Mortgage Agent Licensing Practice Exam · Question
Which of the following describes a 'collateral mortgage'?
A collateral mortgage is registered for an amount greater than the actual principal loan amount. This allows the borrower to access additional funds (e.g., thro
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Question: Which of the following describes a 'collateral mortgage'?
Answer options:
- A mortgage that is registered for the actual amount borrowed, plus a small buffer.
- A mortgage where the home equity is used as collateral for a separate loan. ✅ A mortgage that is registered for a higher amount than the actual debt, allowing for future borrowing without re-registering.
- A mortgage secured by both the property and another asset, like a car.
Correct answer: A mortgage that is registered for a higher amount than the actual debt, allowing for future borrowing without re-registering.
Explanation: A collateral mortgage is registered for an amount greater than the actual principal loan amount. This allows the borrower to access additional funds (e.g., through a Home Equity Line of Credit) later without needing to re-register the mortgage, saving legal fees.
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Question explanations
- Which of the following is NOT a primary provider of mortgage default insurance in Canada?
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