MOCK EXAM 2 Flashcards
Alan and Ann have applied for a mortgage on a property which has been the subject of major extension. What would be the lender’s approach regarding planning permission?
A. It is likely to ask Alan and Ann for an indemnity against action from the local authority.
B. It is likely to insist that Alan and Ann apply for retrospective planning permission.
C. It is likely to lend only if evidence of planning permission can be produced.
D. Planning permission is a matter for Alan and Ann rather than the lender.
C. It is likely to lend only if evidence of planning permission can be produced.
Margaret, a mortgage adviser, has asked her customer to provide a full breakdown of income. This will ensure that:
A. an appropriate lender is selected.
B. her client is self-employed.
C. provision of evidence is avoided at a later date.
D. tax has been properly calculated.
A. an appropriate lender is selected.
Which type of risk applies to a discounted rate mortgage?
A. Capital risk.
B. Interest rate risk.
C. Investment risk.
D. Risk of negative equity.
B. Interest rate risk.
Alex is selling his property and hoping to purchase a new one. However, his estate agent has warned him of the danger of being ‘gazumped’. This would happen if:
A. his buyer offers a lower price than had been agreed originally.
B. his buyer withdraws from the purchase after signing contracts.
C. the owner of the property he wishes to purchase accepts a higher offer from another party.
D. the owner of the property he wishes to purchase withdraws from the sale.
C. the owner of the property he wishes to purchase accepts a higher offer from another party.
A local authority search should reveal:
A. ownership of the property.
B. plans for new developments.
C. responsibility for property boundaries.
D. the presence of environmental hazards.
B. plans for new developments.
Amy and Tom, both young professionals, have agreed a price of £195,000 to buy their first home together, which the lender has valued at £192,000. They have applied for a mortgage of £166,000. The lender applies a higher lending charge of 5% on loans above 75% loan to value. How much will Amy and Tom have to pay for the higher lending charge?
A. £987.50
B. £1,100
C. £1,300
D. £1,450
B. £1,100
On which of the following properties is a lender most likely to agree to provide a mortgage?
A. A freehold flat.
B. A leasehold ex-local authority flat with 55 years remaining on the lease.
C. A leasehold flat in a converted mill with 75 years remaining on the lease.
D. A leasehold flat in a private block with 20 years remaining on the lease.
C. A leasehold flat in a converted mill with 75 years remaining on the lease.
Who, if either, normally loses out if a house purchase transaction is subject to a successful gazumping tactic?
A. Both buyer and seller.
B. seller only.
C. Neither buyer nor seller.
D. buyer only.
D. buyer only.
When would a lender require a title indemnity fee to be paid?
A. As a form of security to ensure that its own interest in the property is noted at the Land Registry.
B. When the property is registered land.
C. When the title cannot be fully guaranteed.
D. When the vendor wishes to speed up the sale process by omitting the title search from the conveyancing process.
C. When the title cannot be fully guaranteed.
Which of the following statements in respect of a basic valuation is correct?
A. The report will confirm whether or not the agreed purchase price is reasonable.
B. The report will usually only highlight any necessary repairs if the loan-to- value ratio is high.
C. The valuation is carried out on behalf of the lender, but the applicant usually meets the cost.
D. The valuation must be carried out by a valuer independent of the lender.
C. The valuation is carried out on behalf of the lender, but the applicant usually meets the cost.
Edward and Wendy wish to make some improvements to their home. Which is the most likely to require planning consent?
A. Building a garage.
B. Building a patio area.
C. Rebuilding the conservatory.
D. Replacing a greenhouse.
A. Building a garage.
Which of the following is true in relation to interest-only mortgages?
A. Interest rates tend to be slightly lower than repayment loans.
B. The monthly payments to the lender will be lower than a repayment mortgage.
C. Under the new rules, you can no longer take an interest only mortgage.
D. They are suitable for risk averse borrowers.
B. The monthly payments to the lender will be lower than a repayment mortgage.
Pauline is taking out an interest-only mortgage without a repayment vehicle, to minimise her initial monthly payments while she completes her accountancy qualifications. However, she is fairly risk averse. What available option is likely to suit her once she has passed her exams?
A. Fund equity ISAs to repay the capital.
B. Maintain the loan on a fixed interest basis.
C. Rely on savings from her increased earnings.
D. Transfer to a capital repayment basis.
D. Transfer to a capital repayment basis.
Jennie has taken out a lifetime mortgage, which meets the Code of Practice requirements. If she takes advantage of the scheme’s mortgage interest ‘roll up’ facility, what are the implications?
A. Her interest payments will gradually decrease year on year.
B. Her repayment vehicle may not be sufficient to repay the mortgage at the end of the term.
C. It increases the debt which needs to be repaid on death.
D. The arrangement might result in a negative equity situation if interest rates increase.
C. It increases the debt which needs to be repaid on death.
Which of the following directly held investments is not permitted in an ISA?
A. gilts.
B. property
C. peer to peer lending.
D. investment trust shares
B. property
