What is the mortgage stress test in Canada?

A bank has to see that you can afford the payment at a qualifying rate that is higher than the rate in the contract. The Financial Consumer Agency of Canada says the bank uses the higher of 5.25 percent, or the rate you negotiate plus 2 percent. That rule is for insured and uninsured mortgages. You also face this test if you refinance, or if you take a home equity line of credit, when you already have a mortgage. A lender that is not federally regulated may still ask you to pass a stress test. The qualifying rate is not the rate you pay. This page does not say a lender will approve the mortgage.

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