![\"\"](\"https:\/\/www.livabl.com\/articles\/wp-content\/uploads\/2019\/08\/canadian-mortgage-stress-test.jpg\")
<\/a><\/p>\nPhoto:\u00a0Landon Martin<\/a>\/Unsplash<\/a><\/em><\/p>\n Stressed out about Canada’s mortgage stress test? Mortgage-comparison website RateSpy recently rounded up four \u201cloopholes\u201d for homebuyers trying to qualify under the tougher rules.<\/p>\n The rules, introduced in January 2018, require uninsured mortgage borrowers \u2014 so those who can put forward a downpayment of at least 20 percent \u2014 to qualify at a rate that is either 200 basis points above their contract or the Bank of Canada five-year benchmark, whichever is higher. Similar testing has been used to qualify insured mortgage borrowers since 2016.<\/p>\n\n One potential \u201cworkaround\u201d RateSpy tipped readers off about had to do with the typical spread between variable and fixed rates. Normally \u2014 but not always \u2014 posted variable rates will be meaningfully lower than their fixed counterparts (otherwise how would banks entice borrowers to go with the option where rates can fluctuate?).<\/p>\n RateSpy notes that, back in January, banks were offering uninsured variable rates of 3.04 percent, compared to 3.69 percent for five-year fixed rates. \u201cPeople choosing rates were stress tested at 5.34%, a 35-bps (basis points) easier stress test than the 5-year fixed at the time,” the blog post reads.<\/p>\n Because in the majority provinces, credit unions are provincially regulated, the newer federal stress test doesn\u2019t apply. An exception is Quebec. Your ability to pay down your debt will still be tested, but not at the higher rate. \u201cIn most provinces you can find a credit union willing to stress test you on its discounted 5-year fixed rate (e.g., 3.19% instead of a tougher 5.19%),\u201d reads the RateSpy post.<\/p>\n \u201cSome banks allow more debt-ratio flexibility than others,\u201d notes RateSpy. \u201cFor example, whereas most prime lenders have a hard 44% limit on total debt service ratio, some banks will allow up to 50% if the borrower is well qualified and has enough equity,\u201d the blog post continues.<\/p>\n Robert McLister, RateSpy’s founder, says that non-prime lenders that are federally regulated, such as Home Trust or Community Trust, are also options.<\/p>\n \u201cCompared to a major bank, they have more lenient ratio limits,\u201d he tells Livabl. \u201cThe stress test still applies, but total debt-service limits are higher,\u201d McLister explains.<\/p>\n Stressed out about the mortgage stress test? One of these tips might be the answer.<\/p>\n","protected":false},"author":23,"featured_media":194652,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","apple_news_api_created_at":"2019-08-01T12:00:52Z","apple_news_api_id":"0dadff21-da6b-4d04-9a01-e5314356f0ff","apple_news_api_modified_at":"2019-08-01T13:57:25Z","apple_news_api_revision":"AAAAAAAAAAAAAAAAAAAAAA==","apple_news_api_share_url":"https:\/\/apple.news\/ADa3_IdprTQSaAeUxQ1bw_w","apple_news_coverimage":0,"apple_news_coverimage_caption":"","apple_news_is_hidden":false,"apple_news_is_paid":false,"apple_news_is_preview":false,"apple_news_is_sponsored":false,"apple_news_maturity_rating":"","apple_news_metadata":"\"\"","apple_news_pullquote":"","apple_news_pullquote_position":"middle","apple_news_slug":"","apple_news_sections":["https:\/\/u48r14.digitalhub.com\/sections\/09b86915-7d2b-3acd-915b-b215002d01b7"],"apple_news_suppress_video_url":false,"apple_news_use_image_component":false,"footnotes":""},"categories":[11108],"tags":[11132,11226,11199],"coauthors":[8692],"apple_news_notices":[],"yoast_head":"\n1. Switch from fixed<\/h2>\n
2. Consider credit unions<\/h2>\n
3. Or consider a more lax lender<\/h2>\n
4. Or a non-prime one<\/h2>\n