What is the mortgage stress test?
Lenders must check you could afford the payment at a higher rate: the greater of your contract rate plus 2% or 5.25%. It applies to insured and uninsured mortgages. The affordability calculator runs the same test.
Mortgage information for London home buyers
Lenders qualify you at the greater of your contract rate plus 2% or 5.25%, cap housing costs at about 39% of gross income and total debts at 44%, and require mortgage default insurance when you put down less than 20%. Insured mortgages are only available on homes under $1.5 million. Get pre-approved before you shop so you know the ceiling.
When do I need CMHC mortgage insurance?
When your down payment is under 20%. The premium is a share of the loan: 2.80% at 85% loan-to-value, 3.10% at 90%, 4.00% at 95%. It is added to the mortgage; the 8% Ontario sales tax on it is paid in cash at closing. A 30-year amortization, available to first-time buyers and on new builds, adds 0.20%.
What is the difference between pre-qualified and pre-approved?
A pre-qualification is an estimate from what you tell a lender. A pre-approval follows a credit check and a look at your income documents, and usually holds a rate for a period. Sellers take a pre-approved buyer more seriously. Start one with our pre-approval request.
Fixed or variable?
A fixed rate keeps the payment steady for the term; a variable rate moves with the lender's prime rate. Which suits you depends on your budget room and how long you expect to stay. A mortgage professional can show you both side by side; our mortgage calculator shows the payment at any rate you enter.
Questions and answers
What is the minimum down payment in Ontario?
5% of the first $500,000, 10% of the portion from $500,000 to $1.5 million, and 20% at $1.5 million or more.
Can I add the CMHC premium to my mortgage?
Yes, the premium itself is added to the loan. The Ontario sales tax on it cannot be, and is paid at closing.
What credit score do I need?
For a CMHC-insured purchase, at least one borrower needs a score of 600 or more. Lenders set their own standards on top.
How long can I amortize an insured mortgage?
Up to 25 years as standard. First-time buyers and buyers of newly built homes can take 30 years, which adds 0.20% to the premium rate. With 20% or more down, the maximum amortization is up to your lender.
Start with a number
Send a pre-approval request and we connect you with a mortgage professional.