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The capital of Manitoba, Winnipeg is the largest city in the province, home to just over 705,000 people. Located at the bottom of the Red River Valley, the city is often referred to as “The Gateway to the West” because it’s an epicentre for railways and transportation. It’s also named after Lake Winnipeg, the 11th largest freshwater lake in the world. In 1914, a female black bear was purchased in Ontario by Lieutenant Harry Colebourn, who named her “Winnipeg”, after his hometown. The bear would later become the inspiration for A.A. Milne’s fictional character, Winnie-the-Pooh, spawning a series of children’s books in the late 1920’s, and is a franchise that still exists today.
Read this for a bit more information on loans, credit, mortgages, and financing in Winnipeg.
Loan Myths in Winnipeg
Should You Choose a Shorter or Longer Amortization Period in Winnipeg?
Although 25 years is the most common amortization period chosen by borrowers in Winnipeg, there are longer and shorter time frames to choose from. The one you decide will depend on a number of factors.
Become Debt Free Sooner
Shorter amortization periods are obviously appealing because they allow borrowers in Winnipeg to pay off their mortgages sooner rather than later. They’re also attractive because the overall amount of interest paid is much less than with longer amortization periods. The longer the payment period, the more interest you’ll have to pay, and vice versa.
Look at this to know if the interest on your mortgage is tax deductible in Canada.
Larger Monthly Payments
But shorter amortization periods also mean that your monthly payments will be higher. If you’re able to make bigger payments comfortably, a shorter amortization period might be best. But if you struggle to make a certain amount of money each month, you may be better of with a longer amortization, which comes with lower monthly payment amounts.
Consider Your Employment Type
Short amortization periods may also prove to be difficult for those who are self-employed or have an irregular income as a result of commission-based employment. They may also be tough for those who are buying a rather expensive home which would require a huge loan amount. In these cases, a short amortization period could tie up cash flow and might not be ideal.
Need to get out of debt fast with a low income? Try this.
Monthly Payment Cost
The majority of people in Winnipeg and Canada, in general, usually go with a longer amortization period for the simple fact that their monthly mortgage payments will be lower. For many, the ability to afford a home purchase depends squarely on their ability to make their monthly payments. However, it should be noted that longer amortization periods mean the mortgage will take longer to pay off, and the overall interest amount paid will be much higher
True, the process of applying for a loan can be a bit confusing for some in Winnipeg, especially when there are so many misconceptions about loans themselves. Through word of mouth alone, certain facts about loans can naturally become skewed. These are just some of the myths that you might hear when you’re thinking about applying for a loan in Winnipeg:
- If you need a loan to help cover the costs of your daily expenses, it means you are irresponsible with money. Not true. Most people’s work and payment schedules are different. Not everyone can afford to purchase everything they need on a daily basis, especially when they already have a family, mortgage, or rent to think about.
- Credit scores are the only factors that lenders take into consideration before approving or rejecting someone’s loan application. Actually, there are a number of things that lenders in Winnipeg look at besides someone’s credit score, such as their credit history, their debt-to-income ratio, red flags (warning signs of possible bankruptcy or financial issues), etc. In fact, many lenders in Winnipeg don’t even check your credit score, just your ability to adhere to their payment schedule.
- Your house is the only thing you can use to secure a loan with. No, you can use any property that can be valued as collateral. This includes your car or other motor vehicles, a piece of land that you own, your business, etc.
- Trying to pay off your loan as quickly as possible is always a good idea. Not necessarily. Some lenders in Winnipeg do offer shorter payment periods and larger payments, which can be beneficial because it means your debt is paid off quicker. However, if your loan is not affecting your finances negatively, it might be better overall to shorten your payments and stretch out your payment period. This way, you’ll be able to save some money for other things, like retirement.
