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CF6 - Mortgages > Main > Flashcards

Main Flashcards

1
Q

Parliament has given the main responsibility for planning permission to local authorities, via which act?

A

The Town and Country Planning Act 1990

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2
Q

Name 4 legal fees incurred on the house buying process

A

Conveyancing: transferring the ownership of the property
Search fees: to investigate whether the seller has good title to the property
Local authority search: locate any road changes or town planning schemes
Land registry fees: to register the property in the buyers name

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3
Q

For what minimum period must a firm retain non-real time qualifying credit promotions?

A

One year from last communication date

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4
Q

How long must an adviser retain their advice and recommendation?

A

Three years

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5
Q

At what stage should an adviser strongly recommend that any life assurance commence?

A

When contracts are exchanged

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6
Q

When a property is sold at auction at what point is the first contact made between the vendor and buyer?

A

When the auctioneer closes the bidding

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7
Q

Who is ultimately responsible for ensuring the vendor has a right to sell their property?

A

The buyers conveyancer

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8
Q

At what point does a buyer need to pay a deposit when purchasing a property at auction?

A

On the day of the auction

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9
Q

The most common method of property sale in Scotland is by

A

Private bargain

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10
Q

Conclusion of missives in Scotland is similar to which stage in England?

A

Unconditional exchange of contracts

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11
Q

If a valuation highlights defects and the value recommends the lender proceeds, subject to an undertaking, what does this mean?

A

The mortgage is agreed in full, subject to the borrower agreeing to make specific repairs

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12
Q

A valuation has highlighted several property defects and they recommend the lender proceeds, subject to a retention. What does this mean?

A

Mortgage is agreed, but some funds are held back until certain repair work has been carried

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13
Q

What type of survey would a lender usually require for a newly built property?

A

A basic valuation

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14
Q

If someone receives a secured loan, which will be secured by a second charge on his main residence, what reflection period is offered?

A

7 days

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15
Q

Before an adviser makes a recommendation, what primary factor must they consider when explaining the different repayment options?

A

The borrowers attitude to risk

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16
Q

If someone is buying a second home, what additional level of SDLT applies?

A

3% (for properties over £40,000) or greater

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17
Q

What is the first fee a borrower may pay their solicitor?

A

A local search fee

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18
Q

Who does title indemnity insurance always protect?

A

The buyer

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19
Q

The rules for advisers who sell mortgage protection insurance policies only, are contained in what regulation handbook?

A

Insurance: Conduct of Business Sourcebook (ICOBS)

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20
Q

Which insurance policy is always a condition of a mortgage loan?

A

Buildings Insurance Policy

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21
Q

What is the principal reason for a borrower paying a higher lending charge?

A

To borrow at a higher loan to value percentage

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22
Q

For how long will a mortgage payment protection insurance policy usually cover interest payments in the event of redundancy?

A

For up to 2 years, or when the policyholder is re-employed, whichever is earlier

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23
Q

Which type of equity release scheme involves selling all or part of an individuals home to a private company?

A

Home reversion plan

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24
Q

What is an Individual Voluntary Arrangement (IVA)?

A

A formal arrangement with creditors to repay personal debt

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25
Q

According to MCOB, how long must a lender keep records of dealing with a customers arrears?

A

Three years

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26
Q

Under the right to buy legislation after what period can the owner usually sell the property without penalty?

A

After 5 years

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27
Q

Under the Support for Mortgage Interest (SMI) rules, when would payments commence for an unemployed claimant who’s in receipt of Universal Credit?

A

After 39 weeks

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28
Q

Under the leasehold reform housing and urban development act 1993, leaseholders are permitted to…

A

Group together to purchase the freehold of a building containing more than two flats

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29
Q

What expense can be deducted from profits made on the sale of a buy to let property in order to reduce their CGT liability?

A

The costs incurred in acquiring and disposing of the property

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30
Q

Rates on a tracker mortgage are most commonly set in line with…

A

The BOE base rate

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31
Q

What’s a main advantage to a customer arranging a home reversion rather than a lifetime interest only mortgage?

