Mortgage 101 – Merry Debtmas

Todd Veinotte and Clinton Wilkins discuss the challenges of home ownership and financial planning in the context of rising costs and inflation.

Todd Veinotte
Mortgage 101. Your guide to home ownership. Bob, Dylan style, Clinton, Wilkins, myself, Todd Veinotte. Can you believe it’s a new year?

Clinton Wilkins
I know and I feel like it’s been so long since I’ve seen you. I’ve seen you in the studio a couple of times recently, but welcome back.

Todd Veinotte
Thanks a lot. Dan Ahlstrand sat in my place.

Clinton Wilkins
He did. We had a guest host for a month or two here while you were off and recovering, and now we’re back in January, and I think it’s gonna be a great season.

Todd Veinotte
Yeah, absolutely. Looking forward to it again. Mortgage 101, your guide to home ownership, Clinton Wilkins, myself. Todd Veinotte, for those of you tuning in or listening online and who don’t know Clinton, Clinton, tell everybody a bit about yourself.

Clinton Wilkins
I’m a mortgage broker. I’ve been a mortgage broker for almost 20 years. It seems like forever and you wrote a book too, and I wrote a book about mortgages. I have an office in Dartmouth and an office in Halifax and we’ve done a lot of transactions, almost 6000 transactions in my career that I’ve been a part of which is amazing. Every day I say that we’ve seen everything. Every day we see something new. We’re passionate about education, we’re passionate about financial literacy, and we started out doing this show, I think when six years ago, seven years ago, and originally was going to be one season, and here we are. There’s just so much to talk about, and even more lately, about mortgage lending. There’s been so many changes from the federal level, around the economy, the Bank of Canada, and we’ve just continued to continue the conversation. But you know what I think is exciting, Todd, I think we’ve broken down a lot of barriers. You know, I think people are shy and they don’t want to talk about their finances, but I think we’ve helped encourage people to have these conversations at the dinner table.

Todd Veinotte
Yeah, and of course, people have some people who should say, have a misconception, that if you’re buying a $750,000 house or a million dollar house, you’ve got all kinds of money, and it’s not an issue. That’s not the case. Everybody’s on a budget, more money, more problems. Everybody’s on a budget, right? And I’m sure you see this all the time, right?

Clinton Wilkins
Even from an income perspective, we see this, this Echelon as, okay, you’re making six figures. Oh, well, if you’re making six figures, you must have tons and tons of money. It’s not what you make. It’s really what you spend. There is a lot of lifestyle creep, and that’s a real thing.

Todd Veinotte
And not only that, but inflation is a part of the conversation as well, right?

Financial Realities and Misconceptions

Clinton Wilkins
Definitely. And I can tell you that the money that we were making here five years ago Todd, is a lot different than the money that we’re making here today. I think sometimes people forget that, and when their mortgages come up for renewal, and we were talking about the renewal cliff, and 60% of Canadians have their mortgage coming up for renewal. Not everyone’s finances are in the best place – and that’s the theme of our show today. We’re gonna be talking about “Merry Debtmas” and talk about it every January. I read something the other day that the number one thing that people made New Year’s resolutions about this year was financial health and wellness.

Todd Veinotte
And knowing, that getting real with your finances, is a big key. You’ve talked about this. Opening the mail, I don’t know people open the mail anymore, but open your emails, call or check in and see what your transactions are. Have an idea of what’s going on with your credit because this is all important, because today, in this day and age, security and your data can be compromised.

Clinton Wilkins
It definitely, and I think also, you need to have a fallback plan. Your fallback plan can’t always be credit cards or lines of credit. You need to have some cash in the bank. Right now, in this inflation environment, cash is king. I think people and Canadians in general are just so so so indebted. You know, we live in this instant gratification culture.

Todd Veinotte
How about you talk about the dream of home ownership? That’s when you look at the trajectory of your life. And you’re young, that’s often, almost always on the list, not always, but often it’s: get married, buy a house, have a kid. There’s a lot of frustration now, particularly among younger people, and not just younger people, that the dream is unobtainable.

