How Interest Rates are Like Gas Prices

Diane Gogar • February 27, 2019

Have you ever noticed that just like gas prices, interest rates seem to go up and down for no reason at all?

How come it feels like right before you are ready to buy a property, rumours of interest rate changes will start to flood the media? Or why do gas prices always seem to go up right before the long weekend (when you are heading out of town)? You could spend a lifetime trying to figure these things out. However, knowing why these things happen isn't as important as knowing what to do when they happen!

How to Protect Yourself from Rising Interest Rates!

Allow me to share a few things you can do to protect yourself from rising interest rates if you are looking to purchase a property in the near future.

Be Prepared. Know Your Mortgage Options

Unlike most gas stations where gas is gas regardless of where you fill up, not all mortgage products are created equal. Just because a mortgage product has a lower sticker price attached, doesn't mean it's necessarily a better deal. You really have to understand the fine print in order to make the best choice for you.

As your unbiased mortgage professional, I can help you understand all the products available to you and how the fine print will impact the overall cost of the mortgage. I can help you understand the difference between fixed and variable rates, the impact of shorter vs longer terms and amortizations, pre-payment privileges, and potential mortgage penalties.

By understanding your options, you can make a decision that is based on your financial situation and goals rather than based on fluctuating interest rates. Protect yourself emotionally by not placing such a high value on an arbitrary "sticker price" (rate) instead focus on finding the best mortgage product available for you at the time you are purchasing.

Be Prepared. Get a Pre-approval With a Rate Hold

If you are shopping for a property, not only should you be pre-approved for the mortgage, but you should have a rate hold in place as well.

A pre-approval is a lender's written commitment to offer you a mortgage assuming the details in the application are proven accurate. A pre-approval is not a guarantee that you will get the mortgage, just that they have looked at the initial application and believe you are a enough of a qualified applicant to proceed once you have found a property to purchase.

The pre-approval process consists of the following:

  • A mortgage application - to assess your financial situation (employment, credit and downpayment).
  • Collection of documents - to support the application.
  • Submission of the application - for lender review.
  • A response from the lender - indicating they will consider lending to you based on a set purchase price limit, specific product, and acceptable property.
  • A rate hold - the time you have to close the mortgage while they will guarantee it at a certain rate.

So as part of the pre-approval, it's really the rate hold that protects you against rising interest rates. A rate hold is a lender's commitment to hold a certain rate on a certain product for a certain time frame. For example, if you like the 5 year fixed term (product), and a lender is offering 2.64% (rate) a rate hold can be secured that will guarantee the rate anywhere from 30-120 days (time frame), this is the time you have to take possession of the property.

Some lenders offer more aggressive rates (lower rates) but limit the hold to a shorter time period, usually 30-60 days. This is why some banks, lenders, or brokers advertise "Rate Specials". However it should be noted that not all rate specials come with a rate hold. Some rates are only available for applications where an offer to purchase has been accepted on a property.

If your rate hold expires, it is easy enough to get another one in place with an updated application. Also, if rates drop while you have a hold in place, and you find a property to purchase, typically we are able to drop the rate for you at closing. It's as easy as that!

Now... if you made it this far and you're looking for advice on how to get the best price at the pump, unfortunately I can't help you out there, that is a mystery to everyone! But if you want to know more about securing a pre-approval and a rate hold, please contact me anytime.

