What is a mortgage stress test?
Everyone in Ontario applying for a residential mortgage has to pass what is known as a stress test. This is also the case for people who are refinancing their current home with a different lender, as well as those who are seeking a homeowner line of credit.
In a nutshell, a stress test is a method used by lenders to determine if a buyer can qualify for a certain mortgage amount. Because of the fluctuating nature of mortgage rates, the Canadian government sets a minimum qualifying rate at a higher level than the prime rate to evaluate a buyer’s ability to make payments, even if the interest rate goes up. Source Toronto Star –Read More