A

Interest payments will not be required

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32
Q

In what circumstances is a low cost endowment policy guaranteed to be sufficient to repay the mortgage?

A

On death prior to maturity only

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33
Q

What is a Market Value Reduction? (MVR)

A

A discretionary reduction in the value of a with profits policy applied by the insurer on early surrender

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34
Q

A shared appreciation scheme is where

A

Lenders charge no or little interest in return for a share of the equity of a property

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35
Q

If a guarantor offers a supported guarantee, this is known as a:

A

A surety

36
Q

What is the equity of redemption?

A

The borrowers right to repay the mortgage at anytime, even after repossession

37
Q

Bankruptcy normally lasts for one year but could be extended by up to:

A

2 to 5 years

38
Q

Do with profits or unit linked policies allow the policy holder to vary their contributions?

A

Unit linked policies allow contributions to vary, with profits do not let them vary the contributions

39
Q

Mortgage rescue schemes are operated by:

A

Local housing authorities

40
Q

A mortgage is set up on a joint tenancy basis, which means that each joint owner is liable for:

A

The whole mortgage on a joint and several basis

41
Q

If a borrower who holds a unit-linked endowment policy dies during the policy term, the policy pays out the:

A

The greater of the value of units held or the sum assured, whichever is higher

42
Q

Can home reversion schemes offer a lump sum or income payments?

A

Both

43
Q

The binding contract between lender and borrower in England & Wales is often referred to as the mortgage deed, and this creates the:

A

Legal charge

44
Q

Which cost is most likely to be incurred in redeeming a mortgage?

A

Sealing fee

45
Q

What is remortgaging?

A

Switching mortgages to another provider

46
Q

Kris has a mortgage with his building society and a second charge loan with a finance company both secured on his home. He is now remortgaging his home. What action, if any, must Kris take in respect of his second charge loan?

A

He must ask the finance provider to suspend their second charge

47
Q

When exercising its power of sale over a repossessed property, the lender must

A

Obtain the best price practical

48
Q

A borrower who recently fell into arrears. According to the Mortgages and Home Finance: Conduct of Business Sourcebook (MCOB), what period of time, if any, should the lender allow the borrower to consider the best course of action?

A

There is no specific deadline but a reasonable period of time should be granted

49
Q

Alan, aged 45, is single, lives alone and has no dependants. He earns £75,000 per annum and has a capital and interest mortgage of £300,000 with 24 years remaining. He is having difficulty in making his mortgage payments and although he is NOT yet in arrears, he has approached his lender for advice. What option is the lender most likely to recommend in the first instance?

A

Transfer temporarily to an interest only mortgage

50
Q

What is the maximum amount of savings that a 55-year-old borrower can hold before his eligibility for income support and Support for Mortgage Interest (SMI) ceases?

A

£16,000

51
Q

To whom is Support for Mortgage Interest (SMI) paid directly?

A

To its lender entirely

52
Q

Under the terms of the Financial Services Act 2012, the Bank of England has overall responsibility for the

A

PRA and FPC

53
Q

Which body is responsible for ensuring that a mortgage lender complies with data protection legislation?

A

The Information Commissioner’s Office

54
Q

Under the Leasehold Reform, Housing and Urban Development Act 1993, what minimum proportion of qualifying owners as leaseholders, in a large block of flats, must be in agreement, to purchase the freehold interest?

A

50%

55
Q

The Ijara method used by Islamic Home Purchase Plan providers involves a

A

Property being purchased by the provider and leased back to the customer for a set period, after which time it legally belongs to them.

56
Q

What specific contract condition normally accompanies a discounted rate mortgage with a cash back to pay fees, in order to protect the mortgage lender?

A

An early repayment charge

57
Q

Typically, when is a mortgage loan released to an individual looking to build their own home?

A

In accordance with pre determined building completion points

58
Q

Ethel has a full home reversion plan. Who will be responsible for the eventual sale of the property on her death?

