OREA Mortgage Financing 2

Question 1

A 'high-ratio mortgage' in Canada is defined as a mortgage where:

Accepted Answer

The borrower's down payment is less than 20% of the purchase price

Answer

The interest rate is above the Bank of Canada prime rate

Answer

The mortgage amount exceeds $1 million

Answer

The amortization period exceeds 25 years

Question 2

Which of the following best describes a vendor take-back (VTB) mortgage?

Accepted Answer

The seller provides financing directly to the buyer as part of the property transaction

Answer

The buyer assumes the seller's existing mortgage

Answer

A government agency provides subsidized mortgage financing to the buyer

Answer

The buyer obtains financing from a third-party chartered bank

Question 3

The Gross Debt Service (GDS) ratio measures:

Accepted Answer

Monthly housing costs as a percentage of gross monthly income

Answer

Total monthly debt obligations as a percentage of net income

Answer

The loan-to-value ratio of the mortgage

Answer

The spread between the mortgage rate and the prime rate

Question 4

What is the standard maximum GDS ratio accepted by most institutional lenders in Canada?

Accepted Answer

32%

Answer

40%

Answer

44%

Answer

28%

Question 5

In mortgage financing, a 'blended payment' refers to:

Accepted Answer

A regular payment that combines both principal repayment and interest

Answer

A payment structure combining two separate mortgage loans

Answer

A payment amount that changes with fluctuations in the prime rate

Answer

A payment applied solely toward the outstanding interest balance

Question 6

A second mortgage is best described as:

Accepted Answer

An additional mortgage registered on the same property after the first mortgage

Answer

A mortgage taken on a second property owned by the same borrower

Answer

A mortgage renewed for a second term with the same lender

Answer

A mortgage obtained from a secondary market lender

Question 7

What is the maximum loan-to-value (LTV) ratio for a conventional (uninsured) mortgage in Canada?

Accepted Answer

80%

Answer

85%

Answer

90%

Answer

95%