Are you ready for a financial reset?

Joel Olson • December 20, 2021
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As we come to the end of the year, a lot of people are going to take stock of their current financial situation.


Have they saved enough money this year?


Have they paid down enough debt?


Have they put themselves in a situation where they're moving forward financially?


Or, maybe they're looking forward with anticipation to the New Year...


Maybe there is a job change that's on the horizon.


Maybe there is a kid heading off to college that they have to financially prepare for.


Maybe retirement is on the horizon.


And now is the time to make sure that that can be done in a financially acceptable way.


Whatever it is, people are taking a look at their financial situation and making adjustments and changes to make sure they are in the best position possible.


Obviously, we're in a unique situation in the world where people have seen major benefits on our current world situation and major disadvantages that may have affected them as well.


Now's a great time to look at doing some type of financial reset as it relates to your mortgage and all debts.


What does a financial reset look like?


Number one, what do you have for debt right now?


If you have any debt that's involved with credit cards, that's not being paid off a monthly basis and I'm paying eight 9% or even higher at 20 to 24%...


...if you have loans, maybe there are loans that are somewhere in the eight to 10% range or even in the four to 5% range, whether they be student loans, car loans, or just personal loans, with interest rates being below 2% and in many cases mid 1%, you are going to save a ton of interest by rolling these into the mortgage.


With the vast amount of equity you would have achieved with the escalating housing market, now is a time where there's an opportunity to do so that may not have existed one year ago or even six months ago.


Now is the time to look at putting that debt into your mortgage to save interest but also to vastly improve your monthly payment.
We are seeing clients that are having their monthly cash flow go up by as much as $1500 to $2,000 a month.


How much of a difference would that make your life if you had to pay $1500 to $2,000 per month?


That's only one way of looking at it.


For some people it's just about saving the interest.


Maybe they keep their payments the same but have that loan payment be paid at a much lower interest rate, which means they will save interest and ultimately pay that loan off much much faster.


The second way so may look at a financial reset, is maybe now's the time you're going to look at updating your real estate.


What I mean by that? 


Now's the time to look at renovations.


Maybe now's the time to put in those big renovations that you've been deterring because you haven't had enough money... now's the time you have equity to do so.


So if you are within a few years of improving the roof, updating your septic and sewer systems, updating your furnace, etc., now would be the time to take money out to do that.


Perhaps your home would benefit by being completely redone...


...both kitchens and bathrooms make a ton of difference to your value.


Maybe now's the time you look at adding a suite to the home, adding extra income on a monthly basis.


Now's the time where you can do that without having to put any extra cash flow in, even possibly doing an expansion of your home can also be in the cards to add extra money and the renovation, and cost of doing so would more than pay off even though you're increasing your borrowing load.

The third way you may be looking at a financial reset would be using your equity towards investment.

 

Now, maybe this involves buying another property.

 

Many people are surprised to know though the equity in their house they may buying the property and putting none of their own money in!

 

Maybe that involve buying a rental property.

 

Maybe if you're looking at your kids going into college, maybe you buy them a property that they're going to live in during college that will then become a rental property when they are finished.

 

In many situations like that, you could do that for as little as 5% down.

 

Maybe you could be looking at other investment opportunities.

 

With a wise strategy, you could look at investing into stocks or businesses or other types of investment opportunity that can have a greater yield than the very, very low interest rates you're going to pay on your mortgage.

 

All of these options are things to look at when you're looking at a financial reset.

 

If I can help you with any different options or just reviewing your particular situation to see if there's opportunity to do some financial reset, please do reach out.

 

You could literally see yourself being a completely different situation and going to the New Year in a much, much better way than you've ever seen before!

 

The easiest way to discuss any strategies is to schedule a time on my calendar here:

 

https://calendly.com/joel-20/discovery-zoom-call

 

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Joel Olson
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An Overview of the Home Buying Process

By Joel Olson • June 3, 2025
If you’re in the early stages of planning to buy either your first home or your next home, you’ve come to the right place! Even if you’ve been through it before, the home buying process can be daunting, but it doesn’t have to be when you have the right people on your side! The purpose of this article is to share a high-level view of the home buying process. Obviously, the finer details can be addressed once you’ve submitted an application for pre-approval. But for now, here are some of the answers to general questions you may have as you work through your early preparations. Are you credit-worthy? Having an established credit profile is essential when applying for a mortgage. For your credit to be considered established, you’ll want to have a minimum of two trade lines (credit cards, loans, or lines of credit) with a minimum limit of $2500, reporting for a period of at least two years. From there, you’ll want to make sure that your debt repayment is as close to flawless as possible. Think of it this way: Why would a lender want to lend you money if you don’t have a history of timely repayment on the loans you already have? Making your payments on time, as agreed, is crucial. We all know, however, that mistakes can happen and payments might get missed. If that's the case, it’s best to catch up as quickly as possible! Late payments only register on your credit report if you're past due by 30 days. How will you make your mortgage payments? When providing you with a mortgage, lenders are trusting you with a lot of money. They'll want to feel really good about your ability to pay that money back, over an agreed period of time, with interest. The more stable your employment, the better chances you have of securing mortgage financing. Typically, you’ll want to be employed in a permanent position or have your income averaged over a period of two years. If you’re self-employed, expect to provide a lot more documentation to substantiate your income. How much skin do you have in the game? If you're borrowing money to buy a home, you’re going to have to bring some money to the table. The best down payment comes from accumulating your own funds supported by documents proving a 90-day history in your bank account. Other down payment sources, such as a gift from a family member or proceeds from another property sale, are completely acceptable. In Canada, 5% down is the minimum requirement. However, depending on the purchase price, it might be more. Also, you need to be aware that you will likely have to prove access to at least 1.5% of the purchase price to be allocated for closing costs. How much can you afford? Here’s the thing. What you can afford on paper and what you can afford in real life are often very different amounts. Just because you feel you can afford the proposed mortgage payments, know that you will have to substantiate everything through documentation. The amount you actually qualify to borrow is based on many factors, certainly too many to list in an article designed to provide you with an overview of the home buying process. However, with that said, it’s never too early in the home buying process to seek professional advice. Our services come at no cost to you; it would be our pleasure to help. Working with an independent mortgage professional will allow you to assess your credit-worthiness, provide insight on how a lender will view your income, help you plan for a down payment, and nail down exactly how much you can afford to borrow. And if you need help putting together a plan to improve your financial situation, we can do that too. If you’d like to discuss your financial situation and put together a plan to secure mortgage financing, please get in touch!

