Mortgage 101 – Cohabitation, collaboration and hard conversations | March 6, 2023

When it comes to buying a home, two incomes is certainly better than one. But even then, there can be challenges. In this episode, Clinton Wilkins and Todd Veinotte discuss cohabitation agreements and how to approach finances in your relationships.

Todd Veinotte 00:04
Welcome back to Mortgage 101, your guide to homeownership with Clinton Wilkins, and myself, Todd Veinotte and we want to talk a bit about when people are entering, because it is the month of love, when people enter relationships, and they fall in love, and they feel as though it’s the time to cohabitate, and perhaps purchase a new home. And I’m sure you see this quite often, right?

Clinton Wilkins 00:28
Yeah, I see it literally every day.

Todd Veinotte 00:30
Every day. Really? Yeah.

The importance of a cohabitation agreement

Clinton Wilkins 00:31
Let me tell you. The first thing I tell them to do is get a cohabitation agreement. I think it’s really important.

Todd Veinotte 00:37
What is that?

Clinton Wilkins 00:37
A cohabitation agreement is almost like a prenup. And it’s really important because it’s a lot easier to have these conversations when things are good. People get wild about two things. One is money. Two is kids. And obviously the home is a big piece of people’s money or the household’s net worth. So I think getting things hammered out in the beginning, really really important.

Todd Veinotte 01:02
Yeah. Okay, so what does a cohabitation agreement look like? What’s involved in it? Is it a lawyer?

Clinton Wilkins 01:07
A lawyer would typically draft a cohabitation agreement. And typically they would draft it on behalf of one of the parties and then the other party would typically seek independent legal advice to make sure you know, it’s all kosher. And you’re getting a fair shake at things, right? It’s important because you don’t know what’s going to happen. As you know, a lot of relationships break down Todd. I’ve been through breakups. You’ve been through breakups, it’s probably cost us a couple bucks a lot.

Todd Veinotte 01:07
It’s cost me a lot of money.

Clinton Wilkins 01:08
But you know what, we made it to the other side? And luckily, we’re both in relationships. Yes. And, you know, there’s certainly been some bumps I’m sure along that ride too, but we’re also cohabitating.

Two incomes is stronger than one

Todd Veinotte 01:29
50, 60% breakdown. We are cohabitating, yes. And let’s, let’s face it, if you can find from a financial standpoint, a two is a lot stronger than one. Not to suggest that people can go in on their own because they do and that’s great. But when you’ve got support –

Clinton Wilkins 02:07
It makes it a lot easier. We were actually talking about this before our show with our producer that, one of her goals is to buy a home. And you know, what I said kind of jokingly, well maybe you’re gonna have to shack up with someone to be able to kind of get to that stage in your life. And it’s not so much a joke. But it’s just reality, practical application of finance. Having two incomes is easier than one, typically. You know, the average house price in Halifax is somewhere around $500,000 which means the household needs somewhere about $125,000 of annual income to buy the average home in Halifax. And we know the average income is not $125,000. And even the average household income maybe is not there. But it’s a lot more realistic for two incomes, to be able to afford to buy a home than one at least right now in Nova Scotia.

Todd Veinotte 03:00
And the other component to that as well as is that if somebody loses their job, which can happen, then then you’ve got somebody to fall back on with the partnership of the marriage or the relationship or whatever the dynamic is.

Matrimonial breakdown isn’t the only financial challenge

Clinton Wilkins 03:12
100%. People have lots of reasons why potentially finances become challenging. It’s not just matrimonial breakdown Todd. People have health issues, people have loss of jobs, people have loss of business, you know, we’re going into potentially a harder economic time. And there will be some job losses, and some people are going to lose their business. You know, we talked a little bit, you know, before we started this segment, about restaurants in Canada. Restaurants are having a hard time right now. Those are small businesses. And you know what, I own a small business, I work in a small business, our mortgage brokerage. So when you support someone like me, you’re supporting a small business. We are in a recording studio. We’re not doing this at your normal City News studio. We’re doing this in a small business. And you know, it’s a small business in our community. And that’s why I think right now, it’s very important to support small businesses.

