Mortgage 101 – what you need to know about buying a home together | February 2022 Part 4

In this episode of Mortgage 101 with Clinton Wilkins and Todd Veinotte, as heard on CityNews 95.7, the guys talk about everything you need to know about buying a home together. February is the month of love so Clinton and Todd take a deep dive into the Matrimonial Property Act, what it means to buy a home as joint tenants versus tenants in common, and much more!

Mortgage 101 with Clinton Wilkins & Todd Veinotte: What you need to know about buying a home together

Don’t feel like watching the video? Check out the transcript below.

Transcript:

Relationship breakdowns

Clinton Wilkins: [00:00:00:01] I certainly have heard from friends who are family lawyers, and I can tell you they are very busy.

Todd Veinotte: [00:00:04:14] Yeah, absolutely.

Clinton Wilkins: [00:00:06:05] You know, if you probably didn’t love your spouse before or like them, you probably like them less now.

Todd Veinotte: [00:00:11:08] Yeah.

Clinton Wilkins: [00:00:12:09] I will venture to say. You know, I will venture to say that, it’s certainly the last couple of years of maybe being trapped with someone isn’t as favourable as you maybe once had envisioned. And you know, if you own a home together and you’re going through a break-up, that might be challenging.

Todd Veinotte: [00:00:30:18] Absolutely, and it’s probably why some people stay together, quite honestly.

Clinton Wilkins: [00:00:34:06] I think some people stay together for finances. I think some people stay together for that old adage like, “We’re staying together for the kids.” I don’t really know if that works or not. Like, I don’t have kids, so I can’t really speak to it. But, you know, sometimes people are better apart than they are together. And it really does happen and we see them in the office. And, you know, it is a challenging time and I’m cognisant of that.

But I mentioned earlier in the show that over half the files that I that I do every day have a family component to it. And that may be a family component where there has been a separation or a divorce, and maybe they’re receiving some child support or spousal support, or maybe they’re paying it. And that certainly does factor into the finances. It factors into the finances.

We can certainly use the income up to time the child’s 13 years old. After that, you’re on your own because we think they’re going to age out during the term. But you know, a child that’s 12 years old or younger, we can certainly use all of the child support.

What you need to know about buying a home together

Todd Veinotte: [00:01:30:03] All right, so what advice do you give people who are in the at the stage where they hope that things are going to go well, they’re in love, whatever term you want to use, and they’re buying a home together.

They’re entering this contract together, whether they’re living together or married, according to the law it doesn’t matter. It’s the same thing. So, what advice do you give people at that stage?

Matrimonial Property Act

Clinton Wilkins: [00:01:55:08] I think the first step is, if you’re married, then obviously the Matrimonial Property Act applies, so I think that’s really important to understand what the law is and get some legal advice.

There’s two different ways that you can take the title in Nova Scotia, and I assume in many provinces it’s very similar. You can take it as joint tenants or tenants in common. And so that can really impact how things happen if one of you were to die.

Joint tenants

So if you are not married, for example, and you buy a home with your spouse and your joint tenants, your interest if you were to die would automatically go to the other person.

Tenants in common

If you were not married and you bought the home and you do the title as tenants in common, whoever dies their interest would then go to their estate. So that could be challenging down the road.

Todd Veinotte: [00:02:43:06] Oh, that’s very important to know.

Clinton Wilkins: [00:02:45:00] Maybe that’s, you know, it could be challenging down the road for some people, but it could also be easier down the road for some people. I guess it just depends.

What happens when a partner dies?

Todd Veinotte: [00:02:51:15] Would it be easier? I mean,

Clinton Wilkins: [00:02:53:18] While if you are planning on giving your financial interest, maybe to your kids or your heir, you know, having it as tenants in common, it’s probably the way to go.

Todd Veinotte: [00:03:05:13] So let’s suggest that happens. Somebody dies and you’re in year three of a five year term. What does that mean for the person that’s living when their interest goes to the estate and that person may not be able to pay for it or qualify for remortgage that house alone?

Clinton Wilkins: [00:03:20:22] Yeah, that might happen,

Todd Veinotte: [00:03:22:02] And I’m sure it does.

Clinton Wilkins: [00:03:23:01] And maybe the estate needs to buy that other person out, or maybe the executor and the remaining owner would agree to sell the home and then split the interest on however the scheme was set up with the tenants and tenants in common.

Todd Veinotte: [00:03:35:21] These are for non-married people, right?

Clinton Wilkins: [00:03:37:11] This would be for non-married people. If you’re married and the property is your matrimonial home, then the Matrimonial Property Act applies. So regardless, if a spouse is on title or not on title, they have the same beneficial interest.

What happens when you get married and one person already owns a home?

So let’s say, Todd, for example, you are a single person. And down the road, you decide you’re going to get married, but you never update the deed of your home because you’re like, “Eh, this was always my house. I’m going to keep the house. I don’t want to change the mortgage. I’m in the middle of my term.” But your new spouse would then become a beneficial owner

Todd Veinotte: [00:04:11:20] As soon as that marriage is done.

Clinton Wilkins: [00:04:13:29] Correct.

Todd Veinotte: [00:04:14:05] Day one? Wow.

Clinton Wilkins: [00:04:16:11] When they occupy it as a matrimonial home.

