Ontario Mortgage Agent Practice Exam

How should the cost of borrowing be disclosed for fixed and variable rate mortgages?

1. Only as an estimated amount

2. As an annual percentage rate only

3. In dollars and cents over the course of the term

4. Through a third-party appraisal

The correct answer is: In dollars and cents over the course of the term

When borrowing for a home loan, it is important to not only know the interest rate, but also the total cost of borrowing. This includes any additional fees or charges associated with the loan. Option A, providing only an estimated amount, may not accurately represent the true cost of borrowing. Option B, only disclosing the annual percentage rate, does not give a clear understanding of the total amount to be repaid. Option D, using a third-party appraisal, is not relevant to the cost of borrowing. Therefore, option C, disclosing the cost in dollars and cents over the course of the term, is the most accurate way to inform borrowers of the total cost of their mortgage.