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PA Questions > Daily Questions > Flashcards

Daily Questions Flashcards

1
Q

The requirement for a Home Information Pack was suspended in May 2010, but which element is still required?

A Property Information Questionnaire (PIQ)

B Replies to standard preliminary enquiries

C Evidence of title

D Energy Performance Certificate

A

D - Energy Performance Certificate

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2
Q

Which of the following statements is true in relation to a buyer withdrawing from a house purchase transaction the day before exchange of contracts?

A The potential buyer is entitled to withdraw and has no liability for expenses or other costs.

B Because the vendor had accepted the offer to buy in good faith, he may sue for breach of contract.

C Because of the lateness of the withdrawal, the vendor is entitled to retain the deposit paid.

D The vendor is entitled to claim all reasonable expenses incurred to date.

A

A - The potential buyer is entitled to withdraw and has no liability for expenses or other costs.

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3
Q

Mike is looking to buy a property at auction. He has £70,000 in cash and an unsold property with equity of £80,000. He has put in a mortgage application for £65,000. What is the maximum he should bid at the auction?

A £70,000

B £135,000

C £150,000

D £215,000

A

A - £70,000

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4
Q

Under FCA regulations, the definition of a regulated mortgage contract specifically excludes:

A debt consolidation.

B home improvement loans.

C commercial lending

D bridging loans.

A

C - Commercial Lending

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5
Q

On a with-profits policy, what is a reversionary bonus?

A An irregular payment, determined by the type of policy and the number of lives assured.

B A payment made on maturity at the discretion of the assurance company.

C One which is declared regularly and, once attaching to the policy, is guaranteed payable.

D One which reverts to a minimum level in the event of a claim.

A

C - One which is declared regularly and, once attaching to the policy, is guaranteed payable.

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6
Q

A lender is considering granting a loan on a corner shop property with a flat above. What sort of lending would this be defined as?

A Buy to Let.
B Residential.
C Corporate.
D Semi-commercial.

A

D - Semi Commercial

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7
Q

Wendy lives in the end house of a terrace. Adjacent to the property is a wall which Wendy has an obligation to maintain. This is known as:

A a restrictive covenant.
B an easement.
C a positive covenant.
D a personalty.

A

C - A Positive Covenant

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8
Q

On what basis are mortgages in England and Wales normally created?

A Common property.
B Joint property.
C Joint tenancy.
D Tenancy in common.

A

C - Joint Tenancy

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9
Q

Gemma is purchasing a property valued at £150,000 and would like to borrow 92% of the property purchase price. At that loan to value level, the lender charges a higher lending charge of 7% of the loan amount over 75% of the valuation. How much will Gemma have to pay?

A. £1,785
B. £2,415
C. £2,625
D. £3,255

A

A - £1,785

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10
Q

Kevin and Hannah are thinking of buying a property which is 15 years old. Which one of the following is TRUE in relation to surveys?

A It is compulsory that they have a full structural survey.
B It is mandatory that they have a home-buyers report.
C They would be wise to have a home-buyers report.
D They can rely on the basic valuation.

A

C - they would be wise to have a home buyers report

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11
Q

When determining borrowing limits, a lender is LEAST likely to be influenced by whether a person’s income:

A includes overtime.
B fluctuates on a seasonal basis.
C is paid weekly or monthly.
D is fixed or related to performance.

A

C - is paid weekly or monthly

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12
Q

How long is the total duration of an NHBC guarantee under their ‘Buildmark Scheme’ for new houses?

A 2 years.
B 10 years.
C 15 years.
D 25 years.

A

B - 10 years

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13
Q

Luke is using the funds in his savings account as a collateral deposit for a mortgage loan. This means he:

A cannot normally access these funds until the debt is sufficiently reduced.
B can withdraw these funds at any time provided he replaces them within 90 days.
C must start a new account with the lender and transfer these funds.
D may not start another savings account without the lender’s permission.

A

A - cannot normally access these funds until the debt is sufficiently reduced.

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14
Q

How does the Murabaha method of Sharia-compliant Islamic mortgages operate?

A The lender buys the property and immediately sells it to the borrower at a higher price in return for the payment of fixed instalments over an agreed term.
B The lender buys the property and the borrower pays rent during the agreed term, at the end of which ownership is transferred.
C The borrower and the lender jointly buy the property with interest waived in return for an enhanced capital repayment and ownership transferring in stages.
D The borrower buys the property for a nominal sum and grants a reversionary.

A

A - The lender buys the property and immediately sells it to the borrower at a higher price in return for the payment of fixed instalments over an agreed term.

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15
Q

Which type of endowment mortgage is MOST likely to give the borrower a surplus at the end of the term?

A Without profits.
B With profits.
C Low cost.
D Unit-linked.

A

B - With Profits

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16
Q

Lenders offering deferred interest mortgages should point out that such mortgages can increase the problems caused by:

A falling interest rates.
B rising interest rates.
C falling house prices.
D rising house prices.

