Humber/Ontario Real Estate Course 2 Exam Practice

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Prepare for the Ontario Real Estate Exam with our comprehensive Humber Course 2 Exam Practice quiz. Engage with multiple choice questions and detailed explanations, designed to help you excel.

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Buyer Lawrence has secured a high-ratio mortgage for a property valued at $232,500 with a mortgage approval of $202,500. If the insurance premium for high ratio mortgages up to 90% LTV is 2.0%, how much will be added to the mortgage amount?

$3,500
$4,000
$4,050
$4,069
$4,650
$4,700

The correct answer is: $4,069

When a buyer secures a high-ratio mortgage where the Loan to Value (LTV) ratio is above 80%, mortgage default insurance is required. In this case, the property is valued at $232,500 with a mortgage approval of $202,500. To calculate the LTV ratio: LTV = (Mortgage Amount / Property Value) x 100 LTV = ($202,500 / $232,500) x 100 LTV = 87.09% Since the LTV ratio is above 80%, mortgage default insurance is required. The insurance premium for high ratio mortgages up to 90% LTV is 2.0%. To calculate the insurance premium: Insurance Premium = Mortgage Amount x Premium Rate Insurance Premium = $202,500 x 0.02 Insurance Premium = $4,050 Therefore, $4,050 will be added to the mortgage amount, making the final amount $206,550. The correct answer is D.