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Mortgage 101 LIVE Special – life insurance, skilled labourers and co-signers | November 16, 2021

In this special LIVE episode of Mortgage 101 with Clinton Wilkins and Todd Veinotte, as heard on CityNews 95.7, the guys took calls live on the air to answer your mortgage questions! In this episode, callers ask about life insurance, construction rate and population growth in Nova Scotia, the growing demand for skilled labourers in the region, as well as discuss co-signers and how to work towards getting a co-signer off a mortgage.

Full segment:

Don’t feel like listening? Check out the transcript below!


Welcome to this LIVE Special of Mortgage 101: Your Guide to Homeownership

Todd Veinotte: [00:00:08.49] Alright, well, you heard it! We’re going to spend the next little bit chatting with Clinton Wilkins, our mortgage guru, because it’s Financial Literacy Month, and we’ll have an opportunity to take some calls as well if people have some questions regarding mortgages and whatever it might be. So without further ado, Clinton Wilkins, what’s going on?

Clinton Wilkins: [00:00:29.58] How are you doing, Todd?

Todd Veinotte: [00:00:30.48] I’m doing well. You’re sounding fantastic. You sound like you’re right beside me, but in fact, you’re far, far away.

Clinton Wilkins: [00:00:35.52] I’m over in Dartmouth today remoting in from my office, and it’s just amazing to be live again. I know we do our Bank of Canada updates eight times a year, but it’s nice to be back on our show: Mortgage 101 live on the air. All year we’ve been doing it in a podcast format, which I’m sure some of the listeners have been listening to on Saturdays and Sundays, and lots of great content this month with Financial Literacy Month.

So we really encourage people to call in today. I know we haven’t been taking calls live on the air all year, so I think it’ll be a good opportunity to break down some of these barriers and talk about some of these key issues around financial literacy. And as our listeners know, you know, one thing that we keep on talking about is, the home purchase is the biggest purchase of borrowers’ lives and, oftentimes, their biggest asset. But the mortgage is the biggest debt, and we can certainly drill down into some of those topics.

Todd Veinotte: [00:01:28.50] Alright. So the way to do that, if you’ve got some mortgage related questions for Clinton, of course, is give us a call at 902-405-6000 or you can call us toll free at 877-801-8255. Again, we’ve got Clinton Wilkins, our mortgage guru, for the next little bit. Good opportunity if you’ve got some questions concerning your mortgage, 902-405-6000 or 877-801-8255.

What is a hot topic in mortgage right now?

Before we go to the phones, Clinton, what are some of the bigger, the more reoccurring questions you get from your clients?

Clinton Wilkins: [00:02:00.33] You know, I think right now there’s a lot of discussion around rates, Todd. You know, there’s a lot of noise in the media, you know, specifically around the Bank of Canada, and it’s something that we obviously talk about quite a lot here on the air. And you know, one of the things that’s really coming up to mind is around inflation and really what’s going on outside in the economy. And as you can imagine, that can make a huge difference to, you know, the cost of borrowing for a consumer over the term of their mortgage.

And more and more borrowers today, believe it or not, are going with a variable-rate mortgage. Obviously, we’re big supporters of that type of product. You know, historically, borrowers do better in a variable-rate. And you know, it’s going to go up. The rates will increase. But is it doomsday? And is the Bank of Canada going to, you know, significantly increase the prime rate over the next few years? I’m not 100 per cent certain, but I do know a lot of borrowers are taking that educated leap of faith, I guess. And I think one of the big reasons that they do is they obviously have us to keep an eye on it.

But the spread between where the variable-rates are today, Todd, and where the fixed-rates are, are widening. And, you know, a borrower today, if they’re doing a purchase and in some cases even a renewal or an early renewal, Borrowers are getting a variable-rate as low as prime, minus 130 Basis points. And Todd, I can tell you, you know, my career, I’ve been doing this for 15 years and we’ve done over 4,000 transactions. I’ve never seen the discount on Prime be so significant.

Clinton Wilkins: [00:03:32.43] And I think that’s why a lot of borrowers are willing to take the risk. You know, right now, the prime rate is 2.45, and imagine if you have 130 basis points below prime, you’re looking at a rate of 1.15. There’s certainly a lot of runway for increases to even balance out with where the fixed-rates are today, and a lot of the fixed-rates are in mid to high two per cent range. So there’s a lot of room for growth in, you know, the key overnight rate and in the bank prime to even be in a break even position with where the fixed are today.

And in our opinion, you know, variable safer for a lot of consumers. Many, many customers don’t keep, you know, their term until the end. A lot of people break their mortgages early, Todd. A lot of things happen and change in people’s lives. You know, maybe they need to refinance, or maybe they sell their home and buy another home. Or maybe, you know, their needs change. They go through divorces. There’s a lot of things that happen in consumers’ lives, and variable really gives the most flexibility because if you’re going to break the term early, it’s only three months interest.

