Mortgage Agent Licensing Practice Exam · Question
What is the primary drawback of a variable-rate mortgage?
The primary drawback of a variable-rate mortgage is the uncertainty of future payments. If the prime interest rate increases, the borrower's mortgage payments o
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Question: What is the primary drawback of a variable-rate mortgage?
Answer options:
- The interest rate never changes. ✅ Payments may increase if prime interest rates rise.
- It is always more expensive than a fixed-rate mortgage.
- It doesn't allow for lump sum payments.
Correct answer: Payments may increase if prime interest rates rise.
Explanation: The primary drawback of a variable-rate mortgage is the uncertainty of future payments. If the prime interest rate increases, the borrower's mortgage payments or the portion applied to the principal will also increase, impacting affordability.
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Question explanations
- Which of the following is NOT a primary provider of mortgage default insurance in Canada?
- When must a mortgage agent provide the borrower with certain disclosures regarding the proposed mortgage, part
- Michael and Jennifer are applying for a mortgage to purchase a home in Calgary for $700,000. Their combined gr
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