Ontario Mortgage Agent L1 flashcards
Ontario Mortgage Agent L1 · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- FSRA
- The Financial Services Regulatory Authority of Ontario, the regulator that licenses and supervises mortgage brokerages, brokers, agents, and administrators in Ontario.
- Principal broker
- A licensed broker designated by a brokerage to supervise its agents and ensure compliance with Ontario mortgage law and FSRA requirements.
- Mortgage agent authorization
- A licensed mortgage agent must be authorized by a sponsoring brokerage to deal or trade in mortgages; the agent cannot act independently.
- Disclosure of conflict
- Before arranging a mortgage, a brokerage must disclose in writing any relationship with a lender or other conflict of interest to the borrower.
- Amortization
- The total period over which a mortgage is scheduled to be repaid in full through regular payments, assuming the interest rate stays constant.
- Mortgage term
- The length of time the current interest rate, payment terms, and conditions of a mortgage remain in effect before renewal or payout.
- Loan-to-value ratio
- The mortgage amount divided by the property value, expressed as a percentage; used to determine insurance requirements and lender risk.
- Closed mortgage
- A mortgage with limited prepayment privileges that charges a penalty, often three months' interest or the interest rate differential, for early payout.
- Interest rate differential
- A prepayment penalty calculated as the difference between the contract rate and the current rate applied to the remaining balance and term.
- Accelerated bi-weekly payments
- A payment plan that makes 26 half-monthly payments per year, effectively adding one extra monthly payment annually and shortening amortization.
- High-ratio mortgage
- A mortgage with a loan-to-value ratio above 80 percent, which requires mortgage default insurance from an approved insurer.
- Mortgage default insurance
- Insurance protecting the lender against borrower default on high-ratio mortgages, provided by CMHC, Sagen, or Canada Guaranty.
- Monoline lender
- A lender that specializes only in residential mortgages and does not offer other banking products, often using broker distribution channels.
- Mortgage investment corporation
- A company that pools investor funds to lend on mortgages, often to borrowers who do not qualify with traditional lenders.
- Bridge financing
- Short-term financing that covers the gap between the purchase closing date and receipt of proceeds from selling the borrower's existing home.
- Home equity line of credit
- A revolving credit facility secured by a mortgage charge on the home, allowing the borrower to draw funds up to an approved limit.
- Gross debt service ratio
- Mortgage principal and interest plus property taxes, heating, and half of condo fees, divided by gross annual income, expressed as a percentage.
- Total debt service ratio
- All housing costs plus all other debt payments divided by gross annual income, expressed as a percentage; guideline maximum is 44 percent.
- Stress test
- A qualifying rule requiring borrowers to qualify at a rate higher than the contract rate, typically contract rate plus two percent or a minimum floor.
- Minimum down payment
- Five percent on the first 500,000 dollars of purchase price and ten percent on the portion above, with twenty percent required at one million dollars or more.
- RRSP Home Buyers' Plan
- A program allowing eligible first-time buyers to withdraw funds from registered retirement savings plans to use as a down payment, subject to repayment rules.
- Self-employed income verification
- Verification using notices of assessment and T1 tax returns, typically averaged over two years, instead of employment letters and pay stubs.
- Credit score
- A numerical rating of creditworthiness based on payment history, utilization, credit length, and inquiries; higher scores qualify for better rates.
- Mortgage payment formula
- Monthly payment equals the periodic rate times principal divided by one minus one plus the rate raised to the negative number of payments.
- Semi-annual compounding
- A Canadian convention where interest compounds twice yearly; the effective monthly rate is derived by converting the nominal annual rate.
- Outstanding balance formula
- The remaining principal after k payments equals principal grown at the periodic rate minus the accumulated value of payments made.
- Interest portion of payment
- The part of a mortgage payment equal to the outstanding balance multiplied by the periodic interest rate for that payment period.
- Three months' interest penalty
- A prepayment charge equal to the outstanding balance times the annual rate times three divided by twelve.
- Straw buyer fraud
- A scheme where a person with good credit is used to obtain a mortgage for someone else's benefit, often concealing the true purchaser.
- Title fraud
- A scheme in which a fraudster transfers or registers a charge on a property using forged or stolen identity documents.
- FINTRAC
- Canada's financial intelligence unit; mortgage brokerages must verify identity, keep records, and report suspicious transactions under anti-money-laundering rules.
- PIPEDA
- Federal privacy legislation requiring consent for collecting, using, and disclosing personal information and safeguarding client data.