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 maximum amortization period for an insured mortgage (less than 20% down payment) as of 2024 is:
Answer: 30 years
As of August 2024, the federal government extended the maximum amortization period for insured mortgages (high-ratio) to 30 years for first-time buyers purchasing new construction. For most insured mortgages, the standard maximum remains 25 years, but the 30-year option was introduced for qualifying buyers.
In Canada, mortgage default insurance is required when the down payment is:
Answer: Less than 20% of the purchase price
CMHC and other approved insurers require mortgage default insurance when the buyer's down payment is less than 20% of the purchase price. This is a federally mandated requirement.
In BC, a 'first mortgage' takes priority over a 'second mortgage' because:
Answer: Priority is determined by registration date — the first registered has priority in case of default
Under BC's Land Title Act, mortgage priority is determined by the date and time of registration. The first registered mortgage has first claim on proceeds in the event of default and forced sale.
The 'mortgage stress test' in Canada requires borrowers to qualify at:
Answer: The greater of the contract rate plus 2% or the Bank of Canada's benchmark qualifying rate
Canada's federal mortgage stress test requires all borrowers (insured and uninsured) to qualify at the greater of their contract rate plus 2% or the Bank of Canada's minimum qualifying rate (currently 5.25%), whichever is higher.
In BC, a 'conventional mortgage' is one where the loan-to-value (LTV) ratio is:
Answer: 80% or less of the property value (at least 20% down payment)
A conventional mortgage has an LTV of 80% or less (20%+ down payment) and does not require mortgage default insurance. A high-ratio mortgage has LTV above 80% and requires CMHC/Sagen/Canada Guaranty insurance.
In BC, which of the following is the correct definition of 'amortization period'?
Answer: The total length of time over which the loan is scheduled to be fully repaid
The amortization period is the total time to fully repay the mortgage if all payments are made as scheduled. It is different from the term, which is the period the current interest rate and conditions apply.