DIANE GOGAR
MORTGAGE PROFESSIONAL
CONTACT ME

Mortgage Approval 101: GDS & TDS Explained

By Diane Gogar • August 13, 2025
Can You Afford That Mortgage? Let’s Talk About Debt Service Ratios One of the biggest factors lenders look at when deciding whether you qualify for a mortgage is something called your debt service ratios. It’s a financial check-up to make sure you can handle the payments—not just for your new home, but for everything else you owe as well. If you’d rather skip the math and have someone walk through this with you, that’s what I’m here for. But if you like to understand how things work behind the scenes, keep reading. We’re going to break down what these ratios are, how to calculate them, and why they matter when it comes to getting approved. What Are Debt Service Ratios? Debt service ratios measure your ability to manage your financial obligations based on your income. There are two key ratios lenders care about: Gross Debt Service (GDS) This looks at the percentage of your income that would go toward housing expenses only. 2. Total Debt Service (TDS) This includes your housing costs plus all other debt payments—car loans, credit cards, student loans, support payments, etc. How to Calculate GDS and TDS Let’s break down the formulas. GDS Formula: (P + I + T + H + Condo Fees*) ÷ Gross Monthly Income Where: P = Principal I = Interest T = Property Taxes H = Heat Condo fees are usually calculated at 50% of the total amount TDS Formula: (GDS + Monthly Debt Payments) ÷ Gross Monthly Income These ratios tell lenders if your budget is already stretched too thin—or if you’ve got room to safely take on a mortgage. How High Is Too High? Most lenders follow maximum thresholds, especially for insured (high-ratio) mortgages. As of now, those limits are typically: GDS: Max 39% TDS: Max 44% Go above those numbers and your application could be declined, regardless of how confident you feel about your ability to manage the payments. Real-World Example Let’s say you’re earning $90,000 a year, or $7,500 a month. You find a home you love, and the monthly housing costs (mortgage payment, property tax, heat) total $1,700/month. GDS = $1,700 ÷ $7,500 = 22.7% You’re well under the 39% cap—so far, so good. Now factor in your other monthly obligations: Car loan: $300 Child support: $500 Credit card/line of credit payments: $700 Total other debt = $1,500/month Now add that to the $1,700 in housing costs: TDS = $3,200 ÷ $7,500 = 42.7% Uh oh. Even though your GDS looks great, your TDS is just over the 42% limit. That could put your mortgage approval at risk—even if you’re paying similar or higher rent now. What Can You Do? In cases like this, small adjustments can make a big difference: Consolidate or restructure your debts to lower monthly payments Reallocate part of your down payment to reduce high-interest debt Add a co-applicant to increase qualifying income Wait and build savings or credit strength before applying This is where working with an experienced mortgage professional pays off. We can look at your entire financial picture and help you make strategic moves to qualify confidently. Don’t Leave It to Chance Everyone’s situation is different, and debt service ratios aren’t something you want to guess at. The earlier you start the conversation, the more time you’ll have to improve your numbers and boost your chances of approval. If you're wondering how much home you can afford—or want help analyzing your own GDS and TDS—let’s connect. I’d be happy to walk through your numbers and help you build a solid mortgage strategy.

Everything You Should Know Before Buying a Home

By Diane Gogar • August 6, 2025
Thinking About Buying a Home? Here’s What to Know Before You Start Whether you're buying your very first home or preparing for your next move, the process can feel overwhelming—especially with so many unknowns. But it doesn’t have to be. With the right guidance and preparation, you can approach your home purchase with clarity and confidence. This article will walk you through a high-level overview of what lenders look for and what you’ll need to consider in the early stages of buying a home. Once you’re ready to move forward with a pre-approval, we’ll dive into the details together. 1. Are You Credit-Ready? One of the first things a lender will evaluate is your credit history. Your credit profile helps determine your risk level—and whether you're likely to repay your mortgage as agreed. To be considered “established,” you’ll need: At least two active credit accounts (like credit cards, loans, or lines of credit) Each with a minimum limit of $2,500 Reporting for at least two years Just as important: your repayment history. Make all your payments on time, every time. A missed payment won’t usually impact your credit unless you’re 30 days or more past due—but even one slip can lower your score. 2. Is Your Income Reliable? Lenders are trusting you with hundreds of thousands of dollars, so they want to be confident that your income is stable enough to support regular mortgage payments. Salaried employees in permanent positions generally have the easiest time qualifying. If you’re self-employed, or your income includes commission, overtime, or bonuses, expect to provide at least two years’ worth of income documentation. The more predictable your income, the easier it is to qualify. 3. What’s Your Down Payment Plan? Every mortgage requires some amount of money upfront. In Canada, the minimum down payment is: 5% on the first $500,000 of the purchase price 10% on the portion above $500,000 20% for homes over $1 million You’ll also need to show proof of at least 1.5% of the purchase price for closing costs (think legal fees, appraisals, and taxes). The best source of a down payment is your own savings, supported by a 90-day history in your bank account. But gifted funds from immediate family and proceeds from a property sale are also acceptable. 4. How Much Can You Actually Afford? There’s a big difference between what you feel you can afford and what you can prove you can afford. Lenders base your approval on verifiable documentation—not assumptions. Your approval amount depends on a variety of factors, including: Income and employment history Existing debts Credit score Down payment amount Property taxes and heating costs for the home All of these factors are used to calculate your debt service ratios—a key indicator of whether your mortgage is affordable. Start Early, Plan Smart Even if you’re months (or more) away from buying, the best time to start planning is now. When you work with an independent mortgage professional, you get access to expert advice at no cost to you. We can: Review your credit profile Help you understand how lenders view your income Guide your down payment planning Determine how much you can qualify to borrow Build a roadmap if your finances need some fine-tuning If you're ready to start mapping out your home buying plan or want to know where you stand today, let’s talk. It would be a pleasure to help you get mortgage-ready.