Mortgage 101: Navigating the Real Cost of Home Ownership

Todd Veinotte and Clinton Wilkins discuss the impact of the new government’s financial policies on the mortgage market, highlighting the HST exemption on homes valued at $1.5 million or more, which could save homeowners up to $250 monthly.

Todd Veinotte
Welcome to Mortgage 101. Your guide to home ownership. With myself, Todd Veinotte, and our mortgage guru, Clinton Wilkins. Clinton Wilkins, time just flies. It just seems like last month we were doing this.

Clinton Wilkins
I think we could probably do this every week. I mean, we could keep on talking about mortgages. There are so many things on the go. And I think there’s more on the go now than there ever has been. Like, we’re only halfway through the year, and I feel like there’s been a lot.

Government Policies and Mortgage Impact

Todd Veinotte
What do you think of the new government so far? And as far as the finances go in the mortgage world, and some of the moves that they’ve made, some pretty significant moves?

Clinton Wilkins
I think, I mean, they’re moving and shaking, and let me tell you, I think it’s probably the most central government. And I saw a meme, we’re always on these memes, and I’m walking, watching TikTok and Instagram stories and all these things. And they were kind of bringing up all the things that conservatives didn’t like about Mark Carney, but he’s probably the most conservative liberal leader in a long time, obviously, more conservative than Trudeau, but the Conservatives were just not liking him because he wasn’t conservative. The policies are great. It’ll be really interesting to see what happens and how we mourn, navigate what’s going on south.

Todd Veinotte
Of the public, the HST on homes. It’s a million dollars or more. Is it not that the agency is applicable?

Clinton Wilkins
No, was it more? Yeah, 1.5 or no?

Todd Veinotte
Perhaps 1.5 but something like that. Nonetheless, I think I saw your construction, right? We do the construction of the trend. I think I saw a story today, and I should have brought it with me, but I think look it up, and I think it said that translates into something like as much as $250 off a month mortgage payment, which is pretty significant, isn’t it?

Clinton Wilkins
That pays a bill. I was talking to a client today. They bought a house three years ago, I think, for three-quarters of a million dollars here in Halifax, so maybe even worth a million dollars now. And they say, Clinton, it’s been tough. We can afford it. It’s not the mortgage, it’s everything else. After we bought this house has gone up. They bought the house while housing was relatively still affordable. They’ve gone up even in value since then. But it’s the cost of food, fuel that’s been a challenge.

Costs of Home Ownership

Todd Veinotte
And I don’t think enough people realize, is that when you buy a house, even if it’s five years old, you’re gonna have upkeep. You’re gonna have things that are gonna go wrong. You’re gonna have appliances. You’re gonna furnish problems you need to have in your budget, I think, $300 to $500 a month just for incidentals.

Clinton Wilkins
That’s the cost of home ownership. And let me tell you, I have a real-life story here for you. Okay, I live in a condo, and I think our listeners know, and I always say I’m the poorest person in there. I’m the only one with a mortgage. That’s probably not true, but I kind of say that joke is kind of by choice, too. I’m all about mortgage lending. Let’s leverage up, baby! But my heat pump died. We have two heat pump units in this condo. It’s central air, but we’ve two separate zones, and the condo is only five years old. But guess what? The fan blew. $3,000 with labour. Was it under warranty? Nope. $2,000 or so for the part, plus, I think, $600 or $700 in labour, plus HST.

Todd Veinotte
$3000, that’s right, and if you didn’t have that money…

Clinton Wilkins
I’d have no heat, that’s right, no heat and cooling. I mean, I could probably survive with no cooling, yeah, but I’d need the heat probably by the time October rolls around.

Todd Veinotte
That’s something that you wouldn’t expect to incur in five years.

Clinton Wilkins
No corrections, and I have two units, so what happens when the next one goes? I need to make sure that I am prepared. For me, I can swing that. But I wasn’t expecting to spend $3,000 this week. That was kind of a surprise and delight, or a surprise. And what’s the opposite of a delight? I don’t know, despair. Despair. Yeah, I’m having a little bit of despair, but it’s not gonna slow me down. I’m still gonna continue.

Todd Veinotte
So let me ask you this, this million five or whatever it is, on New Home builds, which HST is? Let’s say it’s a million if you’re in that pay bracket, or if you’re in that pay category in which you can afford that, does the $250 matter? Does it make that much of a difference in a month?

Clinton Wilkins
I think it does. Yeah, you would, really, really be surprised. There’s some lifestyle creep out there. Have you heard that adage, more money, more problems? It’s the same. It doesn’t matter what you make; what you spend is the biggest thing. And if you’re buying a property at one and a half million dollars, you probably had some lifestyle creep, you’re probably making three, four or $500,000, maybe more, I don’t know, but it’s not just the house. Then you have a couple of cars, then maybe you have kids that are going to private school, trust me, I have friends and I know what these lifestyles look like, and it’s very, very costly. But there is lifestyle creep, and I think that’s the biggest thing. And, money doesn’t buy happiness. It just enables you, maybe, to have more expensive things. A more expensive home, more expensive cars. But that doesn’t necessarily mean that you’re living a better life. If anything, sometimes it’s, it’s even tighter, right?

