Mortgage 101 – Canadians Love Homeownership | Feb 6, 2023

What do you need to know as a new Canadian looking to buy a home? In this episode, Clinton Wilkins and Todd Veinotte talk all about mortgages for new Canadians, why Canada is a great place to buy a home and the many challenges with new construction.

Clinton Wilkins 00:05
So do you respond to your own tweets or do people respond to them?

Todd Veinotte 00:08
No, I respond. I’m not like you. I don’t have people doing things for me. I take care of business myself. We can’t all be you.

Clinton Wilkins 00:15
Your producer does a lot for you.

Todd Veinotte 00:16
Vanessa is amazing. Yes, yes. She’s truly amazing. So do I. Sometimes when that’s actually you know what Vanessa does, take care of all social media, including her Instagram and all that. Are you on Instagram, by the way? Oh,

Clinton Wilkins 00:26
Yeah, I’m on Instagram. Yeah, like an Instagram for the business. And we have the show on Instagram and I’m on Instagram personally.

Mortgages for new Canadians

Todd Veinotte 00:32
I bet you are. Welcome back to Mortgage 101 your guide to homeownership with Clinton Wilkins and myself, Todd Veinotte, right here on City News 95.7 here in Halifax. And we just love what we’re doing here. I want to talk in our last segment a bit about new Canadians and mortgages. And I’m a massive proponent of immigration. And that’s a whole other conversation. Some people aren’t, but I’ve pushed it all the time. I think it’s extremely important. So how much of your business is becoming new Canadians?

Clinton Wilkins 01:00
I would say the percentage was certainly increasing, Todd. The federal government has made some changes that have impacted obviously non-residents and some new Canadians. So if you’re on a work permit, if you’re not a permanent resident, you need to file three months of income tax, not three months sorry, three years, three years of income tax before you can qualify to buy a home. Which I don’t think is unreasonable. And the moratorium on non residents buying homes is really for two years, and then we’ll see what happens with the federal government. And I can tell you

Todd Veinotte 01:36
Pretty big news story, wasn’t it actually?

Clinton Wilkins 01:38
I think more of the challenge in Nova Scotia. I think any non-residents buying homes in Nova Scotia, it was usually Americans, it was Americans buying second homes as cottages. These cottages I don’t think were homes that people were probably living in all year round anyway. So I don’t know if we’re gonna have a big impact here in terms of housing supply. Where I think the challenge was, was Ontario. So like the GTA, and I think in BC, in the Greater Vancouver area. So I think those were the two areas that really non-residents, and maybe people that were coming on a work permit, were buying homes and maybe not having the opportunity that people that were living in that province had. But a permanent resident, same as a Canadian, same same. And I can tell you, so many permanent residents are buying homes. I love it. One of the biggest and the best ways to put down, you know, ties in the community is really homeownership. Canadians love homeownership. And, you know, if you’re a permanent resident, same as a Canadian, all the programs are the same, all the programs. So I think it’s really good news. And certainly a lot of new Canadians that are permanent residents, I think are going to continue buying homes. What’s really interesting is a lot of people who come to Canada, and they are a permanent resident, oftentimes are bringing assets into Canada. So they’re bringing, you know, cash, they’re bringing savings or bringing investments into Canada, and then using those resources as a downpayment to buy new homes.

Todd Veinotte 03:15
Which obviously, when you come with a lot of skin in the game, the more money you bring into the contract then obviously, that’s the stronger your application is.

Homeownership is part of that Canadian dream

Clinton Wilkins 03:26
Yeah, and the banks have some really good and the lenders have some really good programs that work for new Canadians. You know, there’s some lenders that will allow them to do 35% down, you know, as long as there is some net worth there, and maybe they don’t need to have as much income to qualify. Okay. Because, you know, if you’re new to Canada, and you have a permanent residency, you’re maybe not in your, you know, dream job. You know, it takes time, right, it takes time to find that dream job, and typically, the income will increase over time. Let’s say that you do have credit, you’ve been here for a few years, and you do have employment and you can qualify, you can still use the same programs that everybody else can use, you can buy a home with as little as 5% down, which is exciting.
You know, I think some new Canadians that, you know, are new to Canada, and not even new Canadians, like new to Canada, that are relocating here, come from areas around the world that homeownership is never possible for a variety of reasons. Right. And, you know, I think that’s part of that Canadian dream. And I know I’ve used that sometimes in my advertisements. Yeah, you know, homeownership is part of that Canadian dream. And it is more realistic here than it is in other areas of the world and really other areas of Canada. We still have some of the most affordable housing from across this country. Yes, we’ve had increases over the last couple of years. Everyone has, right? But I think now we’ve almost right sized our property values. So I think they are maybe more in line with the rest of the country. But we certainly haven’t had that, you know, double digit boom of price year over year over year.

