Ontario Mortgage Agent Practice Exam

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Study for the Ontario Mortgage Agent Exam. Prepare with flashcards and multiple choice questions, each question includes hints and explanations. Get ready for your test!

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What is not included in APR calculation?

Appraisals, inspections or surveys ordered directly by, and received by, the borrower
Charges for overdrafts
Default insurance premiums for high-ratio mortgages
Penalties for prepaying the mortgage

The correct answer is: Penalties for prepaying the mortgage

APR, or Annual Percentage Rate, is a measure of the total cost of borrowing money and is calculated by taking into account the interest rate, points, and other fees associated with the loan. Option A, appraisals, inspections, or surveys ordered by the borrower are included in the APR calculation. Option B, charges for overdrafts, are not typically associated with mortgages and therefore not included in the APR calculation. Option C, default insurance premiums for high-ratio mortgages, are also included in the APR calculation as they are a necessary cost of obtaining the loan. However, Option D, penalties for prepaying the mortgage, are not included in the APR calculation as they are a punitive penalty for paying off the loan early and not a necessary cost of borrowing money.