What is the Qualifying Rate?
The Bank of Canada's Qualifying Rate (also called the Benchmark Rate) is a weighted average of the Big 6 bank's 5 year posted rate.
This rate is used to essentially "stress test" in mortgage qualification to ensure borrowers can afford higher payments should their actual interest rate increase.
If you are getting an insured mortgage in Canada, meaning putting less than 20% down, you will have to qualify based on this rate. It is important to note that this is not the actual interest rate that you will be paying.
This rate is also used to qualify terms shorter than 5 years as well as variable rate mortgages, for those putting more than 20% down. After January 2018, borrowers with more than 20% will be qualified using the greater of this rate, or their actual rate +2%.
www.christinebuemann.ca
The Bank of Canada's Qualifying Rate (also called the Benchmark Rate) is a weighted average of the Big 6 bank's 5 year posted rate.
This rate is used to essentially "stress test" in mortgage qualification to ensure borrowers can afford higher payments should their actual interest rate increase.
If you are getting an insured mortgage in Canada, meaning putting less than 20% down, you will have to qualify based on this rate. It is important to note that this is not the actual interest rate that you will be paying.
This rate is also used to qualify terms shorter than 5 years as well as variable rate mortgages, for those putting more than 20% down. After January 2018, borrowers with more than 20% will be qualified using the greater of this rate, or their actual rate +2%.
www.christinebuemann.ca
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