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, the 'Gross Debt Service' (GDS) ratio measures:
Answer: Monthly housing costs (mortgage P&I, property taxes, heating) as a percentage of gross monthly income
GDS ratio = (Mortgage P&I + Property Taxes + Heating + 50% strata fees) ÷ Gross Monthly Income. Canadian lenders typically require GDS to be 39% or less.
In BC, the maximum Total Debt Service (TDS) ratio typically allowed by major lenders is:
Answer: 44%
Canadian lenders typically require the TDS ratio (all monthly debt obligations including housing costs) to be 44% or less of gross monthly income for insured mortgages.
In BC, an 'open mortgage' differs from a 'closed mortgage' in that:
Answer: Open mortgages can be prepaid in full at any time without penalty
An open mortgage can be prepaid partially or in full at any time without prepayment penalty. Closed mortgages restrict prepayment but typically offer lower interest rates in exchange.
In BC, a 'vendor take-back mortgage' (VTB) is one where:
Answer: The seller provides financing to the buyer as part of the purchase transaction
A vendor take-back mortgage is seller financing: the seller 'takes back' a mortgage from the buyer instead of receiving the full purchase price in cash. The buyer makes payments to the seller.
In BC, 'mortgage portability' allows a borrower to:
Answer: Transfer an existing mortgage to a new property, keeping the current rate and terms
Mortgage portability allows a borrower to transfer their existing mortgage (rate, terms, balance) from one property to a new property when they move, avoiding prepayment penalties.
In BC, the 'Land Title Act' requires that a mortgage be registered to:
Answer: Have priority and be enforceable against third parties and subsequent registered interests
While a mortgage may be contractually valid between parties without registration, registration under the Land Title Act is required for the mortgage to have priority against subsequent registered interests and be enforceable against third parties.