Ontario Real Estate Licensing Exam Practice · Question
Which of the following mortgage types typically has a fluctuating interest rate that may change over the life of the loan, often tied to a benchmark rate like the Bank of Canada's prime rate?
A variable-rate mortgage is characterized by an interest rate that changes periodically based on a benchmark rate, meaning the borrower's payment amount or the
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Question: Which of the following mortgage types typically has a fluctuating interest rate that may change over the life of the loan, often tied to a benchmark rate like the Bank of Canada's prime rate?
Answer options: ✅ Variable-rate mortgage
- Fixed-rate mortgage
- Open mortgage
- Convertible mortgage
Correct answer: Variable-rate mortgage
Explanation: A variable-rate mortgage is characterized by an interest rate that changes periodically based on a benchmark rate, meaning the borrower's payment amount or the portion applied to the principal can fluctuate. In contrast, a fixed-rate mortgage has an interest rate that remains constant for the entire term.
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