Which income actually renews

OSFI's own exemption meant this straight switch never had to clear the formal minimum qualifying rate test at all, provided the balance and amortization didn't increase. That rule solved one problem and left another standing: the new lender still had to underwrite the switch using sound B-20 principles, and nothing about the stress-test exemption says which of two very different monthly incomes — the EI benefit actually landing in the household's account today, or the higher salary confirmed to resume — should be the number that decides the file.

Left unresolved, the file risked landing with whichever lender's default policy the broker happened to call first -- rather than the policy that actually reflected this household's real, documented circumstances.

The mortgage math itself never changed. What changed was the income line feeding total debt service, and the ten-point swing between the two readings of the same file.

The incumbent's own renewal offer at 5.35% would have cost $2,299/mo -- $129/mo more than the 4.65% switch, or roughly $7,740 over a new five-year term. That comparison held regardless of which income the file was qualified on; the income question only decided how comfortably the switch cleared, not whether it was worth shopping.

A mortgage agent licensed under Ontario's Mortgage Brokerages, Lenders and Administrators Act treated the income question as its own, separate step from shopping the rate.

First, obtained the employer's own letter. Confirmed in writing the co-borrower's guaranteed return date, unchanged position, and unchanged pay -- the specific documentation covered in qualifying on return-to-work income, not a verbal assurance from the client.

Second, called ahead before submitting. Confirmed with the target lender's underwriting desk that its policy accepts documented return-to-work income for a straight switch, rather than discovering a conservative EI-only policy after the file was already in for review.

Third, kept the file inside the straight-switch exemption's own conditions. No increase to the balance or the amortization, so the formal stress test never applied at all -- the income question was about B-20 underwriting judgment, not the OSFI exemption itself.

The switch funded at 4.65%, exempt from the formal stress test under OSFI's own switch rule, qualified on the documented return-to-work salary at 31.1% total debt service -- $129/mo cheaper than the incumbent's 5.35% renewal offer.

This is an uninsured straight switch, so CMHC's ratio maximums don't apply directly; the 38.0% and 31.1% figures are informational, showing how much the income question moved the file's own comfort margin, not a regulatory pass/fail line.

• 01A stress-test exemption doesn't answer every underwriting question. OSFI's straight-switch rule skips the formal MQR test; it says nothing about which income a lender should qualify a temporary-leave file on.
• 02An EI benefit and a return-to-work salary are both real, and both defensible. The gap between them on this file was ten points of total debt service -- worth resolving before shopping a rate, not after.
• 03Get the employer letter before the application, not after a decline. A documented return date and unchanged pay is what lets a lender look past the smaller number on today's bank statement.
• 04Each lender sets its own policy on leave income. Calling ahead to confirm it saves a file from landing with a conservative default by accident.
• 05Keeping the balance and amortization unchanged preserves the exemption. The income question and the exemption question are separate, and mixing them up risks losing both.