Mortgage Regulation Flashcards
Is a lender with a second charge against an asset likely to apply higher or lower rates of interest?
Higher
The first charge has priority over sums obtained through sale, the second charge has less protection.
What are the conditions of a regulated mortgage contract?
A lender provides credit to an individual or to trustees (the borrower)
And
The borrowers obligation to repay is secured by a mortgage on land in the European economic area, where at least 40% of the land is used (or intended to be used) as a dwelling.
Which of the following are ‘accidental landlords’? What would the implications be for them if they needed to arrange a new mortgage on the property they are renting out?
A) a sim inherits his parents house. He has his own property but does not wish to sell his parents house yet because the market is poor. In the meantime, in order to cover the costs of maintenance, etc, he decides to rent it out.
B) a couple have moved to another area to work but have been unable to sell their house. In order to cover the cost of maintenance etc, they have decided to rent it out while they settle nearer to work and perhaps buy another property in the area.
In both cases they would be regarded as accidental landlords and any new mortgage on the property would be regulated as a CBTL
Anita took out a second mortgage on her home in January 2016. Is her mortgage subject to MCOB?
Yes, second charge mortgages that would have been subject to MCOB had they been taken out after 21st March 2016 fall within the MCOB regime
Brian has just bought a three-storey property with the help of a mortgage. Two floors provide office accommodation and the top floor is a two bedroom flat. Is the mortgage regulated?
No. The mortgage is not regulated because less than 40% of the land is to be used as a dwelling.
Which category of lending became regulated under MCOB following implementation of the mortgage credit directive?
Second charge lending
All mortgages on BTL property owned by individuals are consumer BTL mortgages. True or false?
False.
CBTL only applies to mortgages arranged on or after 21 March 2016.
A CBTL only applies to accidental landlords
Gabby, aged 56, has entered into an arrangement where a lender has given her a mortgage that must be repaid only when she moves, goes into care or dies. What type of arrangement does she have?
A) a home reversion plan
B) a home finance plan
C) a lifetime mortgage
C) a lifetime mortgage
Andy has arranged a home reversion plan, entering 50% of his property into the plan in exchange for a lump sum of £80,000. On his death the property is valued at £300,000. How much if any of the property value would be included in his estate for distribution to his heirs?
A) nothing.
B) £110,000
C) £150,000
D) £220,000
C) £150,000
Which of the following is not a chapter of MCOB?
A) application and purpose
B) training and Competence
C) financial promotions
D) MCD: Further advances
B) training and Competence
Regulated mortgages of less than £25,000 on a residential property are regulated under the consumer credits act 1974 and 2006. True or false?
False
All residential mortgages are regulated under MCOB
George wants to borrow £20,000 in the form of a personal loan to install a new bathroom and kitchen in his house. This loan would be subject to consumer credit legislation. True or false?
True
There is no upper limit on the loan as it is not for business purposes
An estate agent that makes misleading claims about the properties it is marketing is potentially in breach of:
A) consumer protection from unfair trading regulations 2014
B) the consumer protection (amendment) regulation 2014
C) consumer credit act 1974
D) consumer credit act 2006
B) the consumer protection (amendment) regulation 2014