Todd Veinotte
So a million, does that include your landscaping? Probably not a new home construction. It might sometimes, but landscaping would be a massive bill. I would think.

Clinton Wilkins
I’ve had clients who have bought new homes that are in that million-dollar range a couple of years ago, and they got the house, and it had steps and walks, but that was about it, yeah, but now they want to do the landscaping, and the landscaping to $300,000.

Todd Veinott
What’s 1,000,005 get you here in HRM these days?

Clinton Wilkins
Nice spot. Yeah, yeah. You can buy a new construction, you can buy a resale, but you’re getting some serious square footage. And you can pretty much buy a house almost any location around that price point.

Todd Veinotte
What are we talking Hammond Plains?

Affordability and Market Trends

Clinton Wilkins
Even buy the south end, it depends, yeah. But that is way above the average. Right now, the average is about 600,000.

Todd Veinotte
So, when it comes to $600,000, what type of income does a household need combined income to afford that on a mortgage amount?

Clinton Wilkins
Because that’s what we’ll talk about. Maybe not so much the purchase price, because the mortgage amount is what we’re most worried about here. You’re probably going to need an income of around $150,000 a year for a $600,000 mortgage combined. So that’s some serious income to swing a $600,000 mortgage, but if you buy a house for 600,000, you’re not necessarily mortgaging 600; you’re gonna have a down payment, right? If you do a high ratio purchase, you’re gonna put 5% down on the first 500, so that’d be $25,000 and then 10% down on the amount above the 500,000, so that’ll be another 10. So you would need a minimum of 35,000 down to get into a $600,000 home.

Todd Veinotte
Safe to say that at the $600,000 price point, you’re going to need to put some money into it.

Clinton Wilkins
It may be because there’s not a lot of new construction that you’re buying at 600, not that much. And if you are, it’s probably really on the outskirts. When you buy further and further out of the quartet, you also have to factor in transportation costs. That doesn’t come for free. And maybe you could have one vehicle for the household if you lived in the city, but maybe if you’re living out in the countryside, you need two vehicles.

Todd Veinotte
I wanted to ask you with this, I’m glad you mentioned the countryside because we weighed into politics, but not too heavily, but this is very political, and that it’s uranium exploration and natural resource exploration. And some people have are buying properties or own properties in which that’s a possibility, and the government has come out and said that they will have the final say, or whether or not who has the right, who has rights, I would think that that might be a factor for somebody trying to resell their property.

Environmental Factors

Clinton Wilkins
It might be, but I think in some of these cases, and that’s not so much a problem here in Nova Scotia, but you think of it with some of these old shows, like, what was the, , the hillbillies and whatever they they struck the oil well that was on their property, but the mineral rights that are under the property oftentimes, now, with mining, they’re mining, , horizontally versus vertically, right? So there, there’s not mining going on now necessarily, but there could be that is even going under people’s properties already at a very deep level. So, so not an issue. I don’t think it’s a big problem, but anytime that the government needs to be involved in, like, reappropriating land or whatever, it’s never gonna make everyone happy, right? Some people are gonna win, some people are gonna lose. Like, think about Bayers Road, they were expanding a whole series of homes that got purchased and torn down on Bayers Road to expand the road, which made it great for you and me to be able to get around the city. But several families had to sell their homes, really not by choice, but by necessity, to HRM to be able to expand the street.

Todd Veinotte
There, and some sad stories about Sackville and the floodplain, right?

Clinton Wilkins
That’s tough. And even when we come to thinking about things like mortgage lenders, if they know that home is on a floodplain, which it would show on an appraisal, or sometimes even some of the due diligence that a lender would do they require in the binder of the insurance, specific insurance to make sure that that home is covered. And oftentimes, you can’t get insurance to bind a risk like that. So it can be very challenging, like we’re dealing with one right now, the borrower just can’t get insurance to mitigate their risk. So, a floodplain can be a tough problem. And also, when you’re thinking about resale, that can be hard too.

Todd Veinotte
All right, we’ve got lots to talk about today. We’re just barely getting going here. We’ve got a guest, so why don’t you tell everybody about him?

Clinton Wilkins
We do have a guest. We have a guest who’s gonna come in and talk about seniors. I know we don’t talk that much about what happens with seniors, but I’m sure some of our listeners are seniors, and I’m sure some of our listeners have senior parents, and we’re gonna talk about what that looks like from a mortgage lending perspective, and some of the nuances around that, but it’s certainly a hot topic. And more and more retirees are having a mortgage in retirement. We’re talking about a reverse mortgage here, right? We’re gonna talk about reverse mortgage, and we can talk about all the different types of mortgages that might be available for people of a certain age. There are lots of options for sure.

Todd Veinotte
Mortgage 101, your guide to home ownership with Clinton Wilkins and me, Todd Veinotte, and we’ll be right back.