Cemap 2 paper 1 Flashcards
1
Q
- What is the key difference between a first charge and a second charge mortgage?
A) Interest rates
B) The order of repayment
C) Loan amount
D) Property type
A
The order of repayment
2
Q
- What is the primary purpose of land registration in England and Wales?
A. To ensure the buyer pays the correct taxes
B. To provide a real-time, accurate record of property ownership
C. To establish squatter rights
D. To prevent the sale of agricultural land
A
To provide a real-time, accurate record of property ownership
3
Q
- In the context of easements, what is the ‘dominant tenement’?
A. The property that bears the burden of the easement
B. The property that benefits from the easement
C. The property that holds the mortgage
D. The land held in possession by a squatter
A
The property that benefits from the easement
4
Q
- What is the main responsibility of an estate agent during the property selling process?
A) To ensure the property is sold at a loss
B) To represent both the buyer and seller equally
C) To maximize visibility and close the deal for the seller
D) To handle all legal documentation
A
To maximize visibility and close the deal for the seller
5
Q
- What is the purpose of financial promotions in the mortgage application process?
A) To encourage buyers to take out loans
B) To provide unsolicited advice
C) To market mortgages in a compliant manner
D) To disclose lender fees
A
To market mortgages in a compliant manner
6
Q
- What is included in the initial disclosure requirements for mortgage firms?
A) Details about the firm’s management team
B) Limitations in the range of products offered
C) Marketing strategies
D) Interest rate comparisons
A
Limitations in the range of products offered
7
Q
- Which of the following is NOT a stage in the mortgage advice process?
A) Researching the solution
B) Factfind Research
C) Implementing the recommendation
D) Finalizing the mortgage payment plan
A
Finalizing the mortgage payment plan
8
Q
- What are the ‘three Ps’ that lenders consider when assessing a mortgage application?
A) Person, Property, Purpose
B) Payment, Profit, Performance
C) Plan, People, Property
D) Price, Purpose, Procedure
A
Person, Property, Purpose
9
Q
- Why do lenders use credit searches during the mortgage application process?
A) To find personal references
B) To establish the applicant’s residency
C) To check the applicant’s social media profiles
D) To gather information on the property’s value
A
To gather information on the property’s value
10
Q
- How does the repayment style affect mortgage recommendations?
A) It does not affect the recommendation at all
B) Clients can choose between fixed and flexible repayment options
C) Clients can choose between monthly and yearly repayments
D) Clients are not allowed to choose their repayment style
A
Clients can choose between fixed and flexible repayment options
11
Q
- What is the primary purpose of a mortgage for lenders? A) To provide financial assistance to
borrowers
B) To grant rights over the property
C) To determine property taxes
D) To appraise property value
A
To grant rights over the property
12
Q
- If a property has a sitting tenant, what type of tenancy is it most likely under? A) Freehold
B) Commonhold
C) Assured Shorthold Tenancy (AST)
D) Leaseho
A
Assured Shorthold Tenancy (AST)
13
Q
- Which survey is described as using a traffic light system to indicate the health of a property?
A) Basic Valuation
B) RICS Home Survey Level 1 Report
C) RICS Home Survey Level 2
D) RICS Home Survey Level 3 Report
A
RICS Home Survey Level 2
14
Q
- What must an individual demonstrate to be eligible for Statutory Sick Pay (SSP)?
A) Be below the lower earnings limit
B) Earn above the lower earnings limit
C) Have worked for less than four days
D) Be employed in a part-time job
A
Earn above the lower earnings limit
15
Q
- How does a waiver of premium (WoP) rider work?
A) It allows you to stop paying premiums forever
B) It cancels your policy when you are unable to work
C) It covers your premiums if you can’t work due to illness or disability
D) It lowers your premiums permanently
A
It covers your premiums if you can’t work due to illness or disability
16
Q
- Which of the following is NOT classified as a “pure” protection product?
A. Term insurance
B. Critical illness cover (CIC)
C. Accident, sickness, and unemployment (ASU) insurance
D. Whole life insurance
A
Whole life insurance
17
Q
- Which duty requires an insurance applicant to provide accurate information during the
application process?
A. Duty of Disclosure
B. Fair Representation
C. Suitability Requirement
D. Consumer Guidance Act
A
Duty of Disclosure
18
Q
- If a client misrepresents information accidentally, what action may an insurer take?
A. Refuse all claims and retain premiums
B. Adjust the terms of the policy
C. Treat the contract as if it never existed
D. Provide no remedy
A
Adjust the terms of the policy
19
Q
- How can interest rate changes affect a capital repayment mortgage?
A. They don’t impact monthly payments
B. Monthly payments are adjusted to maintain term length
C. Monthly payments decrease over time
D. Monthly payments remain the same despite interest rates
A
Monthly payments are adjusted to maintain term length
20
Q
- What are the two main components of an endowment policy?
A) Life assurance and loan repayment
B) Life assurance and investment
C) Investment and tax savings
D) Loan repayment and bonus growth
A
Life assurance and investment
21
Q
- Which type of endowment policy offers a guaranteed sum assured (GSA) to match the mortgage
amount?
A) Low-cost with-profits endowment
B) Unit-linked endowment
C) Full with-profits endowment
D) Unitised with-profits endowment
A
Low-cost with-profits endowment
22
Q
- What is a primary advantage of a unit-linked endowment policy?
A) Guaranteed death benefit
B) Fixed final maturity value
C) Wide selection of investment funds
D) Lack of policy reviews
A
Wide selection of investment funds
23
Q
- Which of the following is true regarding ISAs for mortgage repayment purposes?
A) ISAs come with built-in life cover
B) Mortgage lenders hold legal rights over ISAs
C) The investment in an ISA may fluctuate in value
D) ISAs cannot be cashed in early
A
The investment in an ISA may fluctuate in value
24
Q
- Which type of ISA is generally considered the most suitable for supporting an ISA mortgage?
A) Cash ISA
B) Stocks and shares ISA
C) Innovative finance ISA
D) Junior ISA
A
Stocks and shares ISA
25
Q
- What type of mortgage traditionally offered a rate that changes based on the lender’s discretion
in response to the general market?
A) Fixed-rate mortgage
B) Discounted-rate mortgage
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C) Tracker mortgage
D) Standard variable-rate mortgage
A
Standard variable-rate mortgage
26
Q
- Why might some borrowers choose a standard variable-rate mortgage over other types?
A) It locks them into fixed monthly payments.
B) It offers the possibility of lower product fees and no early repayment charges.
C) It has a fixed rate for a set period.
D) It includes a savings offset feature
A
It offers the possibility of lower product fees and no early repayment charges
27
Q
- What is the maximum initial share a buyer can purchase under a shared ownership scheme?
A) 50%
B) 75%
C) 100%
D) 25%
A
25%
28
Q
- In shared ownership schemes, who assesses the eligibility of applicants?
A) Mortgage lenders only
B) The applicants themselves
C) The housing association or local authority
D) A private real estate agent
A
The housing association or local authority
29
Q
A
30
Q
A