An honest approach to joint finances

Clinton Wilkins 4:05
And I think throughout the the rest of the year, I think being frugal and having these conversations with your spouse are going to be important. Have these wine Wednesdays, or whatever, open your bills, talk about your finances, talk about your income and your debts, and you will be better served.

Todd Veinotte 04:23
And do it from a, and we’re kind of getting to marriage counseling at this point, but do it from a position of of love of love and responsibility. And not being defensive, right? Don’t open the mail and say, “Why did you do all this spending?”. Say, let’s analyze this. Let’s look at some of these bills. How can we make this better? Right? It’s the approach is everything.

Clinton Wilkins 04:47
I see a lot of this with couples that you know, one has their bank account, the other person has their bank account, everything is separate and the only thing they have together is the home. And sometimes there’s some income disparity, not everyone makes the same amount of money Todd. And these are partnerships. It’s even like, with me and my spouse. You know, can I pay 100% of the bills? Yes. Do I want to? No.

Todd Veinotte 05:09
And he wouldn’t want you to either.

Clinton Wilkins 05:11
He can’t pay 100% of the bills. But guess what? We figure it out based on our income. And what works for us is I pay 65%. And he pays 35%. And that works out. Well, everyone’s kind of getting their fair share. And that’s based on, you know, income and everything. And it’s just that’s how we’ve been able to level the playing field a little bit, you know.

Todd Veinotte 05:30
Yeah. So obviously, if people want to enter the end, it’s great that people fall in love, and people want to do all this, but you need to go with your eyes wide open. And have a cohabitation agreement in place. Have these things in place, and know each other’s finances as well. I think that’s important also right.

Hard conversations are beneficial in the long run

Clinton Wilkins 05:47
Talk about your credit score, right? Talk about your income, talk about your assets. These are all important things, when you’re going to enter into a relationship, especially if you’re going to enter into a relationship where you’re going to own a home or buy another home. You know, it’s a lot better to have those conversations upfront with your spouse, because, you know, there’s nothing worse than me breaking kind of more challenging news. I do it. And I try to do it as eloquently as I can. And but I’ve certainly had a lot of these challenging conversations, because not everyone is in maybe the same financial health. And I think communication is kind of the first step with that. Yeah. And again, it can be a difficult conversation. But on the other side of it, it’s quite beneficial, right? I think it’s certainly beneficial. And I think that you will have a healthier relationship if you’re healthier, financially together. And, you know, sometimes when we do refinances, it’s to help one person impact their position better. You know what I mean? Maybe one spouse is in great financial position, and one spouse is having a hard time. I’ve righted a lot of situations. And it’s just about having those conversations.

Todd Veinotte 06:50
Yeah. All right. We’ve covered a lot of territory as we always do on Mortage 101. And this is what this is all about. It’s about education. But certainly if people want to know more about all of this stuff, or if they want to know more about Clinton Wilkins and what you guys do. You have fabulous website. We have all types of posts now from what we’re doing now. So let everybody know how they can get a hold of you guys and where they can get some of this information.

Clinton Wilkins 07:11
I think the first place that people need to check us out is online. Check us out at teamclinton.ca. Lots of great information on our website. And you can surf through to our social media accounts. You can see me and Todd, Todd and I are on all kinds of different social media. We record our show. It’s on YouTube, and we transcribe our show into a podcast because not everyone wants to hear a voice. Believe it or not, I don’t know. You can read exactly what we have to say. And lots of great information. We’re all about the education.

Todd Veinotte 07:40
Oh, it’s great Clinton. Thanks so much. Thanks for having me. That’s Clinton Wilkins, and myself Todd Veinotte on Mortgage 101 your guide to homeownership.