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Beyond The Rate
As expert mortgage brokers, we know building wealth through homeownership and achieving financial freedom is about more than just chasing the lowest rate—it’s about strategy.
We're taking you behind the scenes and giving you the insider tools and powerful strategies to get ahead. If you’re a first-time homebuyer, you’ll find everything you need to secure your first property and start building wealth from day one.
If you’re an existing homeowner, this is where you take control. Maximize the wealth-building potential of your current home with proven strategies for refinancing, leveraging equity, and optimizing your mortgage for bigger opportunities.
Your mortgage is more than a loan—it’s a gateway to long-term financial success.
Our goal is simple: to equip you with the knowledge and tools to make smart, strategic decisions that will transform your financial future.
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Did You Know: When Bank Of Canada Increases Rates, It Reduces The Max Purchase Price You Qualify For?
January 4, 2021 | Posted by: Matt Broom-Hall
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When the Bank of Canada increases its prime rate, banks and lenders move in lockstep in increasing their mortgage rates.
Most people only think that the impact is solely on the monthly mortgage payment. We know that as rates increase, the monthly mortgage payment goes up.
For those out looking for a home the impact can be much greater - it might make it a little more difficult to get the home you plan on buying.
In Canada, the government requires that all mortgages go through what they call a “stress test”. The stress test involves qualifying the borrower at the current mortgage rate plus 2% or 5.25% (whichever is greater).
Let’s consider a scenario where a couple with a total pre-tax income of $120,000 has a $50,000 down payment. They estimate their total monthly property taxes and heating costs will be $775, and they have no outstanding debt.
If they didn’t have to use the qualifying rate, they’d be able to purchase a property costing $750,000 if their mortgage rate was 2.95% and the mortgage amortization is 25 years. Using the qualifying rate of 5.25%, their maximum affordability declines to $602,500. That’s a difference of $147,500.
You can see the impact that the stress test has in calculating your max purchase price. As the Bank of Canada increases interest rates, the qualifying rate used in the pre-approval also increases.
This means that the maximum mortgage amount that you would qualify for is much less than before the interest rate increase.
So how do you protect yourself from the impact of rate hikes while you’re out looking for that perfect home?
As part of the pre-approval process, I can get you a 90 to 120 day rate hold. This means that the lender has committed to offering you that rate for a set period of time.
Although it’s difficult to determine when mortgage rates will change, some predict rates will continue to move higher quickly. Since getting a mortgage pre-approval is a free and easy process, you don’t have anything to lose when locking in your rate. If rates decline, you won’t be stuck with the pre-approved rate
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