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Mortgage Portions And How They Work – FHA Loan Criteria

To learn more about splitting your Portion FHA mortgage interest rates, contact a bank representative.

There are different types of mortgages available to you, and each has its advantages and disadvantages. In spite of all these choices, it may happen that no mortgage loan perfectly meets your needs.

That’s why you can split some FHA mortgage interest rates into “portions or slices”. You benefit from the advantages of several types of FHA mortgage interest rates in one account.

Splitting your mortgage into multiple loans of different types and durations offers many benefits:

Enjoy the best of both worlds.  Variable rate FHA mortgage interest rates often have lower interest rates than fixed rate mortgages. However, you may not be willing to expose yourself to the risk that rates will change over the life of your mortgage. By applying a variable rate to a portion of your mortgage and keeping the rest at a fixed rate, you could get the best of both worlds – interest savings reducing your borrowing costs and a safe rate helping you manage the risk associated with an increase in interest rates.

Lower your effective interest rate.  When you take out a short-term mortgage, you usually pay less interest. Long-term mortgages, however, provide an impression of stability and security. You could benefit from these two benefits by splitting your mortgage into short and long-term portions. This combination will allow you to earn an effective interest rate halfway between the two, rather than sticking to a high long-term rate.

Track a portion of your mortgage for tax purposes.  If you work from home, you could track a portion of your mortgage separately (the amount of the percentage of your home that you use for business purposes). You can track the costs associated with this portion of your mortgage separately. This will greatly simplify the preparation of your tax return.

Reduce the risk of renewing your mortgage.  No one can predict the future, especially with respect to interest rates. By splitting your mortgage, you will be able to renew it in several steps, so you may not need to renew the full amount at higher rates.

Here’s an example of how splitting a Manulife Bank Select mortgage loan would reduce your interest costs. 1

Simon and Melodies have a $ 250,000 Manulife Bank Select mortgage loan. They find attractive low variable rates in the market, but do not believe they will be offered for a long time. They want to take advantage of the current low rates, but also to benefit from some stability in the event of a rise.

Their banking advisor is recommending that they split their mortgage into two and therefore offer a loan of $ 150,000 at a 5-year floating rate and a $ 100,000 loan at a fixed rate of 5 years.

In doing so, they take advantage of the low variable rates applicable to part of their mortgage loan. By switching to another mortgage portion at a fixed 5-year rate, they reduce the potential increase in all their payments if rates start to rise.

1 The example is based on the following assumptions: the 5-year fixed rate is 3.50%; the 5-year variable rate is initially 2.90% and then increases by 0.25% annually. The amortization period is 25 years.

Preauthorization of the mortgage

The First Step Of Buying A Home

Submit a pre-authorization request now to complete your home search with peace of mind.

As soon as you decide to buy a house, pre-approval of the FHA mortgage interest rates must be one of your priorities. This will give you a great advantage in finding your new home, because you will know:

  • The exact amount of the loan that the bank is willing to give you.
  • The exact amount you are able to offer when you make an offer.
  • The expected amount of your FHA mortgage interest rates payments.

In addition, when your mortgage is preauthorized, you have a definite advantage over other potential buyers who have not obtained this pre-authorization. In fact, property sellers prefer offers that are not conditional on obtaining financing (because if the financing is not granted, the offer falls on the water and they must then put their home on the market.). Preauthorization of the mortgage allows you to make a firm offer that will be more attractive to the seller.

AND IT’S NOT ALL …  pre-approvals of a Manulife Bank mortgage loan give you a guarantee on the interest rate. This rate guarantee is generally valid for 90 days (120 days for new construction). If interest rates rise during this period, you are guaranteed to get the lower rate agreed. On the other hand, if interest rates fall, Manulife Bank will give you the lowest interest rate at the time you enter into the agreement. You may therefore have lower mortgage payments or lower overall borrowing costs.

Manulife Bank does not charge you for pre-approval of a mortgage loan, nor does it require you to take out a loan with it afterwards. You therefore have every interest in obtaining a pre-authorization, and no reason not to do so.

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