Christine Buemann Mortgage Broker

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  

Please note that the Bank of Canada has increased their Qualifying Rate to 4.84%, effective immediately (from 4.64%). The increase results in an additional $11.25 a month of qualifying mortgage payment, for every $100k . A $300k mortgage would require an additional $33.75 in higher mortgage payment to qualify (not the actual mortgage payment, simply the payment used for qualification). That is equivalent to roughly $1125 in credit card debt reduction or $1k more required in annual income. What is the Qualifying Rate? This is the rate set by the Bank of Canada that all lenders must use as the "stress test" for all insured mortgages. It is not the rate that your clients will be paying, simply the rate that the Bank of Canada has set to ensure they are able to afford their mortgage payment, should the rates increase. Please note that pre-approvals are now subject to change along with the new rate however deals that have already been sent in and approved by CMHC shou...

The Bank of Canada decreased their Qualifying Rate to 4.99% which is great news for anyone looking for a term other than a 5-10 year fixed. You may wonder what the Qualifying Rate is or how it could affect your potential mortgage. As of April 19, 2010 all insured mortgages (less than 20% down) with a term of less than 5 years or a variable rate must be qualified at the current Qualifying Rate as opposed to the actual interest rate. Here is an example*: Purchase price       $300,000 Down payment     $  15,000 CMHC Premium   $ 7,837.50 Total Mortgage     $292,837.50 For this mortgage with a 5 year fixed rate term, you would need to earn just over $60,000 a year in income to qualify**. For this same mortgage at a variable rate or term less than 5 years, you would need to earn at least $70,000**. The Qualifying Rate was at 5.34% as a few weeks ago so this recent drop will definitely he...