Todd Veinotte: [00:04:19:16] Ok, let’s,

Clinton Wilkins: [00:04:20:28] If it’s not, if it’s a rental property, that would be different.

Todd Veinotte: [00:04:23:08] Okay, so let’s say that you have somebody cognisant, to use your word, of these things, can they then, through a lawyer, create some type of prenuptial agreement if that’s the term that we use here in Canada?

Prenuptial and cohabitation agreements

Clinton Wilkins: [00:04:36:17] So if you’re not married and you want to get such an agreement, it would be considered like a cohabitation agreement. And it would really lay out what the financial terms would be if there were to be a separation. So then you know, there’s no, um, grey areas, I guess. So I think that’s important to think about.

I know a lot of adults that maybe are on their second relationship and they will leverage that cohabitation agreement. I actually had borrowers in my office a couple of weeks ago, and I won’t give obviously their specific situation. But with one borrower, they actually brought it up, and I brought it up and they’re like, “You know what, we’ve already had this conversation,” and I’m like, “You know what? This is so mature. “They had at least one of the borrowers had been through a break-up, and the other one is like, “This is the right thing to do.”

They both had money, Todd. So, it wasn’t like one was having maybe more leverage over the other one, but they’re like, “You know what? We just want to lay it all out, so we know exactly where we’re at. So there’s no questions.”

How many people make cohabitation agreements?

And you know, the one thing I can say from being a mortgage broker: I think it’s kind of like I’m a therapist in some ways. When there’s matrimonial breakdown, people get crazy about two things: One thing is kids and the other thing is money.

Todd Veinotte: [00:05:58:00] Not in that order, necessarily.

Clinton Wilkins: [00:06:01:19] Honestly, it could be interchangeable. But, those are the two kind of contentious issues. And getting your intentions down upfront is really important.

Todd Veinotte: [00:06:12:29] How often do people do that?

Clinton Wilkins: [00:06:15:11] I’m going to say less than 10 per cent of the time. Maybe less than five per cent of the time. I don’t have, these are not like real numbers. These are not real stats like, don’t hold me to this.

Todd Veinotte: [00:06:24:26] No, no I asked you what you think. I didn’t say what are the statistics. Your thoughts are it’s less than 10 per cent of the time.

Clinton Wilkins: [00:06:30:02] I would be curious to know, and I don’t know if there’s any stats out there. So maybe we’ll do some research. I’m looking at our team over there.

Todd Veinotte: [00:06:37:14] Yeah.

Todd Veinotte: [00:06:38:13] Maybe we’ll do some research. I’d be curious to know how many people do a cohabitation agreement.

Todd Veinotte: [00:06:43:12] Or maybe some people could send you some feedback?

Have a will if you haven’t already

Clinton Wilkins: [00:06:45:19] Yeah. You know, if there are any family lawyers that are listening to our show, write me. I’d love to know this. The other thing I’m really curious about: How many borrowers do you think have a will?

Todd Veinotte: [00:06:55:14] Well, it’s a good question. What do you think?

Clinton Wilkins: [00:06:57:22] Very low percentage.

Todd Veinotte: [00:06:59:00] Really? How do you know that?

Clinton Wilkins: [00:07:00:04] I hear of the stories of family members that die and it’s always going through probate and all of these issues. And a lot of them will die intestate, which means no will. You know, I think older people have wills because maybe people smarten up when they get older. I don’t know.

Todd Veinotte: [00:07:18:20] It gets ugly, though, when it gets to go to probate, right? Obviously expensive, too.

Clinton Wilkins: [00:07:23:11] We have about 13,000, 14,000 clients here, and clients do die.

Todd Veinotte: [00:07:30:07] There’s the headline of the day. ‘Clients do die.’ They should use that as your sales moniker.

Clinton Wilkins: [00:07:34:21] I get the calls. And I get calls because they are curious to know if they took the creditor insurance. So primarily, we offer creditor insurance with our mortgage product through Manulife. I’ll just put it out there.

And we offer life and disability insurance. And I’m not an insurance person, but I know it’s a good insurance to have creditor, at least to get over the gap, to maybe get a whole life or return policy or something that might be more of a longer term solution.

See you next month!

Todd Veinotte: [00:07:58:19] All right. We’re a we’re running out of time. How do people get a hold of you?

Clinton Wilkins: [00:08:01:25] Check us out online and we’ll continue the conversation. You can check us out online at TeamClinton.ca/Radio. Lots of great information there. And you know, if you’ve any questions, certainly give us a shout and lots of great blog posts as well.

Todd Veinotte: [00:08:14:00] And of course, all this you mentioned, all this will be on your website, all the links to all our audio and video.

Clinton Wilkins: [00:08:20:21] Exactly. After this weekend, you know, obviously we’re on Saturday and Sunday, we will get it online and it will be all on our social media. So check us out on the website and you can instantly surf through to our social media and check out any of our previous shows as well.

Todd Veinotte: [00:08:32:23] Thanks, Clinton. Always great.

Clinton Wilkins: [00:08:34:02] Thanks for having me, Todd.

Todd Veinotte: [00:08:34:26] Okay, Mortgage 101: Your Guide to Homeownership. Thanks, everybody.

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.

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