BC Real Estate Trading Services Course Financing & Mortgages

Question 1

In BC, the maximum amortization period for an insured mortgage (less than 20% down payment) as of 2024 is:

Accepted Answer

30 years

Answer

As of August 2024, the federal government extended the maximum amortization period for insured mortgages (high-ratio) to 30 years for first-time buyers purchasing new construction. For most insured mortgages, the standard maximum remains 25 years, but the 30-year option was introduced for qualifying buyers.

Question 2

In Canada, mortgage default insurance is required when the down payment is:

Accepted Answer

Less than 20% of the purchase price

Answer

CMHC and other approved insurers require mortgage default insurance when the buyer's down payment is less than 20% of the purchase price. This is a federally mandated requirement.

Question 3

In BC, a 'first mortgage' takes priority over a 'second mortgage' because:

Accepted Answer

Priority is determined by registration date — the first registered has priority in case of default

Answer

Under BC's Land Title Act, mortgage priority is determined by the date and time of registration. The first registered mortgage has first claim on proceeds in the event of default and forced sale.

Question 4

The 'mortgage stress test' in Canada requires borrowers to qualify at:

Accepted Answer

The greater of the contract rate plus 2% or the Bank of Canada's benchmark qualifying rate

Answer

Canada's federal mortgage stress test requires all borrowers (insured and uninsured) to qualify at the greater of their contract rate plus 2% or the Bank of Canada's minimum qualifying rate (currently 5.25%), whichever is higher.

Question 5

In BC, a 'conventional mortgage' is one where the loan-to-value (LTV) ratio is:

Accepted Answer

80% or less of the property value (at least 20% down payment)

Answer

A conventional mortgage has an LTV of 80% or less (20%+ down payment) and does not require mortgage default insurance. A high-ratio mortgage has LTV above 80% and requires CMHC/Sagen/Canada Guaranty insurance.

BC Real Estate Practice Test

BC Real Estate Practice Test

BC Real Estate Trading Services Course Financing & Mortgages