With an 8.9% year-over-year change in housing prices, Winnipeg could home to your next investment property. According to the Canadian Real Estate Association (CREA), the average home price in Winnipeg increased to $279,651 in December 2016. If this sounds intriguing, you might wonder what the monthly mortgage payment is with the average home in Winnipeg.
To calculate the average mortgage payment a couple decisions must first be made, these decisions include:
- How large of a down payment should you put down?
- What’s the best mortgage rate available to you?
- How long should you take out your mortgage for?
- What payment frequency are you most comfortable with?
The first decision we’ll tackle is the down payment amount.
Since the average home price is below $500,000, the minimum down payment required is 5% of the home price. For a home priced at $279,651, the minimum down payment is $13,983 and the mortgage insurance costs are $9,564. This results in a total mortgage of $275,232. To reduce your total mortgage, you can increase your down payment, which will decrease the amount of mortgage insurance payable on the mortgage. By making a down payment of 20% or more of the home price, no mortgage insurance is required. For a house priced at $279,651, a down payment of $55,930 or more will reduce the mortgage insurance payable to zero.
However, if you wished to purchase a home in Winnipeg that costs more than $500,000, your minimum down payment is calculated as follows:
- If the home price is above $500,000, the minimum down payment is 5% of $500,000 ($25,000) plus 10% of the portion of the home’s price above $500,000. The formula is as follows: $500,000 x 5% + (home price – $500,000 x 10%).
- If the home price is $1 million or more, the minimum down payment is 20% of the home price. The formula is as follows: home price x 20%.
When searching for a mortgage rate, you’ll come across variable and fixed rates. With a fixed rate, your rate is guaranteed for the term selected whereas your rate will fluctuate with prime with a variable rate. Therefore, a fixed rate will allow you to know the exact payment amount for the whole term you lock in the rate for, while with a variable rate your payments can fluctuate. Once you’ve decided between a fixed or variable rate, you’ll have to decide on the term of your mortgage rate. The term can span multiple years with the most common being five years.
Finding the best mortgage rate will require comparing multiple rates from various providers. By selecting the lowest mortgage rate available to you, you’ll be able to save on the total amount of interest paid over the life of the loan. In order to find the lowest rate, consider using a mortgage broker. A mortgage broker can help find you the lowest mortgage rate by providing offerings from multiple providers on your behalf. To calculate the average mortgage payment in Winnipeg we will use the best five-year fixed rate currently on the market of 2.49% (as of Feb. 14).
The amortization period determines how long you’re going to take to pay off your mortgage. A shorter amortization period will increase your monthly payments and reduce the total interest paid on your mortgage. In contrast, a longer amortization will decrease your monthly mortgage payments but will increase the total interest paid on your mortgage. Therefore, when deciding on an amortization period you must determine your ability to meet your mortgage payments and whether you can handle larger payments. Amortization periods typically range between five and 30 years. With the most popular term for new mortgages being 25 years, this will be the period used for our calculation.
Typical payment frequencies mortgage providers offer includes bi-weekly, or accelerated bi-weekly. Selecting a payment frequency that works best with your lifestyle can make budgeting easier and less of a hassle. To calculate the average mortgage payment in Winnipeg, we’ll use a monthly payment.
Now that we’ve decided on a 5% down payment and have selected the best five-year fixed mortgage rate of 2.49% with a 25-year amortization, we can use a mortgage payment calculator to determine our monthly mortgage payment. The average monthly mortgage payment for a $279,651 in Winnipeg is $1,232.
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Flickr: Robert Linsdell