A

The home reversion provider only

59
Q

Which type of mortgage is most popular with buy-to-let investors?

A

An interest only mortgage

60
Q

A borrower plans to use an ISA to repay her interest only mortgage, when must the lender check in with her to ensure she can repay the mortgage in full?

A

They must make one check during the mortgage term

61
Q

What is the best form of property ownership if wanting to ensure a portion of a property passes to the child?

A

Tenancy in common

62
Q

Who is ultimately responsible for ensuring that a vendor has a right to sell their property?

A

The buyers conveyancer

63
Q

What type of survey would usually be recommended for a buyer who wishes to buy a 30 year old property without a mortgage?

A

A homebuyer report

64
Q

A lender may seek to add a further advance to an original mortgage in order to…

A

Postpone a second mortgagee’s interest in the property

65
Q

According to Mcobs, how long must a lender keep records of dealing with a customer in arrears?

A

Three years

66
Q

If a borrower has fallen behind on payments, and they paid a higher lending charge, what may their position be regarding the balance of the outstanding loan? Presuming the higher lending charge has been recovered from the lenders insurer

A

The borrower will potentially be liable to repay the balance outstanding to the higher lending charge insurer

67
Q

3 means tests applied when someone claims for Support for Mortgage Interest (SMI)

A

Savings over £16,000 are disallowed
Higher thresholds may apply to over 60’s
SMI is payable up to a £200,000 mortgage, but drops to £100,000 for those on pension credit

68
Q

To move large amounts of funds to complete house purchase transactions, which system is most used by solicitors to guarantee the same day, irrevocable delivery of funds?

A

CHAPS

69
Q

Records of county court judgements [CCJs] are used by lenders when assessing the credit worthiness of a borrower. The equivalent of a CCJ In Scotland is known as a:

A

Court Decree

70
Q

With regard to MCOB definitions, what is a stepped rate?

A

The interest rate applied to the account may move during the initial borrowing period

71
Q

A deed for a legal mortgage must always be:

A

in writing, signed, witnessed, dated and sealed.

72
Q

Samantha has decided that she can no longer afford to make payments to her mortgage account and has informed the lender that she is leaving the property to live with her sister. Her decision is best described as:

A

Peaceable possession

73
Q

The name given to the process whereby a solicitor or licensed conveyancer brings together money received and due at completion is:

A

Engrossment

74
Q

What are 3 examples of a “Non status” borrower…

A

An actor
A start up self employed person within last 3 years
A discharged bankrupt person at least 5 years ago and is now debt free

75
Q

In the case of leasehold properties, buildings insurance is usually carried who…

A

The freeholder

76
Q

If a borrower dies during the term of a capital and interest mortgage, what happens to the mortgage?

A

The outstanding balance becomes a debt on the estate

77
Q

UK interest rate is set within a rate of which measure of inflation?

A

CPI

78
Q

Are council tax and property insurance included within the RPI?

A

No, they’re both excluded

79
Q

Which Act gave public sector tenants the right to buy their council homes?

A

Housing Act 1980

80
Q

Post auction, the property purchase should be completed within how many days?

A

56 days

81
Q

How do you save some money when using a daily interest loan vs an annual interest loan?

A

Because with a daily interest loan the lender calculates and adds a bit of interest every day, therefore you’re more regularly paying off the interest and the balance is decreasing little by little

82
Q

For a guarantee to be enforceable, how must it be agreed?

A

In writing

83
Q

What are the typical % of property value one could raise via a lifetime mortgage?

A

20-45%

84
Q

In which section of an offer of advance of a mortgage would details of fees and charges appear?

A

The Mortgage

85
Q

The role of the National House Building Council in the new house building industry is best described as…

A

Regulator and standard setter

86
Q

What legal fees are associated with the redemption and vacation of a mortgage?

A

Discharge & Sealing

87
Q

Some retail banks use second mortgages as collateral for hitherto unsecured overdrafts. The category of borrowers most appropriate for this measure are referred to as representing what level of risk…

A

Hard core risk

CF6 - Mortgages (2 decks)

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