What are the key assessment criteria FRFIs consider under B-20?
FRFIs evaluate multiple factors to determine a borrower's creditworthiness and the property's value, with a major focus on the borrower's ability to repay the debt.
Consider a first-time home buyer who initially used a private mortgage due to a thin credit file. When they seek to switch to a FRFI, the bank assesses all criteria rigorously. Here's a brief overview:
Key Points
We'll check who you are and your history of paying debts.
We'll carefully look at your ability to keep up with your mortgage payments.
We'll assess the value of your home to make sure it's enough to cover the mortgage.
There's a limit to how long you can take to pay off your mortgage.
Technical Research Verification
Our systems synchronized 3 data points and regulatory frameworks to verify this technical brief.
Related Questions
How does the stress test differ for fixed vs. variable in 2026?
Both are stress-tested at the higher of the benchmark (5.25%) or the contract rate + 2%.
Why are 3-year fixed rates dominating the 2026 market?
Borrowers are hesitant to lock in for 5 years at current levels, but find 1-2 year rates too expensive.
Fixed vs. Variable Comparison Table
Fixed locks a 5-year rate with IRD penalty risk; variable floats with prime and typically caps break fees at 3 months interest.
What is the 'IRD' penalty risk for 5-year fixed borrowers?
The Interest Rate Differential (IRD) can cost tens of thousands if you break a fixed mortgage when market rates have dropped.