News Update: 95.7 News Radio – April 28th

On 95.7 News Radio, Clinton and Todd discussed the Yukon’s government’s new first-time home buyer program, offering low-interest loans to cover up to half of down payments while highlighting similar programs in Nova Scotia and New Brunswick.

Todd Veinotte
Yukon’s government is launching a first-time home buyer program in the territory to help eligible residents receive low-interest loans to help them with down payments. The territory says the Yukon, or First Home program, will give eligible home buyers loans that would cover up to half their down payments on a purchase. Repaying the loan can be deferred until the mortgage has been refinanced or paid off. Joining me to talk about all this is our mortgage guru, Clinton. All right, so what are your thoughts on this type of program, and do we have something similar here?

Clinton Wilkins
I think these programs are very, very needed across this country. As you know, homeownership is part of the Canadian dream, and housing is really at the forefront of what’s going on here across the country. Many Canadians are struggling with home ownership, even when we’re talking about rentals. I think any commitment from a provincial or territorial government for home ownership is positive. In Nova Scotia, we do have a down payment assistance program where Nova Scotia will cover 100% of the down payment for a 5% down payment. There are some requirements that borrowers need to meet, Todd, but it’s great for a first-time homebuyer. So, for example, they have to have a credit rating of at least 650 they have to have a pre-approval from an approved lender. They need to be a first-time homebuyer and household income not to exceed 145,000 in Halifax, for example, it has a cap of 570,000 for a purchase price, which is right around our average purchase price. And other municipalities around the province have a cap of 350 and 300, so it just enables those first-time homebuyers that may have great credit and good income, but just can’t seem to get that savings done. It’s a great way to get into home ownership. As you know, rent is very, very high in Halifax; to rent a two-bedroom is around $2,500, so it’s prohibitive for borrowers who are technically qualified for home ownership, but can’t meet that down payment requirement. I met today with Minister Hickey from New Brunswick. He is the Minister of Housing, talking about putting a similar type of product available or the same type of program available in New Brunswick. Certainly going to share that information with him. As you know, home ownership is really at the forefront of the provincial and municipal levels, and I think a lot of listeners are going to be watching and listening tonight on what happens with this federal election.

Todd Veinotte
So, when it comes to how many Nova Scotians are taking advantage of this program.

Clinton Wilkins
There are a lot of Nova Scotians who are taking advantage of it. Not everyone qualifies, but I think that they’ve expanded the program over the years, they’ve increased the maximum limit of the purchase price, and they’ve increased the household income. So I think there certainly is an uptick. Any commitment from the provincial government in terms of home ownership is important, and we need it. And I think I would argue, Todd, that we need even more commitment from our province and other provinces across the country.

Todd Veinotte
So it seems to me that if you qualify with this, it’s no brainer, right? Why not take advantage of it?

Clinton Wilkins
It is the requirements that I mentioned earlier, but getting a pre-approval from an unbiased mortgage professional that we can now talk about the down payment assistance program, and we can see if the qualifications are going to work. When we’re doing a pre approval, we talk to borrowers every day about this program, and the way that it works is it’s a 10 year interest free loan, so it’s amortized basically like a second mortgage, and then at that 10 year mark, it would be paid off, so no interest, but there is a principal repayment, and we have to put that payment into our debt servicing ratios when we do an approval for our borrower. So the first step is getting a pre-approval.

Todd Veinotte
All right, so would would utilize these government programs? Is that something that mortgage brokers like yourself would do?

Clinton Wilkins
We are running this program every single day. We’re doing preapprovals for borrowers who are looking to get into home ownership, who are looking to take advantage of this down payment assistance program. And we’re being great advocates of the program as well. Todd, we’re talking to consumers who weren’t even aware that the province offered such a program to help them, because oftentimes people come to see us in very early stages of getting ready for homeownership, so we’re talking to them and making plans. And a plan is really important when you’re going to enter into something as big as home ownership.

Todd Veinotte
So why wouldn’t this be better publicized? You would think that the government would be out in front of this and get this acknowledged to people.

