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 mortgage with a 25-year amortization and a 5-year fixed rate term at closing means the borrower must:
Answer: Renew, renegotiate, or pay off the mortgage at the end of the 5-year term
At the end of the 5-year term, the remaining mortgage balance must be renewed, renegotiated with the same or a new lender, or paid off. The borrower has not finished paying — they still have ~20 years of amortization remaining.
In BC, a 'second mortgage' means the lender:
Answer: Has second priority behind the first mortgage, receiving proceeds only after the first mortgage is paid
A second mortgage ranks behind the first registered mortgage. In foreclosure, proceeds go first to the first mortgage holder. The second mortgage lender only recovers if enough value remains after the first mortgage is satisfied.
The 'net present value' concept in BC real estate mortgage calculations is relevant because:
Answer: Future mortgage payments are worth less than current payments due to the time value of money
The time value of money principle means that a dollar today is worth more than a dollar in the future. This is the basis of mortgage calculations — the present value of future payments determines the loan amount.
In BC, the 'mortgage renewal' process means:
Answer: Continuing the mortgage with the same or different terms at the end of the current term, usually without new legal fees
Mortgage renewal is the process of renewing the remaining balance at the end of a term with the same or new lender under new or same terms. It typically does not require a new appraisal or legal fees unless switching lenders.
In BC, 'bridge financing' is used when:
Answer: A buyer needs to finance both the purchase of a new property and carry their existing property before it sells and closes
Bridge financing (bridge loan) is short-term financing used when there is a gap between the completion date of a new purchase and the completion date of the sale of the buyer's existing property — funding the new purchase until the old home closes.
In BC, the 'mortgage discharge' process refers to:
Answer: Formally releasing the registered mortgage from the property's title once the loan is fully repaid
Mortgage discharge is the registration of a discharge of mortgage at the Land Title Office, formally removing the lender's registered charge from title once the loan has been fully repaid.