And let me tell you: Three months interest is a lot lower than sometimes an interest rate differential can be on a fixed-rate. And you know, I saw a funny meme. Obviously, I’m into mortgage lending. We talk about this all the time. I saw a funny meme on the internet the other day and it said, friends don’t let other friends choose a fixed-rate. So, you know, we certainly have those conversations every day.

Todd Veinotte: [00:04:57.43] Ok, 902-405-6000 is the way to reach us for Mortgage 101. If you want to give us a call and ask Clinton about your mortgage, whatever it might be. Variable-rates, fixed-rates, rates in general, reno’s, whatever it might be. I’m sure many of you out there get some mortgage questions right now. Give us a call 902-405-6000. Rick, hello.

Caller Rick asks about Life Insurance

Rick: [00:05:18.12] Hi, how are you doing?

Todd Veinotte: [00:05:19.26] I’m doing well, you?

Clinton Wilkins: [00:05:20.40] Hi, Rick.

Rick: [00:05:21.51] Not bad. I’m getting to the end of my mortgage, which is really good, but I seem to be paying a lot of life insurance. I pay the same life insurance now as I did when I had a large mortgage. I was wondering if I could drop the insurance and add it to the payment, to pay it off quicker?

Clinton Wilkins: [00:05:43.17] You know what? That’s a really good point. And you know, we have these conversations with consumers. Likely, you’re in a type of mortgage insurance product that’s called creditor protection, and the way the creditor protection is, the way it works is if you were to, you know, die or if you were to become critically ill or become disabled, there’s different types of coverage. It would go to cover the balance that you owe. So, you know, if you start with a mortgage 20 years ago when you had the creditor insurance, you’re going to pay that same amount of insurance, no matter how much you owe.

So it may definitely be a good option to have a look at that, and it may be an idea to cancel that insurance and potentially get a whole life or term policy. And maybe you want to get a smaller term policy that would benefit your estate versus maybe benefiting the mortgage lender. And oftentimes, creditor insurance can be expensive, especially if you’ve significantly paid down your mortgage. It’s definitely something to look at. I would definitely recommend having a conversation with your lender.

You are not required to have creditor insurance, and I know that’s a bit of a misconception. A lot of borrowers feel that they have to take the insurance from their lender or from their mortgage broker, or originator. It is not required and it’s actually against the law. It would be considered tied selling to require a borrower to take the insurance. So I think you should definitely look into removing that.

And I would seek the advice of maybe a financial advisor and get a term or a whole life, and that’s a little bit outside of my purview. And creditor insurance is good kind of in the short term. But I think in your case, it’s become more expensive because you’ve paid down the mortgage significantly. So it’s definitely something to look at.

Rick: [00:07:30.15] Thank you very much.

Caller Glen asks about real estate construction and population growth in Nova Scotia

Todd Veinotte: [00:07:31.14] Thanks, Rick. Appreciate it, 902-405-6000 is the way to reach us, or 877-801-8255. Mortgage 101 with Clinton Wilkins and answering just like that. Answering your questions. We’ve got another caller in the queue. Just waiting for Vanessa to put them on hold, and she has done so! Glen, hello.

Glen: [00:07:51.30] Good afternoon… sorta morning?

Clinton Wilkins: [00:07:55.21] Afternoon, now.

Todd Veinotte: [00:07:55.68] Yeah, we’re into the afternoon.

Rick: [00:07:58.08] Yeah, no, you got me there. Clinton, I’ve been around the region here a little bit and you know what? I’ve been fortunate enough to be even on the harbour, on a boat and driving up and down the region. There is, I bet you there’s 20 cranes in the sky in Halifax. I was in Sydney just recently. You know, there’s none there. And I’ve been down the South Shore and I didn’t see any there.

What is, who’s predicting the growth there? And is it built on spec or is it to build on demand or whatever, which does affect mortgage rates and stuff, but I wonder, do you have any insight on that? I’m interested in that.

Clinton Wilkins: [00:08:56.79] Yeah, I can tell you, at least on a population front, our population has grown here significantly over the last couple of years, and it’s actually grown faster than we even envisioned what the pace was. And I think that was really exacerbated by the, you know, the pandemic. To be honest, a lot of people were relocating here to Halifax and Atlantic Canada in general because we have a better quality of life here. And I think that homeownership is more realistic here than it is in some other areas of the country. So that’s one thing.

There was an article that the premier said that our population was going to double by 2060. Now again, I’m not sure if that’s backed on stats or if that’s an estimate. Our population is growing here. That is that’s reality. And there was some research done that by 2025 or 2026 of the population in Halifax was really going to grow even by 20 or 25 per cent. So population certainly is growing. I can tell you one of the major issues here in Halifax and the whole county is the lack of supply.