I Want To…
Preparing to Apply For a Loan in Winnipeg
Not all lenders in Winnipeg will check your credit score before approving you. However, they will look at your finances. Having too much other debt on your plate or showing any other signs of financial irresponsibility could lead to your application being rejected, especially if your lender considers you a bankruptcy risk. That’s why it’s best to prepare yourself and get your finances in order before you apply. Here are some steps that you can take to help you get approved:
- Determine the size of the loan you’ll need to cover the cost of the property, vehicle, business, or item that you’re trying to finance.
- Requesting your credit report and credit score, while not necessary, is always a good idea. If your score is lower than you’d like, it might be better to hold off until you can bring it back up.
- Only take on a loan that you know for certain that you’ll be able to pay off on time and in full. A loan that you can’t afford will only cause more financial problems for you in the future.
- Compare different personal loans and lenders online. Try to find one that best suits your needs.
- Organize any relevant documentation that you can use to support your application beforehand.
Loans and Your Credit Score
While some lenders in Winnipeg do not check your credit score before approving you, it’s important to know that your score will be affected by a loan in various ways. For example:
- Your credit score will be affected positively if you manage to make all your payments on schedule.
- However, any late or missed payments negatively affect your credit score, causing it to drop significantly.
- Failure to make payments altogether will not only result in a reduced credit score but could lead to more severe financial issues.
Remember, a loan, especially when it’s being paid in a responsible manner is a valuable tool for building solid credit. That’s why it’s extremely important to make sure you select a lender in Winnipeg that will report your loan payments to one of the major Canadian credit bureaus, Equifax or TransUnion.
Do you know what your credit score range means? Check out this article.
Frequently Asked Questions
Does my credit score need to be high before I get approved for a loan? It depends on your lender. Some lenders in Winnipeg, like banks, will almost always check your credit score before approving you. However, certain lenders will not.
Will taking out a loan affect my credit score? Yes! As we mentioned above, if you take out a loan, but fail to make your regular payments on time, your credit score will be affected negatively. However, if your payments are on time and in full, your credit score will rise.
How can I increase my chances of getting approved? There are various ways to better your chances of getting the loan you need. Before you apply:
- Check your credit. While not all lenders require a high credit score, it can’t hurt to work towards building it.
- Deal with any other debts that you might already have.
- Do research. Remember that there are different lenders for different types of financial needs.
- Gather and organize all necessary documentation.
Is it possible to make my payments early? That usually depends on the lender. Most lenders in Winnipeg don’t allow advanced payments because they won’t be making as much in interest. If they do allow advanced payments, there might still be some restrictions. Wondering how lenders set their interest rates and if you can beat them somehow? Look here to know more.
Once my loan is approved, how long will it take to arrive? This also depends on your lender. Providing them with all the necessary information and filling out your application forms properly will make the process more efficient.
Is it better to use a credit card or a loan to pay my expenses? It depends on how expensive the purchase is. For smaller items such as food, clothes and other consumer goods (things that are easily paid off on a monthly basis) it can be more efficient to use a credit card. However, to finance something more expensive, it’s probably a better idea to use a loan.
One lender asked me for a deposit before I applied. Why? A legitimate lender is not supposed to charge you any money before you’re approved for your loan. If they demand a deposit upfront, do not pay them anything, they are likely scammers. Do not provide them with any of your personal information and stop all contact with them.
My bank keeps rejecting my applications. Why? All banks have specific policies when it comes to which clients can borrow from them. So, if you don’t have good credit, or don’t match their criteria in other ways, your application might be refused. However, banks are not the only lenders you can borrow from.
Can I apply for a loan if I do not have a credit history to show? Don’t worry. If you don’t have a credit history, it just means you’ve never made use of any credit products (credit cards, etc.). As long as they know you’ll be able to make your payments on schedule, most lenders will still approve you. However, when it comes to larger loans, like mortgages, having a healthy credit history and a record of financial responsibility is a good asset.
The Best Financing For Your Needs!
If you’re living in Winnipeg and you’d like some proper financing, look no further than Loans Canada.
