Mortgage Agent Licensing Practice Exam · Question
A borrower applies for an uninsured mortgage with a contractual rate of 4.00%. If the Bank of Canada's five-year conventional mortgage rate is 5.25%, what minimum qualifying rate will the lender use to assess the borrower's affordability according to B-20 guidelines?
Under the B-20 guidelines, the qualifying rate for uninsured mortgages is the greater of the Bank of Canada's five-year conventional mortgage rate (5.25%) or th
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Question: A borrower applies for an uninsured mortgage with a contractual rate of 4.00%. If the Bank of Canada's five-year conventional mortgage rate is 5.25%, what minimum qualifying rate will the lender use to assess the borrower's affordability according to B-20 guidelines?
Answer options: ✅ 6.00%
- 5.25%
- 7.25%
- 4.00%
Correct answer: 6.00%
Explanation: Under the B-20 guidelines, the qualifying rate for uninsured mortgages is the greater of the Bank of Canada's five-year conventional mortgage rate (5.25%) or the contractual mortgage rate plus 2% (4.00% + 2% = 6.00%). Therefore, the borrower must qualify at 6.00%.
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