Clinton Wilkins
I think the province certainly could pump out more communication, especially around housing, as you know, Todd, this is a hot topic. I think the province has had a program like this in different kinds of iterations over the years. I think they rely on mortgage brokers to be able to pump out this information, and we do in our office; we’re all trained on how to proceed with these types of transactions. But I agree with you, I think there is sometimes a gap in the communication, and that might be intentional from the province, because they have a limited amount of money that they can work with for this program, we have had situations before where they have run out of money and they’ve had deposit in different municipalities because they have different funds earmarked for different areas of the province.

Todd Veinotte
What are some other ways that people can borrow a down payment?

Clinton Wilkins
Number one is the Bank of Mother and Father. That’s the number one way that we see borrowers getting into home ownership, and Todd, it would surprise you, but we see many borrowers who are getting gifts, even to the tune of like six figures. We’re seeing $100,000 gifts these days. And the way that I think parents, their kind of perception, has changed. A lot of these gifts are being done because they say, “Hey, if my kid can’t get into homeownership now, they may never be able to get into it.” So I think there’s some urgency there. The other great one is borrowing from your RRSP that is tax-free as a first-time homebuyer, or if you haven’t used the program for several years, and you’ve gone through a divorce, you can use that program again. So that’s a great one. And we see those are kind of the top two that we see. It’s gifted down or borrowed from the RRSP. There are lots of ways to make a down payment. You can borrow it from an unsecured line of credit if you want, as long as you can afford to service that debt. And there are credit union partners in the province that are also doing cash-back mortgages to be able to cover that down payment as well.

Todd Veinotte
So it seems to me that, instead of using my RSP, if I could get a government program that would be more advantageous for me, would not? Or what? What’s your take on this?

Clinton Wilkins
What we need to remember is that this Nova Scotia Down Payment Assistance Program, Assistance Program is also a loan, Todd. You have to pay it back, right? So it will depend on the tolerance in terms of payments. And through this program, there can be verification of assets as well. So I think some borrowers may not qualify for this down payment assistance program if they have the funds available to make a traditional down payment. So, I think that’s something to be cognizant of as well. And now, obviously, we want to get as many homeowners into homeownership as possible. And I think this is a commitment from the province of Nova Scotia to help these first-time homebuyers get into the market.

Todd Veinotte
Okay, you mentioned homeownership, and the fact that some people are concerned that it is becoming out of reach for some, and some would say that it’s becoming a generational thing. What are your are you? Is there? How concerned are you that this problem is going to get worse over time?

Clinton Wilkins
The demand is very high. Todd, I don’t know if it’s getting that home ownership, the dream is softening. It’s not I think it’s challenging for some. Think about it, if the average house prices increase, but the average incomes have not kept pace at the same level. It is becoming more challenging for some borrowers, but the Canadian Housing Corporation and the other insurers have now, as we said last year, extended the amortization, which is helping more borrowers qualify for a mortgage. So, for any borrower buying a new construction property, they can get a 30-year amortization, and for all first-time home buyers, they can now get a 30-year amortization. And I heard a stat from Sagen, which is one of the three insurers, that almost 50% of applications that they’ve seen since this change went into effect.

Todd Veinotte
Okay, how about on new construction? I wouldn’t want to get political here, but this is the election day. What are your thoughts on the reduction of the age of the federal portion of the HST on new builds?

Clinton Wilkins
I’m mixed. I’ll be 100% honest with you, I think it’s a step in the right direction from the feds. I think again, this is something that we can be more allowed with, maybe starting as early as tomorrow. I just hope that the builders will turn the savings over to consumers. So when consumers are buying a new construction property, it will be much cheaper than it was.

Todd Veinotte
All right. So again, complex mortgage lending is very complex, and it speaks to the need to get to have a professional like yourself and know you that you advise people to access an unbiased mortgage consult or mortgage broker, that’s, that’s people’s best alternative, right?

Clinton Wilkins
It certainly is. And today, Todd, we know there’s a federal election, and here in Halifax, we’re having our regional symposium for Mortgage Professionals Canada, which I’m the Atlantic director. So I’m bringing the concerns from consumers and the mortgage industry to the national stage, and we’re bringing all. Our partners are together here today. So there’s certainly a lot of talk about home ownership.

Todd Veinotte
So people listening right now, if they think they may or may not qualify or whatever, they can certainly reach out to you.

Clinton Wilkins
Reach out to me or any unbiased mortgage professional in your area.

Todd Veinotte
Okay, thanks, bud. Appreciate it. Look into our mortgage guru.