Mortgage Broker Licensing Practice Exam · Question
A broker is assisting Kevin with a Purchase Plus Improvements mortgage for a property in Calgary valued at $400,000. The estimated cost of improvements is $50,000. The lender states they will fund improvements up to 10% of the 'as improved' value, provided the 'as improved' value is supported by an appraisal. If the 'as improved' appraisal comes in at $450,000, what is the maximum amount the lender will add for improvements to the mortgage, assuming Kevin still needs 95% LTV?
Lenders typically cap Purchase Plus Improvements at a percentage of the 'as improved' value. In this case, 10% of the 'as improved' value ($450,000) is $45,000.
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Question: A broker is assisting Kevin with a Purchase Plus Improvements mortgage for a property in Calgary valued at $400,000. The estimated cost of improvements is $50,000. The lender states they will fund improvements up to 10% of the 'as improved' value, provided the 'as improved' value is supported by an appraisal. If the 'as improved' appraisal comes in at $450,000, what is the maximum amount the lender will add for improvements to the mortgage, assuming Kevin still needs 95% LTV?
Answer options:
- A. $40,000 ✅ B. $45,000
- C. $50,000
- D. $22,500
Correct answer: B. $45,000
Explanation: Lenders typically cap Purchase Plus Improvements at a percentage of the 'as improved' value. In this case, 10% of the 'as improved' value ($450,000) is $45,000. This is the maximum amount the lender will add for improvements, even if Kevin's renovations cost more.
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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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