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.

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

Which type of mortgage payment arrangement poses the greatest risk to the lender?

10-year amortized mortgage
Interest-accruing mortgage
Interest-only mortgage, with quarterly interest payments
Interest plus specified principal mortgage

The correct answer is: Interest-accruing mortgage

An interest-accruing mortgage poses the greatest risk to the lender because in this type of arrangement, the borrower does not make regular payments of interest and principal. Instead, the interest is added to the principal balance, increasing the overall amount owed over time. This means that the lender is not receiving any regular payments towards reducing the outstanding loan amount, which increases the lender's risk of not being fully repaid. In contrast, the other options provide some form of regular payment towards reducing both the interest and principal balance, thereby reducing the lender's risk.