Ace the Ontario Mortgage Agent Exam 2025 – Unlock Your Future in Finance!

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What does the gross debt service ratio (GDSR) specifically measure?

The percentage of income used for all monthly expenses

The percentage of income dedicated to housing costs

The gross debt service ratio (GDSR) specifically measures the percentage of a borrower's income that is allocated to housing costs. This includes all costs associated with housing, such as mortgage payments, property taxes, and heating expenses. Lenders often use GDSR as a key criterion to evaluate a borrower’s ability to manage monthly housing expenses in relation to their income. A lower GDSR indicates that the borrower has a greater capacity to handle their housing costs without becoming financially overextended, which reduces the lender's risk.

Knowing the GDSR is critical for mortgage agents, as it helps determine whether a potential borrower meets lender guidelines for housing affordability. This concept is distinct from other metrics that might assess overall financial health or total debt, as it focuses specifically on housing-related expenses relative to income. Understanding this ratio plays a significant role in financial planning and securing mortgage approvals.

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The total amount of loans owned by a borrower

The ratio of investment income to salary

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