Mortgages in Canada can be a murky subject – one that we hope to shed some light on with a series of highly informational articles.
Falling mortgage rates over the course of 2019 have reduced the rate increase shock for those renewing a mortgage. While those renewing a mortgage this year are still locking in at a rate higher than their previous rate, that increase is quickly declining, according to data from the Bank of Canada. .... More »
Retired? No mortgage for you: How the stress test is making it tougher to borrow later in life Nov 6th
Many people are shocked to discover that the amount they can borrow decreases drastically when they retire because the stress test looks at your income..... More »
It’s been almost a couple of years since the mortgage stress test came into effect. So, we thought it was the perfect time to revisit it and clear up any confusion. The mortgage stress test took effect January 1, 2018, affecting how much mortgage money Canadians are able to borrow towards the purchase of a home.
Let’s look at the mortgage stress test in greater detail and what it means for those planning to buy a home in the coming months.
What’s the Mortgage Stress Test?
Whether you’re buying a home with more or less than 20 percent down, the stress test affects you. Before the new stress test came into effect January 1, 2018, depending on the length of your mortgage term, you might have only had to qualify based on your mortgage rate. However, now everyone is required to pass the stress test in order to get a mortgage.
To pass the stress test, you must be able to prove that you can afford the greater of your mortgage rate plus two percent and the Bank of Canada’s five-year benchmark rate (currently at 5…