Mortgage Minute commentary: "If you want to have a mortgage in retirement, be prepared to make some big sacrifices"

Garry Marr from the Financial Post wrote an article on 5 April 2014 entitled, "If you want to have a mortgage in retirement, be prepared to make some big sacrifices." In the article, Garry quotes Will Dunning, Chief Economist with the Canadian Association of Accredited Mortgage Professionals, stating "..among homeowners 65 years or older, 35% have a mortgage," and fortunately "Among those with a mortgage, the average loan-to-value is 33%."

As a public policy nut and a mortgage broker I am pleased to see seniors have strong equity (one hopes they would by that age) in their properties but the question is why are seniors even having mortgages past 65 years? Simple! It seems that seniors are refinancing lately to help to bail out their "kids," now adults, that are carrying a high debt burden. Is life harder now versus then? Was credit just not as available as it is now? Quite probable. Garry states "Most [financial] planners seem to think it is a disaster waiting to happen because seniors don't usually have the income in retirement to support debt repayment and that means major lifestyle changes."

I've personally witnessed several situations like this where a client needs money to pay debt, owes money to revenue Quebec, or has an active consumer proposal and we look to leverage a parent or family member's property. In such circumstances, I usually sit the entire family down to discuss options including pros and cons. If we remortgage the parent's house to pay off their kids debts I make sure:

1. that we have pre-planned exit strategy before doing anything. Sometimes it can take 6 months to 3 years to fix the problem and then we refinance again to pay back the parents.
2. that the kids in turn pay the new mortgage because the new mortgages payments are generally lower than paying for a full unsecured debt load 

Reviewing Mike Holmes: "Home Inspections Benefit Buyers and Sellers"

I always try to keep an eye out on articles written by Mike Holmes. This time Mike writes about the benefits of home inspections. Mike's article is actually reprinted in yesterday's Montreal Gazette. It shouldn't come as no surprise that we're in the buying season and that it's a good idea to get a home inspected by a professional before buying. Having said that, Mike also suggests that you have an inspection completed on your own home before listing it for sale.

Mike Holmes at a speaking engagement 

Photograph by: Alex Schuldt/The Holmes Group, Postmedia News

Mike suggestion makes total sense because selling one's own home can be an emotional process and it's a good idea to get an idea of any unforeseen problems you might have with your home. Wouldn't you rather have your inspector catch any issues up front than a potential buyer's inspector? Being more proactive will most likely get you a better sale price in the end. It will be up to you whether you decide to fix an pre-identified problems. Should you not repair any issues in advance of listing then expect your price to negotiated hard once a buyer's inspector finds problems or repairs to be completed.

Mike also suggests that you have your inspection report ready and available for any future buyers (referencing even the contractors used) visiting your home. Here Mike is also very skeptical of inspectors that are referred by real estate agents. He says you want to get an inspector that does the job not one that lightly reviews a home and may not "catch" all problems. A home inspector in such a situation might do this because they want to keep getting referrals from the agent. Last year, I had two purchase transactions where I was shocked that my client's inspectors did not catch some major items and now my clients are now either in court or given up and financing the problems themselves.

The Making of a Member of Parliament

Today, I am going to focus some thoughts on Federal politics and the road towards becoming a Member of Parliament. Given our busy lives with our jobs, kids, and paying our mortgages; we don't have time to think about the electoral process and how much work it takes to get first nominated by a political party before you can run in an election. With all the recent corruption scandals and mediocre policy ideas, politicians sadly can get a lumped with the same level of trust as a sleazy used car salesman.

Believe me, working and studying politics I saw many politicians come and go. Very few politicians here in Canada and abroad have caught my attention. Once upon a time I worked for Irwin Cotler, Member of Parliament, for Mount Royal. Irwin, I can say is one of the few politicians that is truly issue-driven. Irwin is not your typical politician and human rights lawyer that I respect because he sees beyond party lines. He builds real coalitions of the willing and often defended less popular issues such as gay rights, poverty reduction, and rights for the elderly. Irwin's litmus test for a policy idea is, "ask yourself, is what is happening good for children?"

