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Here’s How to Calculate Your Debt-to-Income (DTI) Ratio

Evaluating your finances is crucial to your financial success and stability. It is important to keep track of your spending, savings, income, and debts, so you can plan a reasonable budget and make wise financial decisions. An overview of your finances also helps you identify problems before they become too big and recognize opportunities.

One of the most reliable tols to evaluate your financial health is your Debt-to-Income (DTI) ratio. Your DTI ratio measures your total monthly debt payments concerning your monthly gross income.

What Does Your DTI Ratio Mean?

Knowing your DTI ratio can help you make better decisions regarding taking on additional debt and understanding your overall financial situation. 

A high DTI ratio can make it challenging to qualify for loans or credit cards, while a low DTI ratio can make it easier to obtain financial assistance.

A high DTI ratio indicates that most of your income is dedicated to paying off debt, so lenders consider you a higher risk. A high DTI ratio suggests that your debt payments could quickly overtake your income, leaving you unable to pay back the loan or credit card. 

The higher the DTI ratio, the more difficult it is to qualify for loans and credit cards.

Meanwhile, having a low DTI ratio means you have effectively managed your finances and will have no problem paying back loans or credit cards. Lenders look at a low DTI ratio to indicate that you have been paying your debts properly and will be a reliable borrower.

How to Calculate Your DTI Ratio?

Calculating your DTI ratio is relatively easy and can be done in three simple steps:

  1. You’ll need to calculate your total monthly debt payments. Include recurring expenses such as car loans, student loans, credit cards, and other debts.
  1. Add up your total monthly gross income. Take note of all income before taxes, including wages, bonuses, investments, and other sources of income.
  1. Divide your total monthly debt payments by your total monthly gross income.

The resulting number is your DTI ratio.

For example, if your total monthly debt payments are $2,000 and your total monthly gross income is $4,000, your DTI ratio is 50%. A DTI of 50% means that half of your monthly gross income pays off debts.

It’s important to note that lenders may use a slightly different calculation for your DTI ratio. Most lenders will include other expenses such as housing, alimony, and child support in the analysis. 

Additionally, lenders may use an average of your income from the past two years instead of your current income when calculating your DTI ratio.

How to Improve Your DTI Ratio?

The best way to improve your DTI ratio is to pay down your debt consistently and on time. Even making small payments of 10-15% of your total debt every month can positively impact your DTI. 

Focus on reducing your expenses as much as possible. Cut out unnecessary luxuries, save on groceries, and consider consolidating your debt. Consistently doing these things can help you make major improvements to your DTI ratio.


Calculating your Debt-to-Income Ratio (DTI) is essential for understanding your debt relative to your income. Knowing your financial standing can help you make better decisions about taking on more debt and provide a measure of your economic situation.

Are you a first-time home buyer in Ottawa, and need reliable assistance? Get in touch with Ottawa Mortgage Services today! You can trust us with your refinancing and debt consolidation needs. 


Options You Can Take to Consolidate Your Debt in Canada

When you are paying off a lot of debts, it can quickly get overwhelming. When you consolidate your debt, you can make things more manageable by getting rid of multiple debts and having just one loan to think about instead. This can be very helpful when you need fewer things to keep track of and want to streamline the recurring date of your repayments.

So, let’s talk about the various options you have for debt consolidation in Canada.

Mortgage Refinancing

One option is to refinance your home. A mortgage refinance is basically like paying off your debt but with cheaper interest rates and extending the overall loan duration.

The process can be a little tricky as you will be required to pay a fee every month and pay for a new appraisal for your home to make sure that the value is still high. Plus, you will only be able to get money against the equity that your home has.

Of course, you can find the lowest refinance rates in Ottawa so that you don’t need to pay out too much in fees.

Debt Consolidation Loans

If you are looking for a longer-term way to pay off your debt, you can apply for a consolidation loan to pay off your debt. The main draw for this option is being able to pay off your loan in much smaller payments over a longer duration of time.

The best debt consolidation loans have reasonable interest rates and allow you to pay your debts off more quickly. This is because you don’t have multiple lenders and interest rates to think about and can simply pay off one larger sum.


You can ask your bank to provide an overdraft or line of credit. This entails getting a bank loan for a set period that gives you a limit of spending. Whatever you spend, you pay back with interest.

It’s helpful if you need a quick source of cash flow and have to pay off various loans. However, it can be a high-cost option with interest rates, and it’s not as easy to find a lender that will give a fully secure line these days.

Debt Settlement

Debt settlement is a viable option but is not always a possible choice. Should you succeed with a settlement, you should be able to negotiate a payment plan with your lenders and reduce the total amount you owe.

You give a certain amount as repayment and then have the rest of the balance waived or reduced. This is mostly dependent on whether or not your lenders agree and if you have some money to pay them back partially.


Filing for bankruptcy is generally a last resort, but it can be an option if there are no other means to consolidate your debt. When you file for bankruptcy, you will no longer be legally required to pay off your existing debts. It’s basically a clean slate.