Glen: [00:10:08.91] Yeah, exactly.

Clinton Wilkins: [00:10:09.60] Even on home sales for buyers to buy. We have less than a month’s worth of inventory. We have the lowest inventory levels in 30 years here in Halifax, so that is a concern. Obviously, the lack of supply is driving the price up. So that’s one thing. Do I think the prices are ever going to go down? You know, and Todd and I talked about this a few weeks ago, we are dealing with a hangover of what happened at the municipal level here in the late 90s and the early 2000s because we had a moratorium on building. It was very challenging to get a building permit.

Glen: [00:10:43.80] I remember that.

Clinton Wilkins: [00:10:44.79] Even today, it’s a challenge. So, you know, we’re dealing with the issues 20 years later, and it might take another 20 years for the inventory to balance out with the amount of demand. So I think that, you know, we’re in a situation here that over the next few years, we’re definitely going to see the demand still stay high. I think it’s an exciting time for anybody who is a homeowner because obviously we’re going to continue seeing the price growth.

My concern is for first-time home buyers because I think it’s going to be challenging for them to get into the marketplace as the price increases. But the one thing I will say, and for anybody who’s listening to our show today, the province really needs to work with the municipality, and I know that they said that that was something that they were going to work on to streamline and help the builders get some shovels in the ground.

Clinton Wilkins: [00:11:33.15] You know, we have a lot of land here in Halifax, and obviously urban sprawl is a concern. But I think that, you know, working on the density within the peninsula is important, but also getting more permits readily available and like streamlining the lowest risk, you know, permits to get those going. Builders certainly do want to build, but they need to have approved building lots to build on. And I’m not just talking single family homes. Obviously, we need those, but we need all styles of housing here.

And you know, it’s going to be a 20 year build, I believe. And you know, it’s a great time for, you know, students. And I, you know, I did a bit of a talk with a high school here in HRM a couple of weeks ago. It’s a great time to think about getting into the trades because we have a huge demand for all types of trades here in Halifax, whether that’s plumbers and electricians, you know, carpenters and the demand is going to keep up for the next careers really for some of these individuals. So certainly some challenging times, I think and I’m excited to be here and help people. I think it’s going to be 20 years before we’re really going to balance out the supply and demand.

Glen: [00:12:52.89] Really? Well, that’s encouraging in one way and something that’s discouraging that I’ve heard from builders.

Todd Veinotte: [00:13:00.68] I’m going to, Glen, have to put you on hold if you’d like to follow up the conversation because we need a break, okay?

Glen: [00:13:06.48] Oh, okay.

Todd Veinotte: [00:13:07.35] All right. Stay there, 902-405-6000 or 877-801-8255. Mortgage 101 with Clinton Wilkins continues when we come back.

Caller Glen follows up with a discussion on the need for skilled labour in our region

Todd Veinotte: [00:13:17.45] Alright, it’s Mortgage 101 with Clinton Wilkins, and we’ve got Clinton down to the bottom of the hour and we’ve got some time to take some calls: 902-405-6000 or 877-801-8255. Just to follow up with Glen to finish off the chat. Glen, you wanted to address or respond to Clinton?

Glen: [00:13:37.85] Okay, yeah. Hopefully I’m not too far off topic there, but it’s a little bit interesting there, that I’ve been talking to some, some contractors, some builders recently, and there’s a call out to Western Canada to come in here and frame houses and pour concrete, et cetera. Gee, that’s a weird situation for us here.

Clinton Wilkins: [00:14:03.95] It’s a kind of a role reversal, isn’t it? You know, I remember,

Glen: [00:14:08.33] You know what? It is.

Clinton Wilkins: [00:14:09.29] And I like I’ll be 40 years old next year, and I remember when I was going through high school, it was very unpopular to go into the trades. That wasn’t considered a good job. And now, think in the trades, there’s a lot of people that I do business with, you know, obviously customers of ours and consumers that are in the trades are making as much as maybe a teacher is making now.

And I think that, you know, the expectation kind of when I was growing up that, you know, getting a university degree was the minimum expectation. Even to go, you know, work in kind of any front line type jobs, even going to work at McDonald’s, you basically needed a university degree. And now it’s kind of very interesting to see how the demand has increased. And I will venture to bet that the demand and the compensation for skilled labour is going to increase over the next 20 years because obviously, if the demand is high, there’s only one way to kind of realise that demand and it’s going to be with more supply.

So I think it’s going to be working even right down to high schools and, you know, NSCC about getting more skilled labour in our market. But I definitely do hear, and I see people relocating from other areas of the country that are skilled labourers to come and work here. And I think, you know, there’s lots of work for them.

Chris calls in to talk about co-signers and how to eventually remove a co-signer off a mortgage

Todd Veinotte: [00:15:40.25] Okay, we’re going to move on. Thanks, Glen. Appreciate it. Let’s go to Chris. Hello, Chris.

