Why You Might Qualify for Less Mortgage Than Last Year (And the Two Things to Do About It Before You Start Looking)

If you are planning to buy a home this spring, there is something important you need to know before you start scrolling listings or walking into showings. Your buying power may have actually gone down since last year, even if your income, your savings, and your financial situation have not changed at all.

Here is why that happens, and more importantly, what you can do right now to protect yourself.

The Stress Test is Working Against You

In Canada, lenders are required to qualify you at two percent above the rate you are actually offered. This is called the mortgage stress test, and it exists to make sure you can still afford your payments if rates rise after you sign.

Here is where it gets important: when rates go up, your qualifying rate goes up with them. So if a lender offered you four percent last year, you were qualified at six percent. If that same lender now offers you five percent, you are being qualified at seven percent. That one percent difference at the qualifying rate can translate into a meaningful drop in how much mortgage you are approved for.

Nothing changed on your end. Same job, same income, same credit score. But the math works differently now, and that gap can catch buyers off guard if they are going into showings without an updated number.

Step One: Get an Updated Pre-Approval

A pre-approval is not just a formality. It is your foundation. It tells you exactly what you can afford based on current rates, current stress test rules, and your actual financial picture today. Not last year. Today.

Getting a pre-approval before you start looking gives you several real advantages:

• You know your real shopping range before you fall in love with a home that is out of reach

• You move faster when the right home comes along because the paperwork is already done

• You are taken more seriously by sellers and agents in a competitive market

If you had a pre-approval done more than a few months ago, it is worth revisiting. Rates have moved, and so have the numbers that come with them.

Step Two: Lock in a Rate Hold

Once you have your pre-approval in hand, the next move is to lock in a rate hold. A rate hold lets you secure today's interest rate for up to 120 days while you shop. That means even if rates climb between now and when you find the right home, you keep the lower rate you locked in.

Think of it as a safety net that costs you nothing but protects you from everything. You do not have to commit to a specific property or a specific lender right away. You are simply holding your place at today's rate while you shop with confidence.

A rate hold is especially valuable right now because:

• Rate movement in either direction is possible in the coming months

• Spring is a competitive season and homes move quickly

• Having a locked rate removes one major variable from an already stressful process

  
  

Do Both Before You Walk Into a Single Showing

Most buyers skip the pre-approval and the rate hold and then scramble when they find a home they want. In a spring market, that scramble can cost you the property. Sellers are not going to wait while you get your financing sorted out.

Doing both before you start looking puts you in a completely different position than most buyers out there. You will know your number, you will have your rate protected, and you will be ready to make a move when the right opportunity shows up.

The good news is that neither of these things takes long.

Ready to Get Set Up Properly?

If you are thinking about buying this spring, reach out now. We will get your pre-approval done, set up your rate hold, and make sure you know exactly where you stand before you start looking. One conversation is all it takes to get ahead of the game.

Contact Justine Secord at Secord Financial: justine@secordfinancial.ca | 905-329-9329 | www.secordfinancial.ca