Final Thoughts

While there are other options out there like credit cards and management programs, they may not be as helpful to your situation if you are already swamped. Plus, using credit cards and the like can end up doing more harm than good when you miss payments. In the end, it’s up to you to recognize which method will work best for your situation.

Looking for private lenders in Ottawa? Look no further than Ottawa Mortgage Services. We specialize in debt consolidation, pre-approvals, and refinancing. Get in touch with us today!

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5 Tips to Ensure Debt Consolidation Success

Whenever it seems like your personal finances are in the red, and you’ve accumulated a mountain of debt, one alternative you can turn to is consolidating your debt. By using debt consolidation to gain greater control of your debt, you can save yourself from complete bankruptcy. However, to pull this off properly, you need to know a few things to help you make better financial decisions. Here are some best practices on debt consolidation that you should consider following.

1. Understand the Impact of Debt Consolidation

Debt consolidation is an option where you combine your debt into a single payment. By doing this, your overall interest rate will be reduced, thereby reducing your overall costs. However, it is worth noting that you may also be vulnerable to interest rate hikes because you are now totally exposed to the whims of a single lender. If your lender increases your interest rate, then you will have no other option but to pay more every month.

2. Run the Numbers

When debt consolidation is in question, one of the first things you’d want to do is to run the numbers. Doing this will allow you to come up with a debt consolidation plan that can save you money. By running this simple calculation, you can make sure that you get the most out of debt consolidation. You can then use this to match the loan amount that you want. This will ensure that you get the most out of your debt consolidation and that your debt payments will be reduced.

3. Choose the Right Lender

There are a lot of debt consolidation options out there, and all of them will have different interest rates and terms. So choosing the right lender will be important. You should be able to check all the details of your loan package and make comparisons before settling for one. Most importantly, you should ensure that your lender is a reputable one. If possible, you should also check if your loan has any restrictions concerning debt settlement.

4. Know the Best Time to Consolidate Debt

One of the most important things you need to know when it comes to debt consolidation is when would be the best time to do it. This will ensure that you can have better control over your debt and that you can easily get out of a bad financial situation.

The best time to consolidate debt is when you need to buy a home, and you want to lower your mortgage. This will allow you to make your monthly payments more manageable and settle your debts at a lower interest rate. You will want to do this as soon as you get your mortgage approval letter, so you can have time to do this before the closing date.

5. Avoid the Trap

While debt consolidation can help you save money and improve your financial standing, it can also lead to something called debt entrapment. With debt entrapment, your situation will only worsen over time, and you will end up in a worse financial situation. This is because once you get into debt entrapment, you will have a harder time getting out of it.

Debt entrapment can happen when you constantly borrow money to pay off your debts. When you are in debt entrapment, you will only get deeper in debt, and you’ll struggle more while securing your financial situation and getting the life you want. So if you want to avoid this trap, then you should use debt consolidation sparingly, and you should only use it when you want to get out of a financial situation. If you use it appropriately, then you will find debt consolidation to be a useful tool in your financial arsenal.


Debt consolidation is an excellent way to improve your financial situation, provided that you know how to do it. By following the steps above, you can gain better control of your debt and achieve financial freedom.

If you’re looking for the best debt consolidation loans with reasonable payment and interest terms, Ottawa Mortgage Services is the one to trust. We help you deal with lenders and negotiate all aspects of mortgage underwriting. Work with Ottawa Mortgage Services today and get a free consultation and assessment!

people discussing debt

The Beginner’s Guide to Debt Consolidation—How It Works

It’s a universally-accepted fact that money plays a crucial role in our daily lives. Most people work to receive their pay in hopes of fulfilling their wants while accommodating their basic needs. However, there comes a point in some people’s lives where their salary can’t cover their expenses, resulting in accumulated debt.

Debt is an economic transaction people use to borrow money by promising to repay it with interest or capital when the loan ends. It is often the result of unpaid credit card statements, mortgages, and personal loans. Moreover, debt is a financial obligation that can lead to consequences, such as bankruptcy, when you don’t pay it back.

Having numerous debts to keep track of may be too overwhelming. You may find yourself in an impossible situation where you are unable to make the payments. Here is when you might want to consider debt consolidation.

What Is Debt Consolidation?

Debt consolidation is a process that allows people to combine multiple debts into one loan. It has an interest rate lower than its current rate of finance charges on all of the individual loans.

Debt consolidation can benefit people drowning in debt with high-interest rates, high monthly payments, and low credit scores. 

According to the Government of Canada’s Office of Consumer Affairs (OCA), the loan a person acquires for debt consolidation often comes from a local bank. However, professional mortgage services can also help you find private lenders to help with debt consolidation. 

What Are the Advantages of Consolidating Your Debt?

There are many benefits to pursuing debt consolidation, some of which you can see below:

Simplified Debt

You’ll have a better time managing your finances if you apply for debt consolidation.