Chris: [00:15:44.87] Hey. I’m here. I’m here. A question for Clintion.

Clinton Wilkins: [00:15:48.59] Sure, go ahead.

Chris: [00:15:49.82] Yeah. We’ve had a rough time trying to get a mortgage and we were actually very successful and we’re able to get a co-signer.

Clinton Wilkins: [00:15:57.95] Okay, good.

Chris: [00:15:58.52] We’re very lucky to do that. I was at a time where our landlord was going to ask us to move out when we were due to give birth. So we’re in there, we’re great, we’re happy. My question is having a mortgage and haveing the co-signer, will our credit score slowly increase, do you think, or?

Clinton Wilkins: [00:16:17.23] Yeah. The key is really to make sure you make all your mortgage payments. And I would say that might be even the most important thing to make sure that you’re going to make those payments on, because that’s going to report to your credit bureau and likely your co-signer’s credit bureau as well. So obviously, it’s very, very important to make those mortgage payments.

And you know, obviously your credit’s made up of your payment history, your utilization and kind of the mix of the credit and the enquiries. The mortgage itself may not impact the score per, say, Chris, but showing that you can make those mortgage payments, I think will impact your ability to get another mortgage when you’re ready to get that co-signer off.

Normally, what I tell consumers is, at least in this market today, you probably need to go through the term. And most likely you took a five year term, whether that was a five year fixed, or a five year variable. And you’re going to continue paying down that mortgage. The key to really getting the co-signer off and kind of the path of least resistance in terms of getting that co-signer off is to really monitor your credit and make sure that you have the income and the credit to qualify for a mortgage on your own.

Clinton Wilkins: [00:17:32.96] And typically, the process would be through a refinance. And the way that a refinance works is we can leverage up to 80 per cent of the market value of the home. If you just bought it, obviously, you’re going to be maybe doing some work and hopefully the market continues to increase where the value is going to go up. But concurrently, you’re going to pay down the mortgage debt.

So normally the way that we tell co-signers and consumers that we’re doing a transaction for that need a co-signer is in five years, it’s a great natural time to look at getting that co-signer off right. And it may be important for things like estate planning because, as you can imagine, oftentimes co-signers are parents, or maybe it’s a brother, sister, or it could be a related family member, but if the intention is to get them off, the best time to do it is kind of at that mortgage renewal time because you’re not going to pay a penalty on the existing mortgage. And hopefully, the property value has gone up enough and you pay down the mortgage enough to kind of be at that 80 per cent mark.

Chris: [00:18:36.91] Right. Yeah, we were going to try and get out as soon as we’re actually possible because of, you know, paying a penalty would be cheaper than paying our rate now, I think. We have a pretty high rate, 5.79, I think it is. So we are kind of immune to, I guess, rate increases for now.

Clinton Wilkins: [00:18:54.40] Yeah. And that may be a situation where you need to keep an eye on what you think the property value is going to be and that mortgage balance because it might be worth it to break the term early. I think in everybody’s situation, it’s a little bit of a case by case basis, and you might not know exactly where the property value is.

But usually, what I tell consumers is, keep an eye on the sales in your neighbourhood for similar types of homes. And when you think that you’re at that 80 per cent mark, you know, it certainly could be worth it to have the conversation. And I also recommend downloading a couple of free apps. So you may just want to write this down…

Todd Veinotte: [00:19:31.30] Just quickly, Clinton, because we’re out of time.

Clinton Wilkins: [00:19:32.53] Yeah, Borrowell and Credit Karma. Download both of those apps, and I would say you and whoever is going to be on the mortgage is a good idea to have that, and it’s a great way to keep an eye on your credit.

Chris: [00:19:43.37] Okay, thank you very much for your time.

See you next time!

Todd Veinotte: [00:19:44.80] Thanks so much. Clinton, how do people get a hold of you?

Clinton Wilkins: [00:19:46.93] They can check us out online at Lots of great information on our website, and I think we have about 500 blog posts now and lots of information on Financial Literacy Month, and we’ll be back next week. And Todd, I’ll let you cue it up. I won’t take your glory, and we can certainly drive down and, you know, do a deep dive into some other topics.

Todd Veinotte: [00:20:07.49] Yeah, you got it, 100 per cent. Always great. Thanks, Clinton. Wonderful. And we’ll talk next week.

Clinton Wilkins: [00:20:12.49] Thanks, Todd.

Todd Veinotte: [00:20:12.91] Alright, you got it. That’s Clinton Wilkins, our mortgage guru. It’s Mortgage 101. It’s Financial Literacy Month. And again, we’ll do this again next Tuesday. We look forward to hearing from you. Sylvain Charlebois, the food professor when we come back.

If you have any questions, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.