New construction is challenging

Todd Veinotte 05:13
What about the new construction? This is something that’s not for everybody. We hear stories about some problems with new construction, because when the builders initially decided on a price, and then they’ve got all types of supply chain issues, and we’ve heard all of these stories before. So it’s not for the faint of heart, new construction right?

Clinton Wilkins 05:34
No, I think it’s certainly challenging. I certainly have some clients that have bought new construction that are being completed that even this month, Todd, but the prices on the new construction, I don’t think are for first time homebuyers. I think anybody who’s doing new construction, whether that’s a turnkey or you know, draw financing, obviously, we recommend turnkeys. The risk is on the builder. But the prices are quite prohibitive. The prices in some cases are double the average. It’s very costly, new construction right now.

Todd Veinotte 06:03
Yeah. And that’s because just simply because of the risk that the builder has to take on, right?

Clinton Wilkins 06:09
No, I don’t think it’s just the risk. I think it’s the cost of construction. It’s the labor. It’s the materials. I think a resale home typically is more affordable than new construction, at least right now.

Todd Veinotte 06:20
What percent of your business is new construction? Roughly? Do you know?

Clinton Wilkins 06:24
I don’t know exactly. But I will go out on a limb and say 10%.

Who should do new construction?

Todd Veinotte 06:29
Yeah. So when what’s the ideal client? When you say, Okay, you are a good client for new construction. When are you comfortable with that?

Clinton Wilkins 06:36
I would say someone that has an existing home that maybe is selling it, and they’re going to buy a new construction a turnkey. Typically they have a bigger down payment, they maybe have a little bit more skin in the game, they can take on some more additional risk. I think a client that’s not great for new construction, looking to do the minimum downpayment. So like, 5%, down. First time home buyer buying at the top of their budget. I don’t know if that’s the best person to do the new construction. Because things certainly go wrong. There’s overruns. I’ve seen a lot of construction contracts, even for turnkey, that they put in a clause, you know, around inflation, and that they can charge X number of dollars or X number of percent more if the cost of materials have gone up.

Todd Veinotte 07:25
Have you talked people out of new construction?

Clinton Wilkins 07:28
I think in some cases I have. Yeah. Yeah. And you know what, maybe that’s not music to builders, ears. But builders are not sitting on inventory. The inventory for new construction is moving probably just as quick as inventory for a resale home. So you know, new construction is for, you know, a select group. I think sometimes first time homebuyers had their expectations set, you know, very high. Whatever happened to a starter home? There’s nothing dishonorable.

Todd Veinotte 08:02
At any age. Or any circumstance. Perhaps sometimes that’s what people need –

Clinton Wilkins 08:08
I’ve had those 4000 square foot homes Todd. I know I don’t want it. You know what I mean, I don’t need the four or five bathrooms. That’s more bathrooms to clean. I mean, I’ll be cleaning them myself. But it’s more bathrooms that are cleaning. I’m only, you know, we’re two people. You know, how many bathrooms do you need in a home? So for me, I think the right space is important. The right location is important. The right mortgage product is important. You know, I think looking at your finances, you know, what fits with all that stuff. You know, I think that keeping up with the neighbors, keeping up with the Joneses, whatever.

Todd Veinotte 08:47
However that was coined.

Clinton Wilkins 08:48
Let’s throw that out the window. 2023, we’re throwing this out. Let’s focus on what’s going on with inflation. Let’s not spend on consumer goods. Let’s, you know, talk about mortgage rates. Let’s talk about your personal finances.

Todd Veinotte 08:59
Alright let’s talk about how people can find it all things with Clinton Wilkins if they want to know more about what you guys do.

Clinton Wilkins 09:03
Check us out online. I think the first place to look is on teamclinton.ca. On our website. There’s links to our social media. We have hundreds of blog posts on there. And you know, you can certainly follow our podcasts you can listen to us on the air, listen to our videos. And you know if you have any questions about residential mortgage lending, certainly give us a shout. If you’re a client, if you’re not a client, we love even just answering a question. Yeah. Always great Clinton, happy new year and we’ll do this, we look forward to, we’re going to do this every month. We’re going to do it every month. Thanks for having me, Todd. Have a wonderful weekend everyone and we’ll be back with you.

Todd Veinotte 09:29
We will be. That is Mortgage 101 your guide to homeownership with Clinton Wilkins and myself, Todd Veinotte. Thanks so much for listening.