After all, debt consolidation essentially takes your different debts and merges them into one loan to make repayment easier. Instead of having to keep tabs on several monthly payments, you’ll only need to worry about one. 

Lower Interest Rate

Most people consolidate their debt to acquire a loan with a lower interest than what they currently have. If you don’t know where to start, applying for mortgage services should be the first thing on your list of things to do.

A mortgage professional will take the time to study your finances, help you deal with lenders, and provide necessary insight while negotiating the terms of your debt consolidation. 

There are other benefits to debt consolidation, notably the protection of your credit rating. However, the one thing about debt consolidation that stands out the most is the lower interest rate that you’ll need to pay, saving you money in the long run. 

What Are the Disadvantages of Consolidating Your Debt?

Given all that has been discussed so far, it’s easy to see that debt consolidation benefits those indebted to several creditors. However, consolidating your debt presents several drawbacks as well.

For one, debt consolidation loans have strict requirements, regardless of whether you’re going to a local bank or a private lender. The conditions may vary, but generally, you’ll need to have an income that can cover the monthly payments and decent credit history to back you.

Another thing you need to consider is a co-signer. Your debt consolidation loan may require another person to co-sign your debt, and if you fail to make your payments, they’ll be left to pick it up. 

Lastly, you could risk losing personal assets should you fail to pay your debt consolidation loan in time. This is because some lenders may have you put up your home as collateral. 

Final Thoughts

Debt consolidation works to compile your debts into one monthly payment with lower interest rates. Like most things related to finance, debt consolidation has its advantages and disadvantages, and it’s up to you to weigh in on these. Mortgage services from professionals may give you the necessary insight to make your final decision. 

Are you wondering why you can’t acquire the best debt consolidation loans? You may require the assistance of Ottawa mortgage services to improve your financial literacy and help you make better, more informed choices about loans and mortgages. 

Ottawa Mortgage Services is a firm that seeks to provide aid to first-time homebuyers, self-employed individuals, and commercial clients. We also help those looking to get debt consolidation. Consult with us, and we’ll do our utmost best to help you with your loans! 

Debt concept. Wooden blocks with text and coins on wooden table.

Exploring Debt Consolidation and How it Works for Canadians

Consider debt consolidation to be the monetary equivalent of getting your life in order. Debt consolidation is a popular financial approach for one fact among many: it helps decrease your interest rate and makes your monthly payments more manageable. So what is debt consolidation? And how can Canadians choose the best consolidation options for their financial situation? Read on!

What is Debt Consolidation?

Debt consolidation is a financial process as opposed to a single financial product. This method enables you to combine numerous invoices into a single monthly payment. The objective is to simplify repayment and decrease or eliminate interest costs on your loan.

In most situations, this is accomplished by obtaining fresh funds to pay off current obligations. A debt consolidation loan, for example, is an unsecured personal loan. You use the loan to pay off your credit cards and other high-interest obligations.

Debt Consolidation Options for Canadians

To begin, determine what you need to borrow – establish a list of all the debts you wish to settle in one go. Add up your financial responsibilities, paying specific attention to anything with a high-interest rate, such as credit card debt and past-due payments.

With that information in hand, you may start looking into personal or debt consolidation loans that might be a good fit for you. Here are a few ideas to get you started:

1. Home Equity Loan

This is sometimes referred to as a “second mortgage,” and it entails leveraging the equity in your house to get a loan, with your home serving as security. The home’s valuation decides the loan amount.

2. Debt Consolidation Loan

If you qualify, you can get one of these from a bank or a finance business so you can settle your outstanding debts and unsecured loans. Most people who have numerous credit cards with large outstanding balances turn to debt consolidation loans to manage their monthly payments and minimize interest.

3. Credit Card Balance Transfer 

Credit cards sometimes offer low-interest rate balance transfers. While this might be incredibly appealing, it can also be a bit of a trap. If you do not pay off your balance before the end of the promotional period, you will be charged regular credit card interest rates of around 20%. You will have quadrupled your debt if you take seven years to pay it off.

4. Credit Line

Borrowing from your bank is required to obtain a line of credit. Credit lines might be secured by your house or unsecured if you have strong credit plus a high salary.

5. Low-Interest Rate Credit Cards 

If a bank or credit union refuses to lend you money and you have a good credit rating, you may be able to consolidate your bills using a low-interest credit card. The drawback of doing so is that you must discipline yourself to pay a specified amount each month that is considerably more than the minimum payment to ensure that the debt is paid off in a reasonable length of time.

What’s Next?

Once you’ve gotten out of debt, make plans to stay that way. Maintain a balanced budget, save for unforeseen costs, and prepare for large and small life events ranging from vacations to retirement.

Take charge of your financial journey by engaging the services of a professional mortgage agent in Ottawa. At Ottawa Mortgage Services, we can handle your mortgage applications, as well as advise you on the best options for your unique needs. We also specialize in pre-approvals, refinancing, and so on. Contact us today so we can plan what lies ahead!