Winnipeg Lending Options For You

With so many mortgage terms and products that are available for borrowers in today’s market, it’s no wonder why prospective buyers get confused as to what mortgage suites there financial needs. 

At Integrity Mortgage Services, we make this transition clearer, so as a borrower, you can make the educated decision.  We tailor the mortgage to meet your specific financial obligations for today and the future. 

Term clarification

Open Mortgage – You can sell or refinance your house without a pre-payment penalty.  The penalty is three months interest or interest differential, which ever is higher.

            Pro – You have not committed a set term with the bank, therefore, you don’t have to pay a penalty when you leave the mortgage (ex. Sell or refinance).

            Con – The rate is very high because you don’t have a commitment with the bank.

Closed Mortgage – You cannot sell or refinance your house without a pre-payment penalty.  The penalty is three months interest or interest differential, which ever is higher.

            Pro- The rate is low because you have committed to the bank for the term of the closed mortgage.

            Con – You cannot sell or refinance your house without paying a penalty.

Fixed rate – The rate is locked in for the term of the mortgage.

            Pro – You have a stable payment knowing your rate is locked in for the duration of the term.  As interest rates go up, your payments do not change.

            Con – Rates can decrease and your fixed rate will remain the same.

Variable rate – The rate will fluctuate with the economy, changing frequently.

            Pro – Your rate is typically lower than fixed rates

            Con – The unpredictability of what your payment is going to be, and how much your payment is going towards the principal.

The following table describes what mortgage programs are available and how they apply to you.

Variable rate mortgages, which fluctuate with prime, have performed better in recent years than fixed rate mortgages, which closely follow the trends of the U.S. bond market.  However, the advantages of a variable mortgage may be diminishing in a rising interest environment. The prime rate of Canada is now swinging up from an all time low, and one must remember that the average prime rate since 1990 is 6.9%. It is very possible that prime may increase gradually over the next two years to its historical average.

Consumers who are carrying a lot of high interest debt, such as credit cards, should consider refinancing this debt into their mortgage now, while rates are still lower than the historical average.  And those who are living with a lot of debt should consider locking into a longer term mortgage to increase their financial stability and protect them from rising interest rates.

Amortization periods can vary from 15 years to 40 years.  By extending your amortization, you lower your monthly payment, however, you pay a lot more in interest over the duration.