Irwin Cotler, MP Mount Royal, speaking out about social injustice and supporting Brigitte Garceau for the Liberal nomination in Pierrefonds-Dollard & event host Beryl Wajsman, President of the Institute for Public Affairs

When Irwin Cotler put his political support behind Brigitte Garceau I paid attention. Brigitte is a divorce attorney and is currently running for the Liberal Nomination for the Liberal party in Dollard-Pierrefonds. I live in Pierrefonds and interestingly a close to home political story. Who can resist! The timing is also very important given tomorrow's Quebec Provincial Election 2014. I am beyond furious with Pauline Marois, the PQ and the politics of division in this province. It's time to speak out and take action. We must denounce those trying to divide us and speak out against this injustice.

The Quebec economy has suffered for the past 25 years with the constant treat of sovereignty. Guess what PQ and Pauline, time to move on. Your sovereignty and charter song is old. I am all about protecting individual and French Quebec rights. However, not under a cloak of us versus them policies and not at the detriment to society. All too often I see my clients getting laid off, closing their businesses, going bankrupt, forcing both parents to work constantly rather than spend more time with their children. I am making a choice to be more vocal and politically active. We need better paying jobs, a better economy, and to close the door once and for all on the politics of division. We deserve this as Quebecers regardless of background. We all make a conscious choice to live and work here. Leaving the province is not the answer either. That's what the PQ desires most.

Last week, I attended a nomination event for Brigitte Garceau. The event was hosted by Beryl Wajsman, President of the Institute for Public Affairs. We listened to supporters like Irwin Cotler (MP Mount Royal) , Gemma Raeburn-Baynes (community and cultural organizer), and Caroline Tison (West Island Community Shares) who all spoke about their excellent community work but also their support for Brigitte.

Brigitte Garceau, running for the Liberal Nomination in Pierrefonds-Dollard, addressing the audience and thanking her community leader supporters to her left. 

I agree with Beryl Wajsman, in that "being a small 'L' liberal is forgotten in creating a just society." It's time for a new generation of politicians and policy makers that create change and cross political lines to create consensus. Both Beryl and Irwin emphasized that as a politician you can do want with process but don't compromise on principle. I am hoping as I participate and help Brigitte Garceau, that she continues to gain supporters and momentum. When asked why run now, Brigitte, responded, "I am a woman, and a mother. I have raised my children here, in the West Island. And I'm angry that they may not want to make Quebec their home because of our politics."

Canadian Muslim Forum & the Quebec Election 2014

Lately, I've gotten the political bug back. As many of you know my education is in public policy and international relations. I think I've been more inspired lately because of the upcoming charged Quebec election. We all have responsibility to vote and voice an opinion. 

Last Sunday I spent the evening with the Canadian Muslim Forum (CMF) in Laval. The CMF hosted an excellent town hall format meeting attended by many Provincial parties (Liberal, Green, Coalition Avenir Québec and Québec Solidaire). The candidates spoke to the community and answered many questions. I'm not surprised that the PQ did not send any candidates to speak. The CMF organizers posed various predetermined questions about: future hopes for Quebec, Quebec identity and the economy.

Canadian Muslim Forum event @ Chateau Royal in Laval

Clearly the room was frustrated with the Charter and politics of division in this province. The common theme discussed was: job creation, access to education and a strong anti-charter sentiment. The best strongest reply from the night came from Rita Da Santis, current elected Liberal Member of National Assembly for Bourassa-Sauve riding, "...an uneducated person is not free," highlighting how important it is to create a neutral government that tolerates all religions and peoples.

Alex Tyrell (Leader of Green Party in Quebec) addressing the public

Second, Rita's quote also relates to creating accessible education in Quebec. Society is not created equal, she stated, however access to education is critical. Rita pointed out that this creates a society of confident citizens but also confident society that attracts investment.

One question addressed to all candidates was about job creation. I liked Alex Tyrell's, leader of the Green Party in Quebec, comments about eco-jobs. This is something that needs to be explored further in our province. A knowledge and eco-based economy may be one of the remaining areas that have not seen much political action. How does that related to mortgages? Simple. We need better quality jobs and better paying jobs in Montreal and the rest of Quebec. Job creation and job innovation feels flat in Quebec. Our Province has many untapped talents. Creating jobs in manufacturing is passe. We need innovation and job creation in knowledge and eco-based industries.

