Mortgage Broker Licensing Practice Exam · Question
A borrower is applying for a conventional uninsured mortgage for a residential property. The contract interest rate offered by the lender is 4.50% compounded semi-annually. According to OSFI Guideline B-20, what is the minimum qualifying interest rate that must be used to calculate the borrower's Gross Debt Service (GDS) and Total Debt Service (TDS) ratios?
OSFI Guideline B-20 requires that for uninsured mortgages, the qualifying rate for GDS/TDS calculations must be the greater of the contract rate plus 2.00%, or
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Question: A borrower is applying for a conventional uninsured mortgage for a residential property. The contract interest rate offered by the lender is 4.50% compounded semi-annually. According to OSFI Guideline B-20, what is the minimum qualifying interest rate that must be used to calculate the borrower's Gross Debt Service (GDS) and Total Debt Service (TDS) ratios?
Answer options:
- 5.25% ✅ 6.50%
- 5.00%
- The contract rate of 4.50%
Correct answer: 6.50%
Explanation: OSFI Guideline B-20 requires that for uninsured mortgages, the qualifying rate for GDS/TDS calculations must be the greater of the contract rate plus 2.00%, or 5.25%. In this case, 4.50% + 2.00% = 6.50%, which is greater than 5.25%.
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Question explanations
- What is the typical time frame for a mortgage agent to provide the required disclosure statement to a client?
- Funds received from a client or investor that the brokerage holds on their behalf must be deposited into:
- Ontario mortgage agents must complete which of the following at each licence renewal?
- Which entity is responsible for licensing and regulating mortgage brokers and agents in Ontario?
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