Mortgage Agent Level 1 Case Study Practice With Worked Answers

Mortgageprep.ca • Independent Level 1 study resources

Longer client scenarios are useful because a real mortgage file contains more than one piece of information. The fictional exercise below combines calculations, income review and responsible conduct. Figures are simplified for learning, not lending advice or an official examination question.

The Patel file — fictional scenario

Asha and Dev Patel plan to purchase an Ontario home for $800,000. They have documented savings of $160,000 for the down payment. Their combined gross monthly income is $12,000. The illustrative qualifying monthly mortgage payment is $3,300; estimated property taxes are $500 per month, heating is $150, and other qualifying recurring debts are $700. They want a predictable payment and ask whether the agent can guarantee their application will be approved. Dev also mentions a cash bonus that is not yet documented.

Question 1: What is the proposed initial mortgage principal?

Worked answer: $800,000 − $160,000 = $640,000, before any financed costs or insurance premiums. The down payment represents 20% of the purchase price.

Question 2: What is the loan-to-value ratio?

Worked answer: $640,000 ÷ $800,000 × 100 = 80% LTV. The numerator is the proposed loan, not the down payment.

Question 3: What is the illustrative GDS ratio?

Assuming the provided qualifying housing costs are complete: $3,300 + $500 + $150 = $3,950. GDS = $3,950 ÷ $12,000 × 100 ≈ 32.9%. This is a simplified classroom computation; lenders determine qualifying costs and income treatment under their own requirements.

Question 4: What is the illustrative TDS ratio?

Add the stated other debts: $3,950 + $700 = $4,650. TDS = $4,650 ÷ $12,000 × 100 = 38.75%. The additional obligations explain why TDS is higher than GDS.

Question 5: Can the agent guarantee approval?

No. Credit assessment, employment verification, property review, lender underwriting, documentation and final conditions can all affect approval. The responsible response is to explain the process and the limits of any preliminary assessment.

Question 6: How should the undocumented bonus be handled?

Do not simply add it to verified income. Ask for appropriate documentation and assess the treatment permitted by the lender. Accurate representation of the borrower's financial position is essential.

Question 7: What further information matters?

Consider credit obligations, employment history, source of down payment, property characteristics, closing funds, the intended product and any relevant disclosures. A sound recommendation begins with a complete, accurate picture.

Question 8: What should the clients understand about a fixed rate?

A fixed interest rate may provide contractual rate predictability for the agreed term, but the term is not identical to the full amortization. Explain key conditions, prepayment provisions and renewal considerations without promising a specific future outcome.

Continue with the free 30-activity challenge or practise additional scenarios through the Level 1 course.