BC Real Estate Trading Services Course Mortgage Finance Fundamentals 2

Question 1

Under current OSFI (Office of the Superintendent of Financial Institutions) B-20 guidelines, what is the minimum qualifying rate for an insured mortgage stress test in Canada?

Accepted Answer

The greater of the contract rate plus 2%, or the Bank of Canada 5-year benchmark rate (currently 5.25%)

Answer

The contract rate only

Answer

The posted 5-year rate of the borrower's lender plus 1%

Answer

A flat rate of 6% regardless of the contract rate

Question 2

What is the maximum amortization period available for a CMHC-insured (high-ratio) residential mortgage in Canada?

Accepted Answer

30 years

Answer

20 years

Answer

25 years

Answer

35 years

Question 3

A buyer has a gross monthly income of $8,000. Using the GDS (Gross Debt Service) ratio of 32%, what is the maximum allowable monthly housing expense?

Accepted Answer

$2,560

Answer

$1,920

Answer

$3,200

Answer

$2,000

Question 4

What does it mean when a mortgage is described as 'open'?

Accepted Answer

The borrower can repay all or part of the mortgage principal at any time without paying a prepayment penalty

Answer

The interest rate is variable and tied to the prime rate

Answer

The mortgage has no fixed term and can be renewed monthly

Answer

The mortgage is available to any qualified borrower without a credit check

Question 5

In BC, which of the following describes a 'vendor take-back mortgage' (VTB)?

Accepted Answer

A mortgage provided by the seller to the buyer as part of the purchase financing, with the property as security

Answer

A first mortgage arranged by the selling agent through a bank

Answer

A mortgage that the buyer assumes from the seller at the original interest rate

Answer

A government-backed mortgage for first-time buyers only

Question 6

For a conventional (uninsured) mortgage in BC, the minimum down payment required is:

Accepted Answer

20% of the purchase price

Answer

5% of the purchase price

Answer

15% of the purchase price

Answer

10% of the purchase price