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 'variable rate mortgage' means:
Answer: The interest rate fluctuates with the lender's prime rate, though payments may stay fixed with the interest/principal split changing
In a variable rate mortgage, the interest rate tracks the lender's prime rate. The monthly payment may remain fixed, but as rates change, the split between interest and principal adjusts. Some VRMs do change the payment amount.
In BC, if a buyer assumes a seller's existing mortgage and the lender does NOT provide a novation (release of the seller), the seller:
Answer: Remains liable on the mortgage if the buyer defaults
Without novation (lender's release of the original borrower), the seller remains contingently liable on the mortgage. If the buyer defaults, the lender can pursue the seller for the outstanding debt.
In BC, the 'First Home Savings Account' (FHSA) allows eligible first-time buyers to:
Answer: Contribute up to $8,000 per year (lifetime $40,000) tax-free for a first home purchase
The federal FHSA allows eligible first-time buyers to contribute up to $8,000/year (lifetime max $40,000), deduct contributions from income, and withdraw tax-free for a qualifying first home purchase.
In BC, a 'prepayment privilege' on a closed mortgage typically allows the borrower to:
Answer: Make additional lump-sum payments (commonly 10-20% of original principal per year) without penalty
Prepayment privileges on closed mortgages allow additional lump-sum payments (typically 10-20% of the original principal annually) and/or payment increases without penalty, helping reduce the amortization.
Under BC law, the period between the date a foreclosure petition is filed and the date the court may order a sale is typically called the:
Answer: Redemption period
The redemption period (typically 6 months in BC but can be varied by the court) is the time the borrower has to pay off the debt and 'redeem' the property after a foreclosure order. After this period, the court may order a sale.
In BC, the Property Transfer Tax (PTT) first-time home buyer exemption applies to purchases up to:
Answer: $500,000 fully exempt, $835,000 partial
In BC, first-time buyers are fully exempt from PTT on purchases up to $500,000 and receive a partial exemption on the portion up to $835,000. The exemption phases out between $500K and $835K.