How the mortgage stress test is impacting qualification amounts + MORE Jun 22nd

When super-organizer Marie Kondo told viewers of her hit Netflix series to jettison household items that neither brought joy nor had a purpose, her advice sounded to me like a great method for cleaning up personal finances, too. While you can’t just do away with your mortgage or car insurance payments, taking a decluttering approach to your finances can help you get them in order, create better money habits and get a clear picture of your goals. And just like decluttering can bring a newfound sense of calm to your home, it can have the same effect on your financial situation.

If just reading this has you feeling overwhelmed by the prospect of tackling your finances, know that you’re not alone. Financial anxiety is common: According to the 2022 TD Wealth Survey, money is a top stressor for more than 85% of Canadians. Surging inflation and the rising cost of living are keeping people up at night. 

Decluttering your finances can help you feel more in control of your situation…

As of June 2022, we are currently seeing unnatural discrepancies in the size of mortgage loans borrowers will qualify for, and it’s all because of a rift in the space-time stress test continuum. You see, most 5-year fixed mortgage rates are already over 5%, making their stress test a full 2% higher at 7% or more. Concurrently, the mortgage stress test rate for variable mortgages is still a comparatively low 5.25% or so. In order to maximize the amount homebuyers […]

“Nothing in this world is certain except death and taxes.”

Benjamin Franklin said this in 1789, and it’s just as true now as it was then. There’s just one thing I’d add given that the world has changed quite a bit since the 18th century: interest payments. Maybe not as certain, but just as stressful. If I could revise the quote now, I’d make it: 

“Paying interest and taxes will be the death of us.”

Make More of Your Own Money

A shocking amount of people’s gross income goes towards paying debt. Based on my research and experience, I’d say about 25%. Paying interest on your credit cards, loans, lines of credit or mortgages is something most of us will experience at some point in our lives – but 25% is still a good chunk of income that isn’t saved, invested, or used for living your life.

An even more shocking amount of gross income goes towards taxes. Tax Freedom Day was last week on June 15, meaning any income earned up to this point of the year will be paid out to the government…

As some second-guess the “variable-rate advantage,” we’ll hear more people asking things like, “Is it too late to lock in?”