Final answer:
The question relates to the business concept of a mortgage, focusing on features important for a Canadian Armed Forces member who might need to relocate, such as assumption, portability, partial discharge, and mortgage default insurance.
Step-by-step explanation:
The student is inquiring about specific features of a mortgage that would allow for flexibility in the face of potential relocation by a member of the Canadian Armed Forces. These features include:
- Assumption: This allows another party to take over the mortgage under the same terms if the property is sold.
- Portability: It permits the borrower to transfer their mortgage from one property to another, which is beneficial if the borrower relocates but wants to maintain the same loan terms.
- Partial discharge: This refers to the ability to pay off a portion of the mortgage and release part of the property from the mortgage lien, which might be useful if subdividing the property.
- Mortgage default insurance: This protects the lender in case the borrower defaults on the mortgage, which is often required for high-ratio mortgages with a down payment of less than 20%.
Mortgage terms, such as the choice between 15 and 30 years, and the factors like interest rates, down payment requirements, and income verification are critical in determining the affordability and suitability of a mortgage for the borrower. Securitization can influence how rigorously banks examine loan applicants, as they may be less stringent if they plan to sell the loan, potentially leading to the approval of subprime loans.