Humber/Ontario Real Estate Course 3 Exam Practice

What factor should be included in a financing clause for a new first mortgage?

1. A conditional clause should note minimal acceptable terms

2. New mortgage clauses must be as condition subsequent

3. Clauses involve lender approval when assuming a mortgage

4. Assumed mortgages do not need lender qualifications

5. Minimum interest rates need not be specified

6. No statements about mortgage amount are required

The correct answer is: A conditional clause should note minimal acceptable terms

Including a conditional clause that notes minimal acceptable terms in a financing clause for a new first mortgage is essential because it clearly outlines the requirements that need to be met for the financing to be secured. This clause helps protect the buyer by ensuring that the terms of the mortgage are acceptable before finalizing the purchase. It establishes a benchmark for conditions such as interest rates, loan terms, and other critical aspects which may impact the buyer's ability to afford or agree to the mortgage. By defining these minimal acceptable terms, the buyer and their agent are safeguarded against unfavorable or unforeseen lending conditions that could arise during the financing process. This clarity fosters transparency and helps prevent potential disputes later in the transaction.