Mohammed and his wife have applied for a $300,000 mortgage to be amortized over 25 years at a fixed rate of 3.5% and a fixed term of 5 years. Payments will be monthly. The Bank of Canada benchmark 5-year fixed insured mortgage rate is 5.25%. The couple expect monthly heating and property taxes will amount to $600. Their gross combined monthly income is $12,000. What is their Gross Debt Service (GDS) ratio?

1. 20.26%

2. 19.90%

3. 18.67%

4. 17.48%