Cemap 2 Flashcards

Question

What is commonhold?

Answer 1

People individually have their own unit in a shared building, like an apartment complex. Each owner manages the common and external parts of the property together. - No head landlord/freeholder

Answer 2

Leaseholders have the right to buy the freehold of their property and extend the lease up to 90 years.

Answer 3

When an existing tenant lets all or part of their home to someone else who is known as the subtenant

Answer 4

Houses built on top of eachother. Were initially built to house the masses (those that flocked to cities)

Answer 5

Title deeds are a series of documents which prove the ownership of a property and the history of its ownership

Answer 6

States what an owner must do (E.G maintain a certain boundary, usually shown in the 'title deeds')

Answer 7

States what an owner must NOT do (E.G Run a business from the premises)

Answer 8

The right to use another persons land for a specific purpose.

Answer 9

A key section of the Land Registry title deeds, which lists the names and addresses of the current owners of the property.

Answer 10

Title to the freehold is unknown, although everything else is in order.

Answer 11

if the deeds are lost - can be converted to absolute title after 12 years.

Answer 12

Some conditions/restrictions are attached to the title

Answer 13

The process by which the state guarantees the validity of a title in a registry.

Answer 14

Conveyancing is the legal process of transferring the ownership of property or land from one person or entity to another

Answer 15

An individual/group who occupy and use land without legal ownership from the rightful owner.

Answer 16

Penalties can be enforced.

Answer 17

Matrimonial interests refer to the legal and financial rights and obligations that arise from marital relationship between spouses

Answer 18

Equitable interests relate to the 'fair and just' covenant of those that don't have LEGAL ownership but have a direct interest in property. (E.G Husband & Wife purchasing a house TOGETHER, Husband is the LEGAL owner however wife has an EQUITABLE INTEREST because she contributed to the purchase + maintenance etc.)

Answer 19

Through mutual agreement or court.

Answer 20

1. Financial support after a divorce (married couples have the obligation to support each other financially during marriage and these obligations may continue after separation) 2. Child Custody 3. Inheritance Rights (the right of a surviving spouse to inherit a portion of the deceased spouse's estate)

Answer 21

A legal document signed by a spouse to grant permission to another spouse to mortgage jointly-owned property.

Answer 22

This is a legal obligation that places the responsibility on certain property owners to contribute to the repair costs of the chancel.

Answer 23

The space around the altar in a church (building, courtyard etc)

Answer 24

Parochial Church Council - A governing body responsible for the financial affairs of the parish and maintenance of the church area surrounding the altar.

Answer 25

It would be mentioned in the property title deeds if applicable - Isn't universal, only affects certain parishes' - You don't have to live next door to a church to be liable either, could be liable if a part of the 'community'

Answer 26

Currently, An additional 3% surcharge on top of standard rates.

Answer 27

NOTHING up to £250,000, A 5% charge on the rest of the excess (£300,000)

Answer 28

13% (10% £925,001-£1,500,000) (3% Surcharge added for purchasing an additional property above £40,000)

Answer 29

3% (Purchasing a second home, so first £40,000 is exempt and the rest (£130,000) will be at 3%)

Answer 30

1. The Property information form 2. The Fixtures, fittings & contents form 3. Title Deeds 4. Contract

Answer 31

Its a standard questionnaire, gives details of boundaries + other property information

Answer 32

Tells you what IS/ISNT included in the sale of the house.

Answer 33

On behalf of the vendor, on a commission basis, Usually 1.5%-3%

Answer 34

1. If successful, the vendor cannot withdrawal 2. Properties at auction are typically offered at a competitive reserve price (minimum)

Answer 35

a 10% deposit will be required on the day.

Answer 36

The sellers' information pack

Answer 37

An undertaking refers to a commitment/promise to complete a specific job E.G Defective plumbing - This might involve a contractor agreeing to repair faulty plumbing components

Answer 38

A retention refers to an individual holding back payment until a job is completed by a contractor as a form of security or guarantee

Answer 39

Designed to prevent water from seeping into the property

Answer 40

the effect of water coming into the property and damaging wood

Answer 41

the result of fungus growth in the wood.

