The Benchmark rate was lowered from 5.24% to 4.99% late last week.
The Benchmark rate is used for qualifying on a mortgage on a variable term or a fixed term less than 5 years. With the rates as low as they are the Benchmark rate was introduced in April of 2010 to make sure those on short terms or variable rates can handle the rate increased when they happen.
What this means is if you are looking to get into a mortgage on a variable rate at Prime (currently 3%) minus .50% you must qualify for the mortgage using the payment based on 4.99% not the 2.5% you will be receiving. On a $250,000 variable mortgage your mortgage payment could be as low as $1120 per month, so the lenders will have you qualify at the Benchmark rate which would make for a $1453 payment. This again is just to make sure your income can handle any fluctuations in the rates that may happen. Your debt ratio’s are one of the main things a lender will look at when qualifying for a mortgage.
Don’t just get a mortgage, KNOW your mortgage!
For a pre-approval on a mortgage you can apply on my website at www.ScottBourke.ca
Follow me on Twitter Here
Thanks for Reading
Scott Bourke, AMP
Dominion Lending Centres Regional Mortgage Group