K2K Mortgage

The Product

How this works, is you, the home buyer, will be required to provide a down payment of 5% of the property value or purchase price (which ever is greater) as a down payment on your home.

An immediate family member*, the donor, would then pledge 15% of the property value or purchase price (which ever is greater) into a non registered deposit instrument at Carpathia Credit Union. This pledged amount, which remains in the donor's name, is used as collateral on the home, acting like a down payment. The home buyer now has a 20% down payment!

Your mortgage will be fixed for a 5 year term, with a maximum amortization of 25 years.

The Savings

This is a great way to save money. As the home buyer, you save the insurance premiums that would have otherwise been charged by the mortgage insurance company, which could be as high as $5,500 on a $200,000 mortgage.

As the donor, you are not only helping a family member save thousands of dollars, but you are also earning interest on your pledged funds which is 100% guaranteed by the Deposit Guarantee Corporation of Manitoba.

What happens after 5 years?

After approximately 5 years with continuous mortgage payments the principal amount of your mortgage should have decreased by the same amount as your donor has pledged. After 5 years the donors pledge is released. This means the donor can use their pledged money as they wish and your mortgage continues to decrease.

Here is an example:

                                                                                          K2K                                                High Ratio

Property                                                                      $200,000.00                                    $200,000.00

Purchasers Down Payment                                   $10,000.00                                        $10,000.00

Insurance Premiums                                                      -                                                    $5225.00

Total Mortgage                                                          $190,000.00                                     $195,225.00

Monthly Payments                                                     $994.44                                             $1026.93

Balance after 5 years                                               $165,402.00                                     $169,951.00

In conclusion, using the above example using an immediate family member as a donor can save you almost $6500 on a $200,000 purchase over 5 years.

 

 

*Immediate Family includes the following relatives:

- current spouse; married or common-law of the opposite or same sex or foster parents
- children; own child, step-child, grand child, foster child
- sibling's; bother, sister, including step or half
- sibling's current spouse; brother-in-law or sister-in-law
- sibling's children; niece or nephew
- current spouse's sibling's; brother-in-law or sister-in-law
- parents; stepparents, grandparents, great grandparents
- spouse's parents or grandparents

NOTE FOR CLARIFICATIONS:
- sibling's current spouse: "My brother's and sister's, partners", current spouse's sibling's: "My partner's brothers and sisters"

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