What is the mortgage stress test? (Ep. 9)

MORTGAGE STRESS TEST. Everybody has to go through it. When you get qualified for your mortgage the lender takes a look at your monthly debts, expenses, mortgage payments and when they look at those mortgage payments, you are being qualified at a much higher rate than the rate that the rate that you are getting. It’s either the Bank of Canada Rate (currently at 4.79%) or Your Rate + 2%, whichever is higher. If your rate is 2%, they will be using a mortgage payment at a rate of 4.79% in an effort to make sure that you can handle a payment at the higher rate. They are considering the long term affordability. The rate you get today might not be available when your mortgage comes up for renewal. *SURPRISE* Rates change haha and that is why the Mortgage Stress Test is in place.

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