Ontario Real Estate Licensing Exam Practice · Question
In Ontario, what does the term 'mortgage principal' refer to?
The mortgage principal is the original sum of money borrowed from the lender to purchase a property. Interest is calculated on this principal amount, and paymen
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Question: In Ontario, what does the term 'mortgage principal' refer to?
Answer options:
- The total amount of interest paid over the life of the loan ✅ The initial amount of money borrowed from the lender
- The monthly payment amount including both interest and taxes
- The equity a homeowner has in their property
Correct answer: The initial amount of money borrowed from the lender
Explanation: The mortgage principal is the original sum of money borrowed from the lender to purchase a property. Interest is calculated on this principal amount, and payments gradually reduce both the principal and pay off the interest.
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