Answer 42

wood would have to be stripped and replaced and the cause of the water sepage fixed as soon as possible.

Answer 43

specialist report and action to get rid as can cover entire property if left untreated and also damage the owners health.

Answer 44

When the ground beneath a property sinks, pulling the property's foundations down with it, creating cracks

Answer 45

Underpinning is needed, which fixes the foundations, which is a massive job.

Answer 46

When the ground beneath a property rises/expands causing damage such as cracks. Can also be caused by tree roots.

Answer 47

Underpinning is needed, which fixes the foundations, which is a massive job.

Answer 48

A lump sum tax that anyone buying a property/land costing more than a set amount has to pay

Answer 49

First £250,000 tax exempt

Answer 50

£250,001-£925,000

Answer 51

£925,001-£1,500,000

Answer 52

½% unless stamp duty is below £5

Answer 53

They focus on the subprime borrowers (those with poorer credit scores, making them higher risk)

Answer 54

The Financial Conduct Authority (FCA)

Answer 55

The Office Of Fair Trading (OFT)

Answer 56

The overall cost of borrowing money as an annual rate. (includes interest rate as well as additional fees or costs) (The true cost of borrowing)

Answer 57

In credit agreements

Answer 58

The nature of the contract Their Rights and Obligations

Answer 59

Enhances rights to consumers with faulty goods and services.

Answer 60

1. What to do when goods are faulty. 2. How services should be fit for purpose. 3.Unfair terms in contracts

Answer 61

- Removes the duty on consumers to volunteer material facts - Instead puts onus on the insurer to ask questions they deem necessary in a 'clear and specific' manner - Consumers must answer fully accurately and 'take reasonable care'

Answer 62

A person who acts on behalf of someone else.

Answer 63

The Principle.

Answer 64

This occurs if an agent acts outside of their stated authority, but it is clear that the principle approves of what the agent has done.

Answer 65

Ratification is the formal confirmation or approval of a decision, agreement, or treaty by an individual or an organization

Answer 66

This allows the principle to agree the action of an agent after the event has occured.

Answer 67

There MUST be an Offer, Acceptance & Consideration.

Answer 68

The consideration would be the deposit.

Answer 69

Certain, Complete, and free from Doubt.

Answer 70

An injunction is a court order compelling the other party to do/not to do something

Answer 71

Latin Translation 'Let the buyer beware' - A principle in contract law that suggests that customers should do their due diligence, to ensure that they assess the quality, condition, and suitability of a product before making a purchase. - Suggests that buyers should be aware of the risks associated with their purchases. Implies that sellers are not obligated to disclose all information about a product/service unless there is active misrepresentation or fraud involved.

Answer 72

Principle suggests that both the insurer and insured act honestly and fairly. Used for life insurance contracts, both parties are expected to disclose all material facts which are relevant.

Answer 73

An Energy Performance Certificate.

Answer 74

A report which contains information on the properties energy uses and CO₂ Emissions. - Also has recommendations on how to reduce energy use + CO₂ Emissions.

Answer 75

Each unit will require its own EPC.

Answer 76

From (A) Efficient To G (Very Inefficient)

Answer 77

The Domestic Minimum Energy Efficiency Standard (MEES)

Answer 78

It is illegal, they are not allowed too.

Answer 79

If they have an EPC rating below E. (unless there is a valid exemption)

Answer 80

Essentially a summary of your income for a specific tax year, along with any tax you owe or have already paid. - A document provided by HM Revenue & Customs (HMRC)

Answer 81

Mortgage Market Review A set of regulations set by the FCA, to improve the sustainability of the mortgage market and ensure that lenders are lending responsibly.

Answer 82

Lenders are WHOLLY responsible

Answer 83

To establish whether the applicant is still living at the address given on the application form

Answer 84

Those with: minimum annual net income of £300,000 or minimum net assets of £3 million.

Answer 85

The same as ‘Final Salary Scheme’ A pension product that invests a fraction of your final salary for every year of service up to a total of 40 years.

