for peace of mind, and variable rates being cheaper, but carrying more risk.
Through a detailed scenario analysis, Wright can help clients understand potential rate changes and their impact on cash flow, empowering them to make informed and confident decisions. “One of my jobs is to never let my clients be put in a position where they are forced to do anything. Because generally the terms will not be great whether you're forced to sell an investment or forced to sell your home. So how do we avoid that? We do the work beforehand,” he explains.
Along with mortgage advice, Wright serves as a wealth ‘coach’ providing investment, tax planning and insurance guidance that can help clients save thousands–if not millions–of dollars down the road. “Whether it's doing something at the wrong time with your investments, not getting the right amount of insurance, or not getting a marriage contract before getting married, [making the wrong decision] can wipe out years of capital just like that…My job is really managing those risks,” he explains.
Wright Wealth Management, BMO Nesbitt Burns takes a personalized, in-depth approach to every client’s wellbeing. Due to the hands-on nature of their service, they are only able to accept a limited number of clients each year. If you’re interested in working with the firm, visit wrightwealthmanagement.ca to learn more.