Conference Board of Canada says no to housing crash

Lately, I've focused a lot of energy the past few blog entries about real estate market prices. This month the Conference Board of Canada released a report entitled, "Housing Briefing: Bubble Fears Overblown." The Conference Board (CBOC) is an Ottawa based think thank that is comprised by the heads of the largest public and private organizations in Canada. The CBOC provides analytical services to the public and private sectors. In the report, the CBOC states that Canadian real estate market is not over-built and overvalued (apart from Toronto being overbuilt). They argue that the market the past tree years is in line with the 20 year average. 

I do agree that I don't foresee a crash either but I still do think that the average Canadian is financially stretched. Yes, I agree with the CBOC report that defaults still remain relatively low but in Canada the homeowner or real estate investors has a few options at their disposal in refinancing and transferring properties that may skew default stats. If people are stretched now then perhaps we haven't fully seen the pricing adjustment? Just a thought...

The CBOC states that Montreal is "Flirting with buyer's market conditions with sales and average prices having dropped somewhat last year." We shall see how 2014 continues to evolve especially post-Quebec election. Stay tuned folks. 

Reviewing the Real Life Ratio

Lately, I’ve been keeping an eye on the Globe & Mail. I am glad to see more good articles written about house-hold debt. In the past I've written about this topic, buying what’s reasonable versus maximum.

Rob Carrick from the Globe & Mail wrote two excellent pieces on 6 March 2014 and 19 March 2014. In the March 6th piece, entitled “Can you really afford that mortgage? Know your Real Life Ratio”, Rob makes a bold outright statement when he says, "Someone ought to explain the facts of life to the nation’s bankers....Never take a lender’s word for it that you can afford a house." Rob highlights what he calls the real life ratio which accounts for the basic costs of home ownership but also the real world expenses such as education, insurance, and long-term home maintenance. The real life ratio (see attached link, excel sheet) also shifts depending on what stage you are in life including your kids.

In Rob’s second article, entitled “West Coaster making $86,000 can barely afford his modest life,” Rob shares the life of Hamish Telford.Hamish is separated from his wife, has a 7 year old son and a professor of political science who is considered upper middle class living in Abbotsford, BC. Hamish spends over 50% of his net income towards household expenses.  Hamish is hanging and “isn’t looking for sympathy, just some understanding of how hard it is to get by even for a member of the upper middle class.” He is more worried about others, “I can only imagine how stressed the other 95 per cent of the population must feel."

The point of the article was that Hamish had car trouble and needed to spend approximately $1500-$2000 to fix his car and he sadly had trouble doing so. People should think about the Real Life Ratio when considering the home they wish to purchase.

Priory School Heritage Fair

Today, I am going to focus my blog on a local community matter. Yes debt and mortgages are all important but sometimes it good to shift attention to things that build a sense of community and belonging. Often times building a sense of community is lost in today's hustle and bustle.

I can say with great pride that I am a Priory School Alum. Yes it was my primary and I attended there many many years ago but I have such vivid memories from the Priory. I remember the sense of belonging including attention and care given by faculty and staff.

Last week, for the second year in a row I was asked to be a judge in the Annual Heritage Fair. The Heritage Fair is the equivalent of a science fair. Every year Grades 4, 5 and 6 create individual or group projects. The children research their topics, type up a report and bibliography, and create a visual presentation to show off to the judges. The projects go up on display in the new Priory gym. Each judge is given 5-6 students to evaluate. Why I love the Heritage Fair is the amount of effort that the children give in creating their projects. Mom and Dad seem to stay away as much as possible from helping, haha. I am always shocked at the level of comprehension and depth shown by the students.

After all the projects are evaluated the excited kids quietly and anxiously await the results as they sit in front of the podium and panel of judges. Tim Peters, school Principal, announces one by one the names of the winners. What's great is that there are no first, second or third awards rather the children get a medal of recognition. I think in an age of competition this is a great approach.

The Priory students sitting patiently for the recognition awards ceremony
(picture posted on The Priory School website)

I am glad to see that the Priory School still shares and promotes a sense of  community and enrichment. I am so impressed by the teachers and staff. That is why I continue to give back to my primary school.