Mortgage Blog

Here’s a Simple Way to Stress Test Your Mortgage

June 15, 2018 | Posted by: Brandi Pierik and Matthew Pierik - Red Deer and Calgary Mortgage Brokers

Here’s a Simple Way to Stress Test Your Mortgage

Chances are, you’ve heard the phrase “stress test” enough for a lifetime, as it’s certainly popular these days when it comes to mortgage qualification.

Unfortunately, stress testing isn’t going anywhere anytime soon. And mortgage rates are on the rise – and expected to continue increasing gradually over the next couple of years or so.

Since the new mortgage rules came into effect January 1st, even home buyers who’ve saved more than a 20% down payment – or are looking to refinance their current mortgage – are facing a new stress test reality. Previously, only borrowers who had less than a 20% down payment (high-ratio mortgage borrowers) were subject to a stress test.

This straightforward math will help

In simplified terms, if you have a down payment of 20% or higher and a 25-year amortization, your monthly mortgage payments are roughly $500 for every $100,000 in mortgage debt.

And, now, thanks to the latest rules changes, you’ll have to qualify as if your payments are $600 for every $100,000 worth of mortgage you hold.

Can you afford to pay an extra $100 a month for every $100,000 of mortgage debt you currently owe?

This is also a useful payment tolerance test in an environment where mortgage interest rates are rising like they are today.

I’d be happy to help run some numbers for you so you can prepare for your next mortgage.

Do you have questions about mortgage qualification or your Red Deer mortgage in general? Answers are a call or email away!

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