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Scotia Drops Conventional Qualification Rate

Scotia-Mortgage-AuthorityScotia Mortgage Authority is joining RBC as one of the only big banks with flexible qualification rates for conventional mortgages.

For those with 20%+ equity, Scotia will now qualify you (i.e.  calculate your debt ratios) using payments based on the following rates:

  • For Variable-rate mortgages:  3-year posted
  • For 1- & 2-year fixed mortgages:  Higher of 3-year posted or contract rate
  • For 3- to 10-year fixed mortgages:  Contract rate
  • For the STEP Line of credit: 3-year posted (if standalone) or the highest above rate (if multiple terms)

Previously, Scotia used the 5-year posted rate to qualify conventional mortgage applicants who chose a variable or 1- to 4-year fixed term.

This policy change creates an advantage for Scotia in that it can now approve conventional clients whose debt ratios are temporarily elevated.

Insured mortgages with less than 20% equity will still be qualified using the benchmark 5-year posted rate, as per federal guidelines.

Rob McLister, CMT