Buyer's Funding of the Purchase (Stage 2E)

Question 1

Under the General Prohibition of the FSMA 2000, what kind of advice can a solicitor give a client regarding mortgages?

Answer 1

Generic advice

(i.e. they can advise on types, but can’t help C choose one offer over the other)

Question 2

What are 4 broad types of mortgages?

Answer 2

1. Repayment mortgage
2. Interest only mortgage
3. Endowment and pension mortgage
4. Sharia compliant mortgage

Question 3

What is a repayment mortgage?

Answer 3

One that requires the borrower to pay interest and repay some capital each month

Question 4

What is an interest only mortgage?

Answer 4

Requires the borrower to pay interest for the term of the loan and repay the capital sum at the end of the term

Question 5

What is an endowment/pension mortgage?

Answer 5

Where the borrower pays monthly premiums for the life insurance policy (endowment) or a personal pension policy (pension) in that the hopes that it will have sufficient funds to pay off the loan when the term ends

Question 6

What is a Sharia compliant mortgage?

Answer 6

An alternative to other types of mortgages to address concerns surrounding payment of interest

Question 7

What is the name of the guidelines that most lenders will follow in relation to mortgages?

Answer 7

UK Finance Mortgage Lender’s Handbook

Question 8

What kind of provisions to the UKML Handbook contain?

Answer 8

Anti-fraud provisions

Question 9

How must a legal mortgage be created?

Answer 9

By deed

Question 10

Prior to issuing a mortgage offer, what will the lender obtain to confirm that a property represents good security for the loan, and requires the buyer to provide evidence that they can afford the mortgage?

Answer 10

Mortgage valuation report

Question 11

What must B’s solicitor submit to the lender before the lender will release mortgage funds?

Answer 11

Certificate of Title (CoT)

Question 12

What 2 things does the CoT show/do?

Answer 12

1. Title is good and marketable
2. Requests release of mortgage advance

Question 13

A mortgage cannot be completed and ________ against third parties who might have an interest in the mortgaged property until the purchase has been ________ and the mortgage has been __________ with HMLR

Answer 13

perfected, completed, registered

Question 14

What can a search with priority prior to completion prevent?

Answer 14

Any new charges from being registered that would impact Buyer or Lender’s rights

Question 15

How many days is the priority period for an OS1 or OS2 search which provides the window to complete registration of a mortgage?

Answer 15

30 working days

Question 16

How long does B’s solicitor have to complete registration of the mortgage, if it would trigger first registration of the land?

Answer 16

2 months

Question 17

How many days within completion does the registration of a mortgage at Companies House have to take place (if the buyer is a company)?

Answer 17

21 days