Answer 86

As part of a lenders affordability process, it is a review that determines whether a mortgage will still be affordable for the borrower if interest rates rise in the next 5 years.

Answer 87

All variable rate mortgages and fixed rate mortgages below 5 years

Answer 88

The interest rate that your mortgage ‘reverts’ too after your fixed rate period comes to an end

Answer 89

They recommend that an additional stress test of 3% is to be used

Answer 90

No, but many lenders retain the policy

Answer 91

Confirmation from your mortgage lender of how much they're willing to lend you for your mortgage.

Answer 92

1. It costs money + will vary depending on factors such as the complexity of the individuals financial position 2. Much more detailed - often showing future mortgage capacity. 3. Created by highly qualified individuals. They are 'DIPs on steriods'

Answer 93

Similar to DIPs - It is a financial document prepared by a financial institution that assesses an individuals ability to obtain a mortgage based on their income, expenses, creditworthyness etc.

Answer 94

A document given out on the first client meeting which outlines essential information about the mortgage product the individual is considering. E.G its key features, fees, interest rates etc.

Answer 95

Similar to an initial disclosure however specifically tailored to mortgage loans within the EU - Provides the borrower with key info about the product they are considering.

Answer 96

When a debtor cannot pay his creditor, a case can be brought against him in court. The court can make a judgment against the debtor which will remain in place until it is repaid.

Answer 97

Occupancy Fraud occurs when a mortgage applicant declares owner occupation but will rent the property instead.

Answer 98

Where multiple loans for the same home are obtained simultaneously for an amount in excess of the true value of the property

Answer 99

1. Solicitors conveyance fee - for arranging the sale + drawing up the contract 2. Estate agents fee - Typically 1-3% 3.Energy Performance Certificates 4. Mortgage redemption penalty if you were caught within the redemption period.

Answer 100

Disbursements refer to the costs that a solicitor/conveyancer may need to pay to third parties on behalf of their client during a property transaction.

Answer 101

1. Solicitors conveyance fee for arranging the purchase of the property 2. Stamp Duty 3. Disbursements 4. Survey Costs

Answer 102

Restrictions/Obligations affecting a property held by the local authority Could be: Planning Permissions Tree Preservation Orders (TPOs) Conservation Area Restrictions (Protecting historical/architectural significance)

Answer 103

Refers to the collateral provided by the borrower to the lender as a guarantee for the repayment of the loan

Answer 104

Helps buyers on a budget receive a decent report on the condition of a property.

Answer 105

A thorough inspection of a property carried out by a professional surveyor -paid for by borrower -expensive (but worthwhile)

Answer 106

To assess how adequate a property is to be used as collateral/security for a mortgage.

Answer 107

The valuer of a property considers it to be of lower value than the price

Answer 108

The property is not suitable security for the mortgage loan being asked for

Answer 109

Designated locations that're protected by the government because of their historical significance

Answer 110

Owners in these areas may need permission to carry out alterations to their property

Answer 111

- Helps first time buyers with a smaller deposit get a mortgage. - Government tells lenders that if you default on your mortgage loan and they lose money, the government will cover some of the losses - This inturn makes lenders more willing to give a mortgage with a small deposit of 5% rather than 20%.

Answer 112

Essentially a Guarantor; A promise made by one party to compensate another party for specific losses or damages.

Answer 113

A life insurance policy that provides a death benefit as well as a savings/investment component

Answer 114

A formal document from a lender to a borrower that confirms they are happy to issue funds before all the paperwork is finalised. -used by lenders to attract consumers, allowing borrowers to meet urgent financial matters.

Answer 115

Legal documents that establish a mortgage agreement between lender and borrower. Outlines the terms and conditions of the mortgage.

