Episode 13: Chapter 13 – Application Analysis: Application Ratios

Welcome back to Inside the Mortgage Brokering in Ontario Manual with your host, Nicolas St-Laurent (The Rate Keeper).In Episode 13, we are rolling up our sleeves and diving into the numbers. We are covering Chapter 13: Application Ratios. This is the most technical episode yet, and for a good reason—LTV, GDS, and TDS are the three most important acronyms in a mortgage agent’s vocabulary. These ratios are how lenders decide if a deal is a "Yes" or a "No."Whether you’re at the rink or on the road, get ready to master the formulas that define a borrower's qualifying power.In this episode, we break down:Loan to Value (LTV): We simplify the calculation for 1st, 2nd, and even additional mortgages. Learn how to use LTV to work backward and find the maximum mortgage amount a lender will allow.Gross Debt Service (GDS): We break down the PITH formula—Principal, Interest, Taxes, and Heat—plus how to factor in those condominium maintenance fees.Total Debt Service (TDS): We move beyond the house and look at the borrower’s total financial picture. We’ll discuss which debts are included (and which are excluded) and share the "Success Tip" on whether to use the outstanding balance or the credit limit for credit cards.The Stress Test: We explain the current "Stress Test" requirements and how they impact the qualifying rate, essentially acting as the ultimate "backstop" for Canadian lending.Maximum Mortgage Amount: We walk through the process of pre-qualifying a client to find their absolute ceiling based on their income and debt load.Problem Solving: What do you do when the GDS/TDS ratios are too high? We discuss Debt Consolidation as a powerful tool to fix a file before it fails.This episode is about precision. Grab your calculator, open your manual to the LTV, GDS, and TDS Quick Reference Guide, and let's get these ratios right.