On the latest edition of Mortgage 101 - Clinton Wilkins and Todd Veinotte are discussing home equity lines of credits and refinancing
Mortgage 101 – The Homeownership Ladder | May 15, 2023
Everyone would love to buy a home, but it can be daunting. No matter what your situation, it’s important to take the first step on the ladder. Clinton Wilkins and Todd Veinotte discuss self employment, building a nest egg for retirement, the appeal of homeownership in rural areas and why a starter home is a great first step.
LISTEN to the conversation on Spotify and Apple
Self-employment and homeownership
Clinton Wilkins 00:05
You know, musicians are self employed, Todd. And I can tell you, as a mortgage broker, I’m also self employed. And we have a ton of musicians, that’s clients, which I think is cool. And we have a lot of self employed people as clients as well.
Todd Veinotte 00:16
You have a ton of musicians as clients?
Clinton Wilkins 00:17
Yeah, we do
Todd Veinotte 00:18
Clinton Wilkins 00:18
Yeah, I’m not gonna name any names. I’m not gonna name any names, because that would break people’s confidentiality. But I will tell you that we do have a lot of musicians. And I think a reason that musicians, you know, are coming to people like mortgage brokers, they probably had a hard time with the bank in the past. Yeah, you know what I mean, in this business, it is feast or famine, you know, regardless of any type of self employment. And I think, you know, really having someone who understands their, you know, needs, wants challenges, and can speak to it I think is really important.
Todd Veinotte 00:49
Why do you say it’s feast or famine? What do you mean by that?
Clinton Wilkins 00:51
Well, I think it’s the best of times, or worst of times, when you’re a musician, but I think also, when you are self employed, it’s the best or worst of times as well. So, you know, you can have ups and downs financially and other things going on in your career. So that certainly can have an impact. And I think one of the reasons that musicians really love homeownership is they want to have something that they can invest into, and you know, putting your money towards something and paying it down. So I can tell you, I talk to a lot of self employed people. Yeah. And that is usually a goal. I mean, every Canadian loves homeownership Todd. I think sometimes it’s a little bit easier when you have a nine to five job and a salary. But the nice thing about self employment, if you need more money, you can probably just work a little bit harder. You can go make it
Building A Nest Egg For Retirement
Todd Veinotte 01:37
Yeah, yeah. You know, it’s funny, because you talked about homeownership, and the fact that it’s a dream for everybody. But I was looking at some of the some of the alerts, and there’s tons of huge apartment buildings in Halifax, as you know, right. And I thought to myself, if you were living in an apartment, your entire life paying out that rent, and you get into your into your 60s, and you wanted to retire, I mean, that would be daunting to have to be able, to have no equity built up over those years. And to have to have that rent over your head until you die. Right? That that would be more than daunting, right?
Clinton Wilkins 02:12
I think it’s daunting. And I think if you are renting any or you’re never going to own a home, what you really need to do is you need to put the Delta, the difference of what you would pay for homeownership away and have that as a reserve difference, that as your nest egg.
Todd Veinotte 02:26
But in this day and age, how much of a difference is there, right?
Clinton Wilkins 02:29
You know what rent is very expensive. Obviously, the cost of homeownership is very expensive. The nice thing with owning a home, though Todd, is that home will typically appreciate. And also, when you own a home, you’re going to pay down the mortgage. So every month that goes by your net worth should increase.
Todd Veinotte 02:34
Yeah, I just, it just really hit home though, when I because I know a lot of older people stay in, or a lot of people are apartment dwellers their whole lives. And I just thought knowing being a homeowner myself and saying, okay,I’ve got that nest egg for down the road when I need it. Because you can always sell that. And even if you want to move into an apartment, you can sell it and you can use that equity to pay your rent for a decade or more or whatever. But if you but if you never have that nest egg, that equity in that home, you always have that rent over your head. And that to me is I just think from a financial planning standpoint, I know that homeownership isn’t for everybody. But I would think if it’s possible, it’s prudent, at the very least, to do so. Right.
Clinton Wilkins 03:30
And you know, a lot of people have a goal that they want to pay off their mortgage by the time that they retire. I think that culture has shifted a little bit. I’m certainly seeing more clients come to me before they retire, and kind of change their financial outlook, you know, they might still have a small mortgage on their house. And sometimes they’re looking to take a longer amortization. And I’m seeing people before they retire, you know, set up products, like a home equity line of credit. So they’re set up for the future. You know, it’s a lot easier to get credit when you don’t need it. And I’m finding we’re having some of these good conversations with people before, you know, they decide that they’re actually going to go into retirement.
Todd Veinotte 04:04
Yeah, absolutely. So it just speaks again, to the importance of homeownership. Also on that I during the talk show this week, I had a young gentleman call the show, and he was a good kid, he worked for Eastlink I believe in you. And he was talking about his job and maybe in your building. He perhaps Perhaps Yeah, that’s right. But but he was saying that he although he’s doing well, financially, doing quite well, he cannot get to get he’s a single guy. Okay. So he cannot pull together enough money because of obviously the cars house, all of it and he just can’t get into a home. And I said, you know, it’s interesting, a job that like you have right now 30 years ago, you would have you would have had a house, you would have had a car you would have been able to start a family. And so we are living in different economic times, though. You’d agree with that, obviously?