Answer 116

Provides a weekly retirement pension income to people over 66 - Paid until death - Taxable

Answer 117

Anyone retired & on a low income - Paid until death - Not Taxable

Answer 118

Weekly income for pregnant women who have been with the same employer at least 6 months. - Paid for 39 weeks, 1st 6 weeks are 90% pay - Taxable

Answer 119

Available to self employed or mothers just recently changed jobs - Paid for 39 weeks - Not Taxable

Answer 120

Available to fathers or partners to help take time off work to care for the baby - Paid for 2 weeks - Taxable

Answer 121

Paid weekly to adult responsible for child from birth to maximum age. - Paid until child reaches 16 years of age - Not Taxable

Answer 122

Only if one partner earns more than £50,000

Answer 123

The minimum statutory wage employers will pay on sickness to employees. - Paid from the 4th day up to 28 weeks - Taxable

Answer 124

Given to carers of the seriously ill or disabled claiming PIP - Paid indefinitely - Taxable

Answer 125

A non means tested benefit for people aged 16-64 with a disability or long term ill health. - Paid indefinitely - Not Taxable

Answer 126

Situation where an employer terminates and employees job because it is no longer needed.

Answer 127

If employee is made redundant after being with employer for more than 2 years. - One off lump sum - Not Taxable if less than £30,000

Answer 128

Paid to those unemployed or working less than 16 hours per week - Paid for 6 months - Taxable

Answer 129

Paid to widows or surviving civil partners - An initial lump sum followed by 18 monthly instalments - Only the instalments are taxable

Answer 130

Support for Mortgage Interest A financial assistance program by the government to help homeowners struggling to pay mortgage interest

Answer 131

A form of life insurance that provides coverage for a specified 'term' - Designed to provide financial protection to beneficiaries in the event of policyholders death.

Answer 132

The amount that will be paid to beneficiaries in the event of death to the policyholder during the term.

Answer 133

The value of sum assured may be eroded by inflation.

Answer 134

Often used for mortgage protection. (as mortgage outstanding balance decreases, so does amount of insurance needed)

Answer 135

A life insurance policy with the opportunity to convert it to a permanent policy at a later date.

Answer 136

Virtually the same as level term assurance however you can get up to 45% tax relief on premiums.

Answer 137

A 'death in service' term assurance plan which allows small businesses to offer life insurance benefits to employees, tax efficiently.

Answer 138

The process in which a deceased persons estate Is settled and distributed to beneficiaries under the the supervision of a court. whereby a will is 'proven' by a court

Answer 139

An arrangement in which the settlor grants a trustee authority to hold and manage assets on behalf of the beneficiaries following death of the settlor/life assured

Answer 140

Chosen & trusted by the settlor To hold and manage assets on behalf of beneficiaries following death of settlor. (pass on sum assured to the right people)

Answer 141

This refers to a situation where a trustee is given full authority to make decisions regarding the distribution of trust assets without being bound by specific instructions/limitations set forth in the trust document.

Answer 142

A trust in which trustees have complete discretion as to who gets the money, they are not held back by specific instruction by the life assured. - Also means there is no immediate IHT charge, because no decision has yet been made.

Answer 143

This refers to the transfer of assets/property during an individual's lifetime to another person.

Answer 144

A type of general insurance designed to help homeowners cover their mortgage payments if they become unable to work specifically due too illness, injury or unemployment.

Answer 145

A MAXIMUM of 2 years.

Answer 146

ASU insurance (Accident, Sickness, And Unemployment)

Answer 147

Life insurance - Provides financial support to beneficiaries in the event of the policyholder's death Health Insurance - Covers medical expenses related to illnesses, injuries, and health conditions. General Insurance - Covers non-life-related risks and liabilities.

Answer 148

The initial waiting time from when a claim is made until the benefit is paid.

Answer 149

Typically a benefit of IPI, this applies if an individual is able to work but not to the capacity that they did before, their insurance payout is relative to how much the disability has interfered with their work. E.G If you're able to work at 50% of the capacity that you did before, proportionate benefit will cover the other 50% (the amount that the disability has been deemed to be affecting)

Answer 150

Own occupation, Suited occupation, Any occupation

Answer 151

Individual is unable to perform substantial duties of own occupation (the job they were working before illness/injury) regardless of their ability to work in another occupation.

