3.8 Mortgage Terminology

Why do people use mortgages?

• To pay off credit card debt.
• To invest in the stock market.
• To finance the purchase of a home or property.
• To fund a vacation.
• To pay for a property in full.

Select all correct answers.

Mortgages are a type of:

• Simple interest

• Annuity

• Compound interest

• Lumpsum payment

• House furniture

The principal of a mortgage represents:

• The monthly payment on the mortgage.
• The interest rate on the mortgage.
• The original amount of money borrowed.
• The length of time to repay the mortgage.

A mortgage broker is:

• A middleman between borrowers and lenders who helps borrowers find the right mortgage loan.
• A financial institution that lends money to borrowers to purchase real estate.
• A government agency that provides mortgage loans to low-income individuals.
• A person who buys and sells mortgages for a profit.

In the context of a mortgage, collateral is:

• A legal document outlining the terms of the loan
• A monthly payment made towards the loan
• Property or asset used as security for the loan
• A type of insurance policy

Select all correct answers.

In the context of a mortgage, accelerated payments can be good because:

• They increase the total amount of interest paid over the life of the mortgage.
• They make it harder for borrowers to qualify for a mortgage.
• They make it easier for lenders to collect the amount owed.

• They allow borrowers to pay off their mortgage faster and save on interest costs.

Do renters have to pay land-transfer tax?

• Yes

• No

What is the purpose of the Canada Mortgage and Housing Corporation (CMHC) fee?

• To provide mortgage loan insurance and support affordable housing
• To offer low-interest mortgage loans
• To regulate the housing market in Canada
• To provide financial assistance for home renovations