Mortgages

For many of us, purchasing a home is one of the largest investments we will make in our lifetime. Since a mortgage is likely the largest debt we will have as well, it is important that we understand the types of mortgages and repayment options available and learn ways of paying off our mortgage as quickly as possible.

Variable or fixed rate mortgage?

The interest rate on a variable rate mortgage fluctuates with market interest rates. The advantages of a variable rate mortgage include:

  • the interest rate is usually lower than a fixed rate mortgage
  • there is no penalty involved if you prepay your mortgage
  • you can usually change to a fixed rate mortgage at any time

Since a variable rate mortgage fluctuates with market interest rates, the interest rate can increase dramatically along with your monthly mortgage payment. This can be a problem for people who are on tight budgets.

As the name implies, the interest rate (and the monthly payment) on a fixed rate mortgage is fixed for a specified period of time. The advantages of a fixed rate mortgage include:

  • the interest rate is guaranteed to remain the same for a specified period of time, which is a particular benefit when interest rates start to rise dramatically
  • your monthly principal and interest payment remains the same during that period
  • fixed rate mortgages are a benefit to people who are on tight budgets

Call one of the mortgage professionals at Winnipeg Police Credit Union at 204-946-0551 to discuss the mortgage options and repayment terms that are right for you.

In the market for a new home?

It makes sense to arrange for a pre-approved mortgage before you start shopping for a home. The mortgage professionals at the Winnipeg Police Credit Union can work with you to identify the maximum purchase price and the size of mortgage that you can afford, review the mortgage options and repayment terms that will work best for you, and also give you an idea of the potential costs involved in purchasing your home. The pre-approval process takes some of the guesswork out of home buying, which makes it more comfortable for you.

Looking for ideas for paying your mortgage off faster?

Here are some strategies you should consider to pay your mortgage off faster:

  • Pay more frequently – make bi-weekly or weekly payments rather than monthly
  • Make lump sum payments whenever possible (e.g.: contribute to an RRSP and apply the income tax refund as a lump sum mortgage payment)
  • Keep your mortgage payments the same when your mortgage renews at a lower interest rate
  • Increase each mortgage payment by as little as $10 when you get a pay raise

Here is an example of the impact of paying your mortgage bi-weekly rather than monthly:

EXAMPLE USED

Mortgage amount – $100,000
Interest rate – 8.0%
Amortization period – 25 years
Bi-weekly payments – $381.60
Monthly payment – $763.21

Please note: Accelerated bi-weekly payment

Accelerated bi-weekly payment options are calculated by taking your normal monthly payment and dividing it by two and making the resulting payment amount every two weeks.  Since you would be making 26 bi-weekly payments, by the end of a year you will have made the equivalent of one extra monthly payment. This additional amount and the increased payment frequency can save you thousands of dollars in interest and take years off your mortgage. In the example below the mortgage would be paid approximately 5 years earlier, with an interest savings of $30,475.99!

Results – Bi-weekly
Total payments – $197,710.11
Total Interest – $97,710.11

Results – Monthly
Total payment – $229,358.86
Total interest – $129,358.86

Special features and benefits of a Winnipeg Police Credit Union Mortgage

  • Up to 30 year amortizations and 85% conventional financing
  • 20% annual prepayment privilege without penalty
  • No renewal fees (typically $85 – $150)
  • Fast approvals – pre-approvals for qualifying borrowers
  • Full payment protection packages available for eligible borrower

For more information please call 204.944.1033 TODAY or email info@wpcu.ca

Please click here for our current rates!

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