Answer 152

Individual is TOTALLY unable to work a job that is suitable to them based on education, training or experience. (The person does not have capacity to perform previous job OR any job relating to this) (E.G The individual isnt fit to be a doctor anymore, but also isnt fit to TEACH being a doctor)

Answer 153

Individual is TOTALLY unable to work any occupation whatsoever. (The person does no longer have capacity to work their previous job, a job related to it, and any job at all)

Answer 154

By failing a number of activities of daily working/living (ADW/ADL) or on a functional ability test (FAT)

Answer 155

2 years, then the definition will change from own occupation to suitable occupation which may affect eligibility for continued benefits.

Answer 156

1. Self Inflicted Injuries 2. Alcohol & Drugs other than direction of Medical Practitioner 3. Pregnancy & Childbirth + complications arising from them 4. Participation in criminal activities 5. Disabilities arising from events such as war, invasion, act of foreign enemy, riot, military

Answer 157

They need to inform the Life office, and they will decide whether to continue the insurance. If the new job is riskier, Premiums are likely to increase.

Answer 158

Morbidity risks, not mortality. Because being too ill to work is far more likely than the chances of dying. (Medical History, Age, Occupational Risks, Mental Health)

Answer 159

The relative incidence of a particular disease.

Answer 160

Occupation. Age. Deferred Period. Length of term.

Answer 161

ASU Covers just mortgage payments + associated insurances IPI Covers the salary

Answer 162

ASU covers for up to 2 years IPI can cover until retirement

Answer 163

ASU has a standard period of 1 month. IPI has options, customer can choose up to a year

Answer 164

Designed to pay out a lump sum on diagnosis of a specified illness

Answer 165

An insurance feature/rider that ensures the policyholder that if they become unable to make their premium payments due to critical illness/disability, the insurance company will 'waive' the payments for a certain period or duration of the disability.

Answer 166

Essentially an 'accelerated death payment' Pays out on diagnosis of a specified illness within the term OR on death during the term

Answer 167

Every 5-10 years

Answer 168

This would most likely be the case due to general advances in medical science & not due to the policyholders state of health

Answer 169

Similar to home insurance but specifically designed for properties that are being rented

Answer 170

Covers any damage to the structure of a property + cost of rebuilding it

Answer 171

Covers the cost to repair/replace fixtures & fittings such as carpets, furniture + electrical items

Answer 172

Covers you if your tenant or a visitor suffers an injury within your property.

Answer 173

(Tenant default Insurance) Protects you if your tenant falls into arrears.

Answer 174

Round the clock cover against loss of essential services within your property. (Plumbing, heating, roofing, problems with doors,windows,drains,pipes)

Answer 175

A lump sum paid on death, loss of eyes, loss of limbs or permanent inability to work again.

Answer 176

Provides funds to meet the cost of care

Answer 177

Determined by the need of the policyholder and how many ADLs (Activities of daily living) they cannot do. (Washing, feeding, dressing, using toilet)

Answer 178

(Repayment mortgages) Each monthly payment consists of part interest & part capital outstanding. Early years = mostly interest Over the years, proportion of capital increases

Answer 179

This is the rate at which interest is calculated and added to your loan balance. Can be calculated annually, Monthly or Daily

Answer 180

Paying early reduces your loan balance sooner, leading to less interest being calculated and paid. Saving you money over the life of the loan.

Answer 181

Annual Percentage Rate is used for a wide range of financial products whereas Annual Percentage Rate of Charge is used specifically for mortgages and additional costs that come with it.

Answer 182

A policy that combines life insurance with an investment component Reversionary Bonus - A share in companies profits Terminal bonus - Added at maturity or death

Answer 183

A bonus that can be declared under a With Profits Endowment policy. Essentially, its a share in the companies profits just like a dividend Added annually, but once declared, cant be removed.

Answer 184

A bonus within a With Profits Endowment Policy that is paid out on death or on maturity of the policy.

