Michael is selling his condo in Canmore for $380,000. He has an existing mortgage with a principal balance of $250,000, an interest rate of 3.5%, and a remaining term of 3 years. A potential buyer, Jessica, is interested in assuming Michael's mortgage. If Jessica assumes the mortgage, what key benefit might she gain compared to obtaining a new mortgage, assuming current rates are higher?

Question: Michael is selling his condo in Canmore for $380,000. He has an existing mortgage with a principal balance of $250,000, an interest rate of 3.5%, and a remaining term of 3 years. A potential buyer, Jessica, is interested in assuming Michael's mortgage. If Jessica assumes the mortgage, what key benefit might she gain compared to obtaining a new mortgage, assuming current rates are higher?

Answer options:

• She will lose the ability to refinance the mortgage for 3 years.
• She will not be required to pay a down payment. ✅ She can potentially secure a lower interest rate than current market rates.
• She will avoid paying any legal fees associated with the purchase.

Correct answer: She can potentially secure a lower interest rate than current market rates.

Explanation: Mortgage assumption allows a buyer to take over an existing mortgage with its original terms, including the interest rate. If current market rates are higher, assuming a mortgage with a lower rate can lead to significant savings for the buyer.