Mortgage Agent Licensing Practice Exam · Question
When is mortgage default insurance typically required for a residential mortgage in Canada?
Mortgage default insurance is typically required for 'high-ratio' mortgages where the borrower's down payment is less than 20% of the property's purchase price.
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Question: When is mortgage default insurance typically required for a residential mortgage in Canada?
Answer options:
- When the borrower's credit score is below 680.
- When the purchase price of the property exceeds $500,000. ✅ When the borrower's down payment is less than 20% of the property's purchase price.
- When the mortgage term is fixed for more than 5 years.
Correct answer: When the borrower's down payment is less than 20% of the property's purchase price.
Explanation: Mortgage default insurance is typically required for 'high-ratio' mortgages where the borrower's down payment is less than 20% of the property's purchase price. This means the loan-to-value ratio is greater than 80%, increasing the lender's risk.
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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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