Don’t Stress about the Stress Test
Borrowers presenting with 20%+ downpayment are frustrated after new stress test rules resulted in approximately 20% reduction in borrowing power. However, there’s good news (for now)!
The stress test does not apply to provincially regulated lenders; while some have voluntarily implemented it, a few are still qualifying under the old rules for maximum mortgage amount until further notice. That’s right – no stress test required!
Below are examples of how borrowers can bypass the stress to access more funds. (Assumptions: minimum 20% down payment, 3.49 contract rate, $2,000 annual property tax, $100/month heating cost, 30 year amortization.)
Scenario 1: $50,000 annual income*
$241,140 = maximum mortgage from lenders using stress test
$303,818 = maximum mortgage from select lenders using old rules
+$62,678 = additional purchasing power
Scenario 2: $100,000 annual income*
$529,621 = maximum mortgage from lenders using stress test
$667,282 = maximum mortgage from select lenders using old rules
+$137,660 = additional purchasing power
How’s that for stress relief?!
But there is no guarantee how long it will be before these lenders also adopt the stress test rules. Call me today to get the maximum funds for your next purchase, refinance or construction mortgage.