Chapter 3: Financial Planning Fundamentals Flashcards
1
Q
What is used to calculate Gross Debt Service (GDS) Ratio?
A
Housing costs to gross income - Where housing costs include: mortgage/rent payments, property taxes, heating costs, 50% of condo fees
2
Q
What is the upper limit of GDS?
A
30-35%
3
Q
What is used to calculate Total Debt Service (TDS) Ratio?
A
GDS + all other debt servicing requirements including: car payments, installment loans, support payments, garnished wages, etc.
4
Q
What is the upper limit to TDS?
A
40-45%
5
Q
What are two ways to calculate a penalty for breaking a mortgage?
A
Interest Rate Differential & 3 Months Interest
