Financing & Mortgages Flashcards
6 cards from real BC Real Estate Trading Services Course practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Financing & Mortgages flashcards as text
In BC, a 'Home Equity Line of Credit' (HELOC) is:
Answer: A revolving credit facility secured against home equity that can be drawn and repaid flexibly
A HELOC is a revolving credit facility secured by a registered charge against the property. Borrowers can draw, repay, and redraw up to the approved limit, paying interest only on amounts drawn.
In BC, 'mortgage assumption' occurs when:
Answer: A new buyer takes over the seller's existing mortgage with lender approval
Mortgage assumption occurs when the buyer takes over the seller's existing mortgage, continuing the same terms. The lender must approve the assumption. The seller may remain liable unless the lender provides a release.
In BC, a 'collateral mortgage' is different from a conventional mortgage because:
Answer: It is registered for an amount higher than the loan advanced, using a promissory note, and is not easily transferred to another lender
A collateral mortgage registers a charge (often 100-125% of value) backed by a promissory note rather than the mortgage contract itself. It cannot be transferred to another lender — the borrower must discharge and re-register, incurring costs.
In BC, the minimum down payment for a purchase price between $500,000 and $999,999 is:
Answer: 5% of the first $500,000 plus 10% of the portion above $500,000
Canada's rules require: 5% on the first $500,000 and 10% on the portion between $500,000 and $999,999. For $1M+, 20% is required. This tiered structure means the effective minimum down payment increases with price.
In BC, which factor would MOST likely lead a lender to decline a mortgage application?
Answer: The applicant's TDS ratio is 52%, well above the maximum
A TDS ratio of 52% exceeds the maximum allowable threshold (typically 44%). Lenders decline mortgages where total debt servicing is too high relative to income, as it suggests the borrower cannot afford all obligations.
In BC, 'interest adjustment date' (IAD) on a new mortgage refers to:
Answer: The date from which interest is calculated, typically the first of the month after funds advance
The IAD is the date from which regular mortgage payments begin. If funds advance mid-month, the borrower pays interest-only from the advance date to the IAD, then regular P&I payments begin.