Management and Organizational Studies 2277A/B Chapter Notes - Chapter 7: Debt Service Ratio, Mortgage Loan, Down Payment

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2277A/B
• Professor: Barry Hawn

Document Summary

Pre-approval certificate - provides you with a guideline on how large a mortgage you can afford and an estimate of your mortgage payment based on your financial situation. Also provides you with an interest rate guarantee that lasts 60-120 days. Useful if the rates increase while you are still shopping. Does not guarantee that you will be approved for a mortgage. Put a financing condition on your offer to give you time to secure the mortgage. Financial institutions will only provide you with a mortgage loan if your gross debt service ratio is <32% Gross debt service (gds) ratio - your monthly mortgage-related payments (including mortgage loan repayment, heating costs, property taxes, and half of any condominium fees) divided by your total monthly gross household income. Mortgage loan repayments must be calculated using the greater of the mortgage interests\ rate agreed to and the current five-year fixed mortgage interest rate.