A

C - falling house prices

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17
Q

Tracey’s mortgage lender has charged her an arrangement fee. For which type of mortgage is she MOST likely to have applied?

A Fixed rate.
B Variable rate.
C Low start.
D Discounted.

A

A - Fixed rate

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18
Q

What penalty is likely to be applied if a cashback mortgage is redeemed within a year of being taken out?

A None.
B Charging of an administration fee.
C Redemption penalty of several months interest.
D Clawback of some or all of the cashback.

A

D - Clawback of some or all of the cash back

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19
Q

The Mortgage Conduct of Business Rules allow lenders to repossess the property of a borrower in arrears, but only if:

A all other reasonable attempts to resolve the matter have failed.
B all attempts to communicate with the borrower have failed.
C the arrears exceed £2,000.
D the arrears exceed 10% of the initial loan.

A

f:

A - all other reasonable attempts to resolve the matter have failed

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20
Q

Some borrowers like to feel that the amount they owe to the lender is being reduced by their monthly mortgage payments. They should choose a:

A fixed rate mortgage.
B endowment mortgage.
C repayment mortgage.
D ISA mortgage.

A

C - Repayment Mortgage

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21
Q

The MOST important advice, about his loan, to give a borrower who has just lost his job is:

A tell your lender and seek a joint solution.
B maintain your current repayments at all costs.
C do not let your lender know.
D don’t accept any other job at a lower salary.

A

A - Tell your lender and seek a joint solution

22
Q

Following divorce from Sandie, Joe wants to continue as sole borrower on a mortgage that was previously joint. What new or altered factor might make the lender concerned about Joe’s ability to make repayments?

A Loss of child tax credit.
B Increased premiums on the endowment.
C Possibility of maintenance payments.
D Change in Joe’s tax status.

A

C - possibility of maintenance payments

23
Q

A solicitor checks on the possible impact of any town planning schemes by making a:

A Local Land Charges search.
B Land Registry search.
C Land Charges Registry search.
D Environment search.

A

A - Local land charges search

24
Q

At what stage of the house-buying process is the purchaser in England and Wales committed to proceed?

A Submission of offer.
B Acceptance of offer.
C Exchange of contracts.
D Completion.

A

C - Exchange of contracts

25
Q

A purchaser receives the keys to a property in exchange for full payment of the purchase price. This is known as:

A exchange of property.
B exchange of contracts.
C completion.
D sale.

A

C - completion

26
Q

Under the Commonhold and Leasehold Reform Act 2002, the borrower has the right to:

A enfranchisement in a flat development with 35% commercial usage
B buy the freehold in a flat development with 15% commercial usage
C set the price at which the freehold may be purchased
D insist on a lease extension of 100 years.

A

B - buy the freehold in a flat development with 15% commercial usage

27
Q

To qualify for the Right to Buy in England, Mike Smith, must have been a secure tenant for a minimum of:

A one year.
B two years.
C three years.
D five years.

A

C - three years

28
Q

How are corporate mortgages dealt with under the Mortgage Conduct of Business Rules?

A They are wholly excluded.
B They are covered up to a maximum of £500,000.
C They are only covered if in excess of £250,000.
D They are regulated on a semi-voluntary basis.

A

A - They are wholly excluded

29
Q

Ron Best bought his house for £150,000, but its value is now 20% less. He now wants to increase his £100,000 interest only mortgage. If the lender’s threshold for mortgage indemnity guarantee cover is 75%, what MAXIMUM further amount can he borrow within this limit?

A Nothing.
B £5,000
C £7,500
D £10,000.

A

A - Nothing

30
Q

Which one of the following statements is FALSE in relation to ‘block policies’ for buildings insurance?

A The lender may insist the borrower takes this cover.
B Premiums may be cheaper due to simplified administration.
C Premiums can be collected with mortgage payments.
D They are administered by the lender.

A

A - The lender may insist the borrower takes this cover

31
Q

If a borrower is buying leasehold and the lease specifies the use of an insurer whose buildings cover policy the lender considers inadequate, what steps could the lender take?

A Include the other insurer on their panel.
B Require the borrower to insure the property twice.
C Insist that the terms of the lease be changed.
D Withdraw the mortgage offer.

A

D - Withdraw the mortgage offer

32
Q

A condition in a mortgage offer to carry out certain repairs within a specified timescale is known as:

A a positive covenant.
B a retention.
C a restrictive covenant.
D an undertaking.

A

D - an undertaking

33
Q

What penalty is likely to be applied if a cashback mortgage is redeemed within a year of being taken out?

A None.
B Charging of an administration fee.
C Redemption penalty of several months interest.
D Clawback of some or all of the cashback.

A

D - Clawback of some or all of the cash back

34
Q

Assuming the interest rate remains the same, what would normally INCREASE over the mortgage term under an interest only mortgage?

A The amount of capital repaid.
B The proportion of interest in the monthly payment.
C The value of the repayment vehicle.
D The amount of life cover required.