GDS/TDS Ratios Explained

By Joel Olson • May 20, 2025
One of the major qualifiers lenders look at when considering your application for mortgage financing is your debt service ratios. Now, before we get started, if you prefer to have someone walk through these calculations with you, assess your financial situation, and let you know exactly where you stand, let’s connect. There is no use in dusting off the calculator and running the numbers yourself when we can do it for you! However, if you’re someone who likes to know the nitty-gritty of how things work instead of simply accepting that's just the way it is, this article is for you. But be warned, there are a lot of mortgage words and some math ahead; with that out of the way, let’s get started! “Debt servicing” is the measure of your ability to meet all of your financial obligations. There are two ratios that lenders examine to determine whether you can debt service a mortgage. The first is called the “gross debt service” ratio, or GDS, which is the percentage of your monthly household income that covers your housing costs. The second is called the “total debt service” ratio, or TDS, which is the percentage of your monthly household income covering your housing costs and all your other debts. GDS is your income compared to the cost of financing the mortgage, including your proposed mortgage payments (principal and interest), property taxes, and heat (PITH), plus a percentage of your condo fees (if applicable). Here’s how to calculate your GDS. Principal + Interest + Taxes + Heat / Gross Annual Income Your TDS is your income compared to your GDS plus the payments made to service any existing debts. Debts include car loans, line of credit, credit card payments, support payments, student loans, and anywhere else you’re contractually obligated to make payments. Here’s how to calculate your TDS. Principal + Interest + Taxes + Heat + Other Debts / Gross Annual Income With the calculations for those ratios in place, the next step is to understand that each lender has guidelines that outline a maximum GDS/TDS. Exceeding these guidelines will result in your mortgage application being declined, so the lower your GDS/TDS, the better. If you don’t have any outstanding debts, your GDS and TDS will be the same number. This is a good thing! The maximum ratios vary for conventional mortgage financing based on the lender and mortgage product being offered. However, if your mortgage is high ratio and mortgage default insurance is required, the maximum GDS is 39% with a maximum TDS of 44%. So how does this play out in real life? Well, let’s say you’re currently looking to purchase a property with a payment of $1700/mth (PITH), and your total annual household income is $90,000 ($7500/mth). The calculations would be $1700 divided by $7500, which equals 0.227, giving you a gross debt service ratio of 22.7%. A point of clarity here. When calculating the principal and interest portion of the payment, the Government of Canada has instituted a stress test. It requires you to qualify using the government's qualifying rate (which is higher), not the actual contract rate. This is true for both fixed and variable rate mortgages. Now let’s continue with the scenario. Let’s say that in addition to the payments required to service the property, you have a car payment of $300/mth, child support payments of $500/mth, and between your credit cards and line of credit, you’re responsible for another $700/mth. In total, you pay $1500/mth. So when you add in the $1700/mth PITH, you arrive at a total of $3200/mth for all of your financial obligations. $3200 divided by $7500 equals 0.427, giving you a total debt service ratio of 42.7%. Here’s where it gets interesting. Based on your GDS alone, you can easily afford the property. But when you factor in all your other expenses, the TDS exceeds the allowable limit of 42% (for an insured mortgage anyway). So why does this matter? Well, as it stands, you wouldn’t qualify for the mortgage, even though you are likely paying more than $1700/mth in rent. So then, to qualify, it might be as simple as shuffling some of your debt to lower payments. Or maybe you have 10% of the purchase price saved for a downpayment, changing the mortgage structure to 5% down and using the additional 5% to pay out a portion of your debt might be the difference you need to bring it all together. Here’s the thing, as your actual financial situation is most likely different than the one above, working with an independent mortgage professional is the best way to give yourself options. Don’t do this alone. Your best plan is to seek and rely on the advice provided by an experienced independent mortgage professional. While you might secure a handful of mortgages over your lifetime, we do this every day with people just like you. It’s never too early to start the conversation about mortgage qualification. Going over your application and assessing your debt service ratios in detail beforehand gives you the time needed to make the financial moves necessary to put yourself in the best financial position. So if you find yourself questioning what you can afford or if you want to discuss your GDS/TDS ratios to understand the mortgage process a little better, please get in touch. It would be a pleasure to work with you, we can get a preapproval started right away.