We want to be well informed as your mortgage broker Toronto. That means we stay on top of all of the latest developments in the market like the mortgage stress test. Here’s what you need to know about this test that’s just as important as getting the best mortgage rates.
What It Is
Like the name implies, it’s a benchmark designed to make sure that mortgage applicants can keep up with changing interest rates. You need to qualify for an agreed to interest rate plus 2% or the five-year benchmark number from the Bank of Canada, whichever is greater.
Why It Was Brought In
This stress test takes the huge amount of personal debt Canadians are piling up into account. Low interest rates had made borrowing money attractive for many people. As your mortgage broker Toronto specialists, we kept an eye on this and other developments to get you the best terms.
What Are The Issues?
There are some problems with the stress test. For example, it can lower the purchasing power you have to get into a new or second home by as much as 20%. It can also be a problem for people just about to retire. The issue arises for these folks because the stress test looks at your current income. That’s not always a good idea for people who are looking to refinance after they’ve stopped working.
What You Can Do
One of the best things you can do to prepare is take into account all the money the house will cost you. While you’re budgeting, don’t just factor in the mortgage payment. Include all the utilities and property tax as well as maintenance.
As your mortgage broker Toronto , we want you to have the best chance of getting the house you want.