Importance of Financial Health and Planning

Clinton Wilkins
Is it unobtainable? I think for some people, it is. I always say home ownership is available to everyone. It is, but you need to make some sacrifices sometimes. And the problem is with the culture right now, we don’t want to sacrifice. I want everything now, I want to live in downtown Halifax, I want to have my million-dollar place, and I don’t want to scrimp. I don’t want to necessarily save. I don’t want to sacrifice. But home ownership is a privilege. It’s not necessarily a right. And there are a lot of things that you need to do to be able to achieve that. It’s not just something where you can be handed it in many cases and most Canadians who are buying a home need to get a mortgage. To get a mortgage, you need to have income, you need to have credit, and you need to have assets, and if one of those is lacking, it’s going to be more challenging and likely more costly.

Todd Veinotte
Do you think that people’s mindset is adjusted to that? Do people still kind of spend beyond their means because they think: Hey, I’m making $105,000 a year, and spend too much money based on the old ideology?

Clinton Wilkins
I think everything’s become more expensive, and I think we’re almost numb to it, I had a friend the other day who had a problem with her car, and she took it in and it was $600. I was like, Oh my God, you got off easy! 600 bucks, that’s nothing, but $600 is a lot of money, and it’s a lot of money to a lot of people, but I think we’re just so numb to it. Now, everything costs a lot more than it used to, and it’s kind of the new norm. The thing is, the incomes have not paced, Todd. So we need to be more and more planful and cautious when we’re making purchases when we’re going into debt because we need to have a plan to be able to pay it back. We need to have a plan to live. We need to have a retirement plan. That’s why January’s so interesting. I love the first of the month. I love the first of the week. I love the first of the year. You know, having a fresh start, I think, is important, and we’re going to talk a lot about that during this show, for sure.

Adjusting to Inflation and Financial Planning

Todd Veinotte
And look, as far as obtaining that dream, if it’s something you need to be methodical and take those steps. This is part of what we’re going to talk about today and you need a plan.

Clinton Wilkins
You need a plan. You can’t just go footloose and fancy-free. I like that. I like to have an easy life. But if you want something, you need to work for it and need to plan. It’s challenging for a lot of people. There is some positive news.

Government Policies and Financial Planning Tools

Todd Veinotte
I’m going to talk about the news in the next segment, for sure, about what the government’s done. And of course, there’s a state of flux with the government right now, and we’ll get into the politics of that, not to get political or too political about it, but it’s part of the process, right? It’s reality and you, as a mortgage broker, I’m sure that you have these conversations with your clients all the time, right?

Clinton Wilkins
Yes, we have these same types of conversations all the time, and it starts with a plan, especially if you want to buy a home. If you want to do a refinance, or you want to do a transfer from lender to lender, it involves a little bit of work.

Todd Veinotte
Financial planning in TFSA is an example, using things like maximizing TFSA huge when it comes to this, right?

Clinton Wilkins
Well, when we’re thinking about things like a first home savings account. Every year it resets. So, if you were fortunate enough and planful enough, you’re planning on buying a home, and you put some money in at the end of last year, which was only a few days ago, you can then put more money in this year, which is right now. So, if anything, that’s a great vehicle, if you’re looking to buy a home, the first home the first home savings account, a lot of people don’t know about it. So that’s something great to look into. It is very similar to what a TFSA would be, or an RRSP, but there’s some tax benefit. RRSP is a great program, and they’ve increased the amount that you can borrow from your RRSP if there are two borrowers, both can borrow from the RRSP, which is awesome, yeah. And you know, TFSA, they, they, it’s $7,000 you can put in this year, every year, every year. So if you haven’t, never contributed, you have, I think, 81 or 87,000. But you have over $80,000 that you can contribute to a TFSA.
We also have Tina Powell coming in. She’s from MNP, and she’s going to talk to us about what happens if you’re having some financial problems, we are going to talk obviously, in the next segment of more about refinancing. What’s going on in the news, Tina will be back with us here at the back half of our show.

Todd Veinotte
Okay, awesome stuff. So Mortgage 101, your guide to home ownership with Clinton Wilkins and myself, and all you need to know. And we look forward to being with you all year, and we’ll be back.