Page 1 of 74
FP1 FULL PRACTICE EXAM | {LATEST 2026/
2027 UPDATE} COMPLETE ACTUAL AND
AUTHENTIC EXAM | BRAND NEW!
What will result from choosing accelerated mortgage payments?
A. Lower payments.
B. Unchanged cash flow.
C. Shorter amortization.
D. Repayment penalties.
C. Shorter amortization.
General Feedback:
An accelerated payment schedule can have the same effect as
making one extra monthly payment each year. As is shown in the
table displayed in the example for Janet Benjamin, as the
mortgage payments increase, the amortization period decreases.
Module 2 Section 2 page #27.
,Page 2 of 74
Choose the type of credit that is usually the most expensive.
A. Unsecured personal line of credit.
B. Secured personal line of credit.
C. Home-equity line of credit.
D. Overdraft protection.
D. Overdraft protection.
The interest rate associated with overdraft protection can be as
high as 21% plus there is an overdraft fee. The typical interest
rate for a secured line of credit is always the lowest since the
home is pledged as collateral for the debt. Module 2 Section 2.
Choose the item that is included in the calculation of the Gross
Debt Service Ratio (GDSR).
A. Personal loan payments.
B. Property taxes
,Page 3 of 74
C. Insurance premiums.
D. Overdraft charges.
B. Property taxes.
The GDSR is the calculation of all housing costs, whether rent or
mortgage as a percentage of annual gross income. Mortgage
costs include principal and interest payments, property taxes,
heating and condominium fees (if any). Reference: Module 2
Section 2.
Select the correct statement about statutory rights for
conventional mortgage prepayments.
A. The Canada Interest Act permits borrowers to make
prepayments of a mortgage without penalties as of the three-
year payment date anniversary.
B. The National Housing Act allows restricted prepayments of
mortgages without penalties at the 12th and 24th payment-date
anniversaries.
C. The Bank Act permits any prepayments of mortgages after a
period of three years with a maximum penalty of three months'
interest.
, Page 4 of 74
D. The Canada Interest Act allows prepayments of mortgages
after the 5th anniversary with a maximum interest prepayment
penalty of 3 months.
D. The Canada Interest Act allows prepayments of mortgages
after the 5th anniversary with a maximum interest prepayment
penalty of 3 months
General Feedback:
The Canada Interest Act permits prepayment of a conventional
mortgage (where the borrower is an individual) after the fifth
anniversary of the mortgage, with a statutory maximum
prepayment penalty equivalent to three months' interest. The
fifth-anniversary rule does not apply to mortgages with
corporate borrowers where the terms of prepayment are wholly
determined by the contract between the two parties. Reference:
Module 2 Section 2.
Choose the mortgage payment strategy that would likely result in
the greatest interest savings for a client.
A. Changing from monthly to bi-weekly mortgage payments.
B. Changing from monthly to weekly mortgage payments.
FP1 FULL PRACTICE EXAM | {LATEST 2026/
2027 UPDATE} COMPLETE ACTUAL AND
AUTHENTIC EXAM | BRAND NEW!
What will result from choosing accelerated mortgage payments?
A. Lower payments.
B. Unchanged cash flow.
C. Shorter amortization.
D. Repayment penalties.
C. Shorter amortization.
General Feedback:
An accelerated payment schedule can have the same effect as
making one extra monthly payment each year. As is shown in the
table displayed in the example for Janet Benjamin, as the
mortgage payments increase, the amortization period decreases.
Module 2 Section 2 page #27.
,Page 2 of 74
Choose the type of credit that is usually the most expensive.
A. Unsecured personal line of credit.
B. Secured personal line of credit.
C. Home-equity line of credit.
D. Overdraft protection.
D. Overdraft protection.
The interest rate associated with overdraft protection can be as
high as 21% plus there is an overdraft fee. The typical interest
rate for a secured line of credit is always the lowest since the
home is pledged as collateral for the debt. Module 2 Section 2.
Choose the item that is included in the calculation of the Gross
Debt Service Ratio (GDSR).
A. Personal loan payments.
B. Property taxes
,Page 3 of 74
C. Insurance premiums.
D. Overdraft charges.
B. Property taxes.
The GDSR is the calculation of all housing costs, whether rent or
mortgage as a percentage of annual gross income. Mortgage
costs include principal and interest payments, property taxes,
heating and condominium fees (if any). Reference: Module 2
Section 2.
Select the correct statement about statutory rights for
conventional mortgage prepayments.
A. The Canada Interest Act permits borrowers to make
prepayments of a mortgage without penalties as of the three-
year payment date anniversary.
B. The National Housing Act allows restricted prepayments of
mortgages without penalties at the 12th and 24th payment-date
anniversaries.
C. The Bank Act permits any prepayments of mortgages after a
period of three years with a maximum penalty of three months'
interest.
, Page 4 of 74
D. The Canada Interest Act allows prepayments of mortgages
after the 5th anniversary with a maximum interest prepayment
penalty of 3 months.
D. The Canada Interest Act allows prepayments of mortgages
after the 5th anniversary with a maximum interest prepayment
penalty of 3 months
General Feedback:
The Canada Interest Act permits prepayment of a conventional
mortgage (where the borrower is an individual) after the fifth
anniversary of the mortgage, with a statutory maximum
prepayment penalty equivalent to three months' interest. The
fifth-anniversary rule does not apply to mortgages with
corporate borrowers where the terms of prepayment are wholly
determined by the contract between the two parties. Reference:
Module 2 Section 2.
Choose the mortgage payment strategy that would likely result in
the greatest interest savings for a client.
A. Changing from monthly to bi-weekly mortgage payments.
B. Changing from monthly to weekly mortgage payments.
