Finance Flashcards

Sources of finance and types of mortgage

1
Q

What funds must a buyer have to purchase a property?

A

Sufficient funds to complete the purchase:
- cash to pay deposit on exchange
- balance of price on completion
- agreed price for any extras
- tax
- solicitor’s fees
- solicitor disbursements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Residential - where does funding usually come from?

A
  • Client’s own resources
  • Proceeds of a related sale
  • Mortgage loan
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Commercial funding

A
  • Companies might raise finance for a purchase by equity finance
  • High value properties, money may be raised from a group of lenders (syndicate)
  • A lender may fund the development
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the types of residential mortgage?

A
  • Capital repayment mortgage: borrower repays the capital sum by monthly payments, with an interest added each month. At the end of the term, the loan is paid in full
  • Interest only mortgage: borrower only pays interest on the loan. Capital remains outstanding, no matter how long the loan is in place. Capital is generally only repaid by sale of the property. The borrower may end up better off as they will have the equity (increased value of the property) that is not required for the mortgage
  • Endowment mortgage: in general, no longer available in UK
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the lending documents?

A
  • Mortgage offer - formal offer by the lender to lend
  • Facility letter (commercial equivalent of a mortgage offer)
  • certificate of title
  • legal charge (deed that creates the security interest and is registered at the Land Registry)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Certificate of title

A

Is a document, provided by a solicitor to a lender, in which a solicitor certifies that the property is satisfactory for lending purposes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

CCLS certificate of title

A

Certificate of title for commercial property as a prescriptive format, from the City of London Law Society Certificate of Title

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What steps must be done pre-exchange in relation to the certificate of title?

A

For a commercial transaction, the buyer’s solicitor must ensure that the lender’s solicitor has approved the draft certificate of title (before exchange)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What steps are taken pre-completion in relation to the certificate of title?

A

Buyer’s solicitor will send the certificate of title (in its final form) to the lender and request the loan advance in time for completion and send lender’s solicitor an undertaking relating to the mortgage money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What will the lender’s solicitor do in a commercial transaction?

A
  • Specify what enquiries and searches are needed
  • Ask buyer’s solicitor to send copies of all searches and replies to enquiries
  • Review them and ask the buyer’s solicitor to make such additional enquiries as the lender’s solicitor requires
  • Draft the legal charge and other security documents
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is a mortgage offer?

A

A formal offer by the lender to lend, subject with the lender being satisfied with the transaction and security. Sets out terms and conditions of the loan

  • Facility letter is the commercial equivalent
How well did you know this?
1
Not at all
2
3
4
5
Perfectly