A buyer in Laval is seeking to purchase a single-family home. They have obtained a conventional hypothecary loan with a loan-to-value (LTV) ratio of 75%. Which of the following statements is true regarding this financing arrangement?

Question: A buyer in Laval is seeking to purchase a single-family home. They have obtained a conventional hypothecary loan with a loan-to-value (LTV) ratio of 75%. Which of the following statements is true regarding this financing arrangement?

Answer options: ✅ The loan does not require mortgage default insurance from CMHC or a private insurer.

• The loan-to-value ratio for a conventional hypothec must always be 80% or less.
• The buyer will be required to pay a one-time mortgage default insurance premium.
• The interest rate on this conventional hypothec will be higher than a high-ratio hypothec due to fewer conditions.

Correct answer: The loan does not require mortgage default insurance from CMHC or a private insurer.

Explanation: According to federal regulations, a conventional hypothecary loan, characterized by a loan-to-value ratio of 80% or less, does not require mortgage default insurance.