Tips for lowering your debt servicing ratios

When applying for a mortgage in Canada, debt servicing ratios—also known as GDS (Gross Debt Service) and TDS (Total Debt Service)—play a key role in determining how much you can qualify for. If you're aiming to increase your approved mortgage amount, the key is to improve these ratios.

Two Main Strategies to Reduce Your Debt Servicing Ratios

1. Increase Income
2. Reduce Debt

While boosting your income isn’t always easy, it could come from a raise, a higher-paying job, or even adding a side hustle. If you receive a financial windfall, like a year-end bonus or income tax return, consider using it to pay down debt instead of spending it.

Paying Down Debt Is the Most Effective Strategy

Reducing your existing debt (and avoiding new debt) will have a direct and positive impact on your debt servicing ratios. Here are a few practical ideas to get started:

• Avoid new credit purchases, especially on high-interest credit cards.
• Create a budget and apply any savings directly to your debt.
• Contact your credit card provider to negotiate a lower interest rate—this helps more of your payments go toward the principal.
• Use idle savings from low-interest accounts to pay down high-interest debt.
• Consider refinancing your mortgage to access home equity and consolidate debt—talk to your mortgage broker to explore this option.

The Bottom Line: Improving your debt servicing ratios doesn't happen overnight, but with a strategy and the right support, it’s absolutely achievable.

Let’s work together to build a plan that strengthens your financial position—and gets you closer to the home you want. Book a complimentary Discovery Call to connect and discuss your next steps to move forward.