Answer 185

A life insurance product that combines savings & insurance. Savings Component: Premiums pooled into a with profits fund by the insurance company - savings grow through the addition of bonuses (Reversionary + Terminal) (A share in companies profits) Pays a higher fixed premium

Answer 186

A life insurance product that combines savings & insurance at a lower premium cost. Premiums are put into a With Profit fund Typically used for mortgage purposes, Policy aims to align investment performance with target mortgage payoff amount by the end of the term. (Potentially may not reach goal if investment performance is poor) (Heavily reliant on bonuses in reaching target) (Reversionary + Terminal)

Answer 187

A Life Insurance Product that combines elements of both unit linked + with profit policies. Portion of premiums are put into a with profits fund by insurance company Remaining portion are used to purchase units in the with profits fund. Bonuses are added by allocating additional units to the policy.

Answer 188

A life insurance policy which combines investment (stock market) & insurance. Part of premiums paid are used to purchase units in a chosen fund. Units are cashed in at an appropriate bid price to payout the surrender, maturity or death claim.

Answer 189

£20,000 per year

Answer 190

Minimum Age: 18

Answer 191

A savings account that allows you to invest in equity based investments. (Such as shares, unit trusts, OEICs, Investment trusts, ETC)

Answer 192

None, all ISAs offer different tax advantages

Answer 193

Minimum Age: 18

Answer 194

On death, your ISA can benefit from 'Additional Permitted Subscriptions' - Allows survivor/partner to pump money into your ISA for up to 3 years.

Answer 195

A tax free savings account available to kids under 18

Answer 196

£9,000 a year (ANYONE can contribute)

Answer 197

A tax free savings account in which the government gives a £1 for every £4 put aside

Answer 198

Must fit into the age bracket of 18-40

Answer 199

No, you can only access the funds once you turn 60 or if they're used to purchase a house

Answer 200

They are liable to a 5% fee

Answer 201

Available to ANY UK resident under the age of 75

Answer 202

The maximum annual contribution is £60,000 or 100% of your annual income, WHICHEVER IS LOWEST.

Answer 203

Can be carried forward for up to 3 years.

Answer 204

£20, but can contribute as often as you like

Answer 205

Can start taking benefits from age 55

Answer 206

There is no tax on the accumulation/growth of the pension. 25% of your pension can be taken out tax free (and can be taken out as a lump sum) The remaining 75% is taxed as income.

Answer 207

The first 10 years - 1.5% Thereafter - 1%

Answer 208

£1,073,100

Answer 209

The fund is passed to your beneficiaries tax free

Answer 210

- Tax free lump sum - Uncrystallised funds pension lump sum - Flexi Access Drawdown - Money Purchase Annual Allowance

Answer 211

Taking the entire pot out as a lump sum -25% tax free - The rest at marginal rate of tax (would very easily push a nontaxpayer into higher rate/additional rate of tax)

Answer 212

A higher lending charge…

Answer 213

This affects homeowners that need to raise some funds In exchange for a lump sum, investment firm takes over a portion of the homeowners house (or full) Homeowner becomes leaseholder (tenant) that doesn’t pay rent Firm becomes legal owner of property after they die + owns capital value in the house

Answer 214

A sum of money paid by the lender to borrower on completion of a mortgage based as a % of the loan

Answer 215

If a borrower redeems a cash back loan early, some or all of the cash back must be returned - lenders use this to encourage the borrower to maintain the loan over a substantial period of time

Answer 216

If a borrower redeems a cash back loan early, some or all of the cash back must be returned - lenders use this to encourage the borrower to maintain the loan over a substantial period

Answer 217

Tenants who specifically live in a council house for atleast 3 years earn the ‘right to buy’ the property at a discount - the longer it has been lived in, the more significant the discount can become

Answer 218

Maximum discount for houses - 35% Maximum discount for flats - 50%

Answer 219

Allows people to find land and build a home to suit their dreams - loan payments are given in stages as the build develops E.G - Stage 1 - land + footings Stage 2 - outer frame + roofing Stage 3 - plumbing, utilities etc

Answer 220

How much you’re allowed to borrow against the value of the property E.G Property value = £200,000 LTV = 75% You can borrow up to £150,000

Answer 221

Overpayments + underpayments - can pay more than regular monthly payments without penalty - can also underpay if they have previously overpaid + can take ‘payment holidays’ Interest is calculated daily (Making overpayments very beneficial)