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Different types of Manitoba mortgages

Conventional Manitoba mortgage or Manitoba mortgage conventional

An Manitoba mortgage that does not require a mortgage default insurance fee. Typically this is a mortgage Manitoba loan which is 75% or less of the purchase price or property value. The good? By having a large down payment, you can save thousands of dollars in insurance fees. The bad? When you sell there will be less buyers eligible to ‘assume‘ your Manitoba mortgage because they may not have enough of a downpayment.

Non-conventional 1st Manitoba mortgage or ‘first’ Manitoba mortgage non-conventional

An Manitoba mortgage that is used when you need Manitoba lender financing which is greater than 75% of your house purchase or property value. This can also be called a ‘high ratio’ Manitoba mortgage when it is a refinanced ‘first’ Manitoba mortgage. The good? It allows people who don’t have large down payments the ability to buy a house. They do this by using mortgage default insurance. (See CMHC or GE Capital below). Another good? It allows you to refinance your house beyond its 75% appraised value so you can access your equity and get cash out! This allows people that are loaded up in other high interest debt (credit cards) or high loan repayments (car loans) the ability to payout these debts and conserve family cashflow. The bad? The benefit of ‘insuring’ an Manitoba mortgage default costs a lot in premium costs - but, thankfully, this can be added to the ‘first’ mortgage Manitoba loan. The cost is minimized if the real estate market is rising or stable as it allows people to buy real estate today - rather than waiting years to save up more of a down payment.

Manitoba mortgage Second or Second Manitoba mortgage (Manitoba home equity loan)

An Manitoba mortgage second or second Manitoba mortgage (also called a Manitoba home equity loan) is usually a non conventional mortgage Manitoba loan. Often it is used when Manitoba mortgage financing exceeds 75%. This is usually made available through private Manitoba lenders rather than institutional Manitoba lenders. A private Manitoba second mortgage or Manitoba mortgage second is used with your mortgage Manitoba first priority. Your personal Manitoba mortgage broker will advise you when this makes sense. The good? Sometimes, your current down payment amount available PLUS a new Manitoba second mortgage allows you ’enough’ of a down payment to qualify for a non conventional purchase. You can then avoid paying mortgage default insurance altogether. And that can save you thousands in default mortgage insurance premium dollars. Also, an Manitoba mortgage second or second Manitoba mortgage (Manitoba home equity loan) will allow you to access your cash in your home equity. This allows you to improve your monthly cash flow by paying off other higher interest debt (credit cards) AND other debt that has high monthly payments (car loan). Also there is no default insurance payable when you obtain a private Manitoba mortgage second or Manitoba home equity loan as the lenders are private and do not charge an insurance fee. The bad? Second mortgages always have a higher interest rate cost than a first mortgage because there is a higher perceived risk by the lender with the borrower.

CMHC or GE Capital

Mortgage Insurance companies licensed by the Federal Canadian Government to provide mortgage insurance for Manitoba lenders. This insurance protects Manitoba lenders against default by borrowers. The insurance is usually added to the mortgage Manitoba loan. The good? This insurance enables many more buyers to enter the market which keeps housing demand strong. It allows people to be able to buy with a low down payment. The bad? Premium rates range from 0.5% to 3.75% or more of the mortgage Manitoba loan balance.

‘Open’ Manitoba mortgage or a ‘Closed’ Manitoba mortgage

An open Manitoba mortgage has terms from 6 months to 1 year This is an Manitoba mortgage in which you can prepay all, or part of the original balance without penalty. The good? You can save usually 3 months interest charge penalty or more for the entire Manitoba mortgage balance. This is helpful if you plan to pay down your mortgage Manitoba loan with a large sum, or the entire balance of your Manitoba mortgage in a short period. The bad? Manitoba lenders charge higher rates than for closed terms because of this convenience. Here is a helpful tip from your personal Manitoba mortgage broker. If rates are going up…and you are moving…get a closed term Manitoba mortgage. You can ‘port’ your current Manitoba mortgage to your new place.

A closed Manitoba mortgage has terms from 6 months to 10yrs. The good? The rates are lower than ‘open’ mortgage Manitoba loans. The bad? You need to be careful to pick a term that suits your needs. Your personal Manitoba mortgage broker can explain to you the risks of not choosing a term that suits your needs. You may be faced with a large penalty if you try to prepay too much or try to switch your Manitoba mortgage to another Manitoba lender in the middle of your term.

ARM Manitoba mortgage or Variable Manitoba mortgage

The ARM (Adjustable Rate Mortgage) or Variable rate Manitoba mortgage is all about the ‘rate’ charged with your mortgage Manitoba loan. Instead of a ‘fixed’ rate the rates fluctuate. These variable Manitoba mortgages can be either open or closed. Terms are from 6 months to 5yrs. Rates fluctuate with prime, usually monthly but can be every few months. Variable mortgage Manitoba loans have been historically extremely popular. The good? Manitoba mortgage rates are as much as 2 or 3% below the 5 year fixed rates. This can save you up to $200 or more interest per month on a $100,000 Manitoba mortgage. The bad? You will pay a penalty if you want to pay it off early or switch lenders. Or you may find yourself chasing headlines when prime rates rise. Ask your personal Manitoba mortgage broker for advice on obtaining the best variable mortgage Manitoba loan. The good? Most Manitoba lenders will let you convert to a fixed rate, closed term, without penalty. If you are lucky you can save tens of thousands off the principal and interest. This will take years off your amortization on your Manitoba variable mortgage.

Portable

First a disclaimer. No Manitoba mortgage or mortgage Manitoba loan is portable. It is the rate and term that are portable. If you move to a new place and want to take your Manitoba mortgage with you, you will need a new Manitoba mortgage with the same rate, term, and amortization that was left on your old place. The good? The benefit of a portable mortgage is that you may keep your low rate and not have to pay CMHC or GE Capital fees again. The bad? You will have to re-apply - even if you are staying with your present Manitoba lender. And, you will still owe a ‘pound of flesh’ as you will have to pay legal fees.



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