Mortgage Agent Licensing Practice Exam · Question
A borrower chooses a mortgage where their regular payment amount remains the same, but the portion allocated to principal and interest changes based on fluctuations in the prime lending rate. This describes which type of mortgage?
In a variable-rate mortgage with fixed payments, the payment amount itself does not change, but the amortization period and the principal/interest split adjust
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Question: A borrower chooses a mortgage where their regular payment amount remains the same, but the portion allocated to principal and interest changes based on fluctuations in the prime lending rate. This describes which type of mortgage?
Answer options:
- Fixed-rate mortgage
- Open mortgage ✅ Variable-rate mortgage with fixed payments
- Closed mortgage
Correct answer: Variable-rate mortgage with fixed payments
Explanation: In a variable-rate mortgage with fixed payments, the payment amount itself does not change, but the amortization period and the principal/interest split adjust with prime interest rate changes. If rates rise, less goes to principal; if rates fall, more goes to principal.
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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
- Which of the following scenarios would typically lead to a higher mortgage interest rate for a borrower?
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