Qualifying For A Bigger Mortgage

Qualifying For A Bigger Mortgage

Getting a mortgage is surrounded by all kinds of uncertainties. You’ve found the home of your dreams, but you don’t know if you can buy it. You don’t even know if you will be approved for a mortgage and if you are, how much would you get?

The difference in the allowed mortgage and the mortgage you wanted can be what you lacked to sign the purchase contract.

It’s here that we see the importance of getting the maximum amount of mortgage. You may think that the only option to qualify for a bigger mortgage is to either improve your credit history or have a bigger income, but there is another way to do it. 

You can qualify for a bigger mortgage by using a simple, but a well-known method – getting a 5-year fixed-rate mortgage. 

I will explain how it works and how you can take advantage of it below. 

Please note that this is a completely legal and fair process that many people use to maximize the amount of mortgage they can get.

Why a 5-year fixed-rate Mortgage? 

You may have wondered why the 5-year fixed-rate mortgage is the one that will allow you to qualify for a higher mortgage. 

The answer behind this is the formula lenders use to assess a 5-year fixed-rate mortgage. 

It’s completely different from the calculations used to assess a 1 to 4 year fixed rate mortgage, so the results are also completely different. 

The same goes for variable rate mortgages. The calculations are different between a 5-year fixed-rate mortgage and a variable rate mortgage, making it easier to qualify tor a 5-year fixed-rate mortgage. 

How Does It Work?

When you apply for a mortgage, lenders use something called a “qualifying rate” to determine whether or not you can afford the requested mortgage. In every type of mortgage, they use a higher qualifying rate to minimize the risk of errors, which makes it harder to qualify. 

This rate is called the Bank Of Canada Qualifying Rate and is currently 4.94%. It basically means that at a minimum, you would have to approve a mortgage with a 4.94% rate.

However, when you apply for a 5-year fixed-rate mortgage, the qualifying rate is lowered to the actual mortgage rate you would pay if you were approved for the sum you’re applying for. 

This rate is currently at 2.45% – 3%, in most banks.

This helps shed some light into why a 5-year fixed rate mortgage gives the best chances to be approved. 

There is a big difference between the total amount you would repay using a mortgage with a 4.94% rate versus the amount you would pay with a mortgage with a 3%. 

Of course, mortgage rates can always change – so make sure and check with a mortgage broker to get the latest.

Logically, it would be easier to be approved for a mortgage with a lower rate, which is why many decide to apply for a 5-year fixed-rate mortgage. 

Is There a Catch? 

Nothing is given for free, especially not in the financial world and this also includes the lower rate you would get with 5-year fixed-rate mortgages. 

Keep in mind that the process I just described is completely legitimate and works as described above, but there is a catch behind all of this. 

The catch is that there are some hidden costs that most lenders don’t really disclose early on or directly. 

These costs can significantly increase the overall mortgage costs and make the 5-year fixed-rate not as affordable as it may seem at a first glance.  

For instance, the penalty costs you would pay being late on payments with a 5-year fixed-rate mortgage are significantly higher than the penalty costs on other mortgage types.

In some cases, the penalty costs can go as high as $20,000, even higher! This means that you cannot repay your mortgage before the 5 years elapse unless you’re prepared to pay extremely high penalties. 

In addition to this, a 5-year fixed-rate mortgage can result in you paying a higher interest rate than you would with a variable mortgage or a mortgage with a shorter duration. 

The main thing here is that it all depends on how the market movement and how the Bank Of Canada Qualifying Rate will fluctuate.  Make sure and check the Dominion Lending mortgage rates to keep up to date with the latest.

If it goes up, you’ve made the right call when you opted for a 5-year fixed-rate mortgage, but if it goes down, it means that you would pay far less if you took a 1 to 4 year fixed rate mortgage or a variable rate mortgage. 

Is a 5-year fixed-rate Mortgage the Right Mortgage Product For You?

More than half of mortgage applicants choose a 5-year fixed-rate mortgage as their go-to financing option, especially if they are first time homebuyers. 

But this doesn’t necessarily mean that this type of mortgage is the right one for everyone. You should choose a 5-year fixed-rate mortgage in the following cases: 

  • You want to have a fixed interest rate that doesn’t change for the duration of the mortgage
  • You don’t have any plans to refinance or pay off your mortgage before 5 years pass
  • You want to plan your finances and have fixed monthly payments for the next 5 years

A 5-year fixed-rate mortgage does offer one of the best balances between safety and affordability, but this shouldn’t be the deciding factor for you. 

You should always consider if you fit these 3 criteria and make your decision based on your needs.


In the end, a 5-year fixed-rate mortgage is a financial loan after all, so it always carries unpredicted risks and costs you may be faced with. 

To give yourself the best chance at making the right choice, you can always consult a mortgage professional. 

An experienced mortgage professional can advise you, provide you with some numbers and calculations, and ultimately help you make the decision of which mortgage product suits your needs the best. 

We are dedicated to giving you the most helpful mortgage advice and giving you the best mortgage service, no matter what your needs are.

As mortgage agents who specialize in bigger mortgages, you can be sure that we have the solution for you that will take away all of the stress and get the best mortgage product for you.

Get started today by applying online – it’s free and takes less than 90 seconds. Apply here at: https://www.goodadviceforabetterlife.ca/application/

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