cemap 2 unit 10 Flashcards
Which of the following is true? For a mortgage application form:
either the applicant or the adviser can complete the form, but it is the customer’s responsibility to ensure it is accurate.
A lender will usually require details of previous employment if a mortgage applicant has been with their current employer for less than:
three years.
A self-employed person’s income for mortgage purposes is normally calculated as turnover minus:
the cost of necessary raw materials and routine business expenses.
Which of the following statements apply to a director’s loan account? Select all that apply.
It can provide loans to the spouse of a shareholder.
It records loans from the company to a ‘participator’.
It records loans from a ‘participator’ to the company.
Which of the following factors would prevent a lender from waiving or modifying an affordability assessment if a borrower wished to vary the terms of, or replace, an existing mortgage? Select all that apply.
The borrower missed three mortgage payments at the start of the current year.
The borrower wishes to increase the mortgage to build an extension
A ‘credit-impaired’ customer is looking for a further advance, claiming it is to consolidate credit card debt into his mortgage. Using the lender’s standard criteria, the new mortgage would be unlikely to meet the lender’s affordability criteria. What actions are available to the lender under MCOB rules? Select all the available actions
Agree to the further advance but settle the credit card debt using the further advance
Agree to the further advance and take reasonable steps to ensure the credit card debt is repaid on completion of the mortgage.
Agree to the further advance but include the monthly credit card payments as committed
Last week Sam contacted her bank’s mortgage adviser about applying for a mortgage, and the adviser told her that she and her partner could probably afford to borrow £180,000, which is three times their joint income. A friend who works in a building society has now told Sam that the bank is no longer allowed to assess her application on the basis of an income multiple. Should Sam be concerned about the way the bank dealt with her enquiry?
No – lenders are allowed to give initial assessments based on income multiples. If Sam were to go ahead and make a mortgage application the lender would be required to carry out a full and detailed assessment of her income and that of her partner
All sole traders must provide a detailed breakdown of their business expenditure on their tax return. True or false?
False. All businesses must maintain accurate accounts but a detailed breakdown of expenditure is only required on a tax return if the business turnover is above the VAT registration threshold
Karen is applying for a mortgage but is struggling to provide exact expenditure figures. For which of the following elements of Karen’s expenditure could the lender not use figures from the Office for National Statistics instead?
Personal loan repayments.
Andreas, who has been self‑employed for 18 months, wants to buy a house but is concerned that his track record in self‑employment is not long enough for him to be offered a mortgage. A friend has advised him to apply for a self‑certified mortgage. Would this be an appropriate solution for Andreas?
No, this suggestion would not help Andreas as self‑certified mortgages are no longer available
To comply with MCOB 11, lenders must retain documents that provide a rationale for the decisions taken on mortgage applications:
in hard copy or electronic form for the length of the mortgage contract.
