• how can i avoid the stress testHow Can I Avoid The Stress Test?

    More and more of our clients are having difficulties qualifying to a mortgage to purchase a home and asking us “how can I avoid the stress test”? If you put less than 20% down on the purchase, there is no way around the stress tests. You need to show that you can afford mortgage payments at a much higher mortgage rate than the actual (contract) rate. But thankfully, there are ways around this!

    Step 1: Come Up With At Least 20% Down

    If you can come up with 20% as a down payment, we can help you answer the question how can I avoid the stress test! The reason is that once you reach that 20% level, we can avoid the Canadian Federal Government because we don’t have to involve CMHC or Genworth (the mandatory insurers of mortgages with less than 20% down).

    Step 2: Qualify At A Lower Rate

    Now that we have 20% down, we can focus on lending institutions that will qualify you at the contract rate. The catch is that THAT contract rate will be higher than the one that would apply if you could qualify in the traditional way. It’s usually less than a percent higher than usual. This is the price that you pay to qualify in this non-traditional way.

    Step 3: Qualify With A 30 Year Amortization

    The longer the amortization, the lower the payment (but the more interest you pay in the long term). So if you still can’t qualify at the contract rate, you can get even more help by amortizing over 30 years.

    It is possible to avoid the stress test under certain circumstances but it should be a last resort because it does come at a price. Talk to us first and we will present all your options!

    Robert Floris and Sean Howard are Mortgage Brokers in Hamilton. Their office is located at 236 Pritchard Rd, Hamilton, ON L8W 3P7. If you would like to speak with Sean or Robert, he can be reached at 1-855-558-7878.

    If you would like to apply for a mortgage online, please follow this link.

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