Be open to rural areas to buy a home
Clinton Wilkins 04:56
I would 100% agree. And I think we’ve talked about it on our show, Todd. It’s very tough for a single income earner to be able to buy a home. Really with where the prices are right now the average home in Halifax is somewhere around $500-550,000, which means you have to have household income north of $125,000. So typically that takes two borrowers to make it work just for the average home.
Todd Veinotte 05:20
Exactly, exactly. So do you have people come in sometimes, and you just have to have that conversation with them. You just said, look, you just simply do not have enough income.
Clinton Wilkins 05:28
What I tell them is, you can afford a home and you know, let’s say that they’re making $50,000 a year, right? You can afford a home somewhere around $200,000. But you can’t buy a home in Halifax for $200,000. But the interesting thing is, you can buy a home in other places in Nova Scotia, in more rural areas. And I’m seeing it. I had clients, you know, even the last couple weeks that have bought homes in New Glasgow, they work at home, New Glasgow has kind of like a young hipper vibe right now there’s some like breweries and stuff like that. And they made the choice to say I need to get into the homeownership ladder today. And this is my step in, I’m going to do some work on the home, hopefully that home appreciates. At some point down the road, I’m going to sell that home and maybe move back to Halifax.
Todd Veinotte 06:13
I like New Glasgow. It’s kind of a cool area.
Clinton Wilkins 06:15
Yeah and I have some friends that live up there, you know, there’s more of a community.
Todd Veinotte 06:15
There’s a river that goes through New Glasgow did you know that?
Clinton Wilkins 06:20
No, I didn’t know that. I mean, there’s a river that goes through a lot of places, Todd, but you know, smaller areas, even outside of New Glasgow, that are, you know, even more affordable in some cases. And I’m not saying that the house prices, they are maybe half what they are here, but certainly kind of in that downtown core of New Glasgow, where there are more amenities. The homes are very affordable. And, you know, for people that work at home, sometimes that is a good solution that you need to kind of think outside the box. Maybe it’s a different area of the province. And maybe it’s not forever, maybe it’s just to get you into that homeownership ladder.
Todd Veinotte 07:00
And the other nice thing about Nova Scotia, of course, is that it’s not a massive geographical province, right?
Clinton Wilkins 07:05
Yeah like, what is it to New Glasgow, like, less than two hours?
Todd Veinotte 07:08
Yeah, two hours, something like that. Yeah. And there’s, I mean, Truro would be close by
Clinton Wilkins 07:12
And I’m just using New Glasgow as an example. But there’s other areas that are like that in Nova Scotia?
Todd Veinotte 07:18
Pictou I’m sure.
Clinton Wilkins 07:19
Pictou county. I mean, that’s all up in that same region.
Todd Veinotte 07:22
So here’s a question for you. Would you suggest that somebody buy something to build equity to rent out, perhaps?
Starter homes can lead to your dream home
Clinton Wilkins 07:30
You know, what I’m seeing is, I’ve seen people buy their first home as a true starter home. And we touched on this kind of our last show, I think, prior to the last three years, first time homebuyers were buying homes that were, you know, really at the top of their budget, they were buying their dream home as their first home. And I think right now, the expectations have been reset a little bit. And people are buying starter homes as their first home. And what we’re seeing is they’re converting those starter homes, potentially into a rental property and then buying a new home down the road, you know, when they can afford that home that’s, you know, maybe more of their taste or more of their dream home.
Todd Veinotte 08:01
Yeah, I honestly can tell you though, it’s I don’t want to say I feel badly for or feel sorry for anybody because you have to deal with the circumstances that you’re dealing with, but I can remember being 30, 25, or 30 when I bought my first house, whatever it was, and you could buy a house for 125, 30, 40 $50,000 like a bungalow, a decent home, maybe not, you know, whatever. But so I think it’s, it’s tough is what I’m getting at here.
Clinton Wilkins 08:27
I think it’s definitely more challenging. But our home prices here in Halifax and really across Nova Scotia and Atlantic Canada, are still some of the most affordable across the country. It’s really Atlantic Canada and the prairies that have pockets of affordability. You know, it’s that Ontario, you know, Toronto, Montreal, Vancouver, it’s just really out of reach for many, many Canadians and that’s why we’re seeing the migration here.
Todd Veinotte 08:54
Okay, what else do you want to talk about quickly?
Clinton Wilkins 08:56
You know, we’re going to talk about what’s going on here in the spring. I think spring markets obviously one of the busiest markets of the year, so we’ll touch on that.
Todd Veinotte 09:02
Okay. Mortgage 101 your guide to homeownership. We’ll be right back.