A

C - the value of the repayment vehicle

35
Q

What name is given to the bonuses usually added to a with profit endowment each year?

A Reversionary.
B Terminal.
C Loyalty.
D Periodic.

A

A - Reversionary

36
Q

Which one of the following mortgage repayment vehicles is LEAST tax-efficient for the borrower?

A Stocks and shares ISA.
B Stakeholder pension plan.
C Cash ISA.
D Unit-linked endowment.

A

D - Unit linked endowment

37
Q

Help to Buy is a scheme where:

A an older customer is provided with funds by a company in exchange for the right to vacant possession of the property on their death.
B the borrower makes lower repayments in exchange for a share of the equity held in the property used as security.
C a property is used as security for a loan used to provide an older customer with additional income.
D an individual takes a loan to buy increasing amounts of ownership in the property used as security.

A

B - the borrower makes lower repayments in exchange for a share of the equity held in the property used as security.

38
Q

Which one of the following statements regarding letting of a mortgaged property is FALSE?

A The lender’s agreement can normally be waived.
B Lenders will only agree to this if the letting is for a reasonable purpose.
C Lenders will only permit this if the type of tenancy is acceptable to them.
D Lenders will only permit this if the tenants rights to permanent occupancy are specifically excluded in the letting agreement.

A

A - The lenders agreement can normally be waived

39
Q

A lender will MOST likely give permission for a borrower to sell part of the land on a mortgaged property if the:

A land to be sold did not have planning permission.
B land was to be bought with a loan from the same lender.
C borrower’s property value after the sale would remain above the loan amount.
D joint value of the two properties after the sale would be greater than the current value.

A

C - Borrowers property value after the sale would remain above the loan amount

40
Q

If a mortgage is in arrears, a court is unlikely to sanction a lender taking possession, if the borrower is complying with the terms of:

A the mortgage deed.
B an arrangement.
C the endowment policy.
D the Mortgage Conduct of Business Rules.

A

B - an arrangement

41
Q

A borrower who buys a new property WITHOUT having obtained a buyer for the old one will require:

A closed bridging.
B an arrangement.
C open bridging.
D a release of part security.

A

C - open bridging

42
Q

A lender would take steps to avoid the forfeiture of a borrower’s lease because the:

A mortgage conditions do not permit it.
B lender has requested it as an option.
C lender’s security would become of no value.
D borrower would be unable to make repayments.

A

C - Lenders security would become of no value

43
Q

A lender would NOT permit a borrower to effect a policy with a subsidence exclusion to cover a mortgaged property because:

A the lender’s security could be impaired.
B the borrower could be left with a large bill.
C the Association of British Insurers advise against it.
D it is prohibited by law.

A

A - The lenders security could be impaired

44
Q

Lenders release a loan for a self -build project throughout the building period. What frequency will this normally take?

A Annually for up to 5 years.
B Three or four instalments.
C Monthly for up to 3 years.
D Three monthly for up to 3 years.

A

B - Three or four instalments

45
Q

Adrian bought a bungalow for £120,000 with an interest only mortgage loan of £80,000. The bungalow is now worth £150,000 and he requires a further advance of £40,000. If his lender’s higher lending charge threshold is 75%, how much of his total loan will be subject to a HLC?

A £2,500
B £5,000
C £7,500
D £10,000.

A

C - £7,500

46
Q

Insurance premium tax is charged on:

A buildings and contents insurance but not life assurance.
B buildings insurance but not contents insurance.
C contents insurance but not buildings insurance.
D life assurance but not buildings and contents insurance.

A

A - Buildings and contents insurance but not life assurance

47
Q

With regard to buildings insurance, the lender has the right to all of the following, EXCEPT:

A insist the property is insured.
B have its interest noted by the insurer.
C ensure claim money is used to remedy the cause of the claim.
D choose the level and type of insurance cover.

A

D - Choose the level and type of insurance cover

48
Q

Negative equity means the:

A current property value is less than the purchase price.
B the loan was based on 100% of the property valuation or greater.
C current value of the property is less than the mortgage amount.
D ratio of loan to property value is increased due to a second mortgage.

A

C - Current value of the property is less than the mortgage amount

49
Q

Jeff and Linda’s mortgage interest rate goes up by just 0.25% when their lender announces a general 1% increase. This could be because they have what type of mortgage?

A Fixed rate.
B Discounted rate.
C Capped rate.
D Collared rate.

A

C - Capped rate

50
Q

Under a ‘shared ownership’ mortgage, the borrower usually shares the ownership with:

A the vendor.
B a housing association.
C the lender.
D another mortgagee.

A

B - A housing association

51
Q

Which one of the following illnesses would NOT normally result in benefits being paid out from a critical illness policy?

A Heart attack.
B Stroke.
C Cancer.
D Liver failure.

A

D - Liver failure

52
Q

To whom is Support for Mortgage Interest benefits paid?

A Trustee in bankruptcy.
B The borrower.
C The lender.
D The person granted letters of administration.

A

C - The lender

PA Questions (1 decks)

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