Mr. Chen, a high-net-worth individual, is applying for a $2,000,000 mortgage on an investment property in Calgary. His total net worth is $15,000,000, primarily held in illiquid assets like real estate and private company shares. He also has $250,000 in a savings account and $100,000 in publicly traded stocks. For underwriting suitability, what aspect of his net worth is most critical to the lender?

Question: Mr. Chen, a high-net-worth individual, is applying for a $2,000,000 mortgage on an investment property in Calgary. His total net worth is $15,000,000, primarily held in illiquid assets like real estate and private company shares. He also has $250,000 in a savings account and $100,000 in publicly traded stocks. For underwriting suitability, what aspect of his net worth is most critical to the lender?

Answer options:

• His total net worth of $15,000,000 as it shows overall wealth.
• The $100,000 in publicly traded stocks, as they are easily transferable. ✅ His liquid net worth of $350,000, indicating his ability to cover unexpected costs.
• The value of his illiquid assets, as they can be pledged against the mortgage.

Correct answer: His liquid net worth of $350,000, indicating his ability to cover unexpected costs.

Explanation: While total net worth shows overall wealth, lenders prioritize liquid net worth ($250,000 savings + $100,000 stocks = $350,000) as it demonstrates a client's immediate financial capacity to manage unexpected expenses or payment shortfalls without needing to sell long-term assets.