Purchasing A House

Question 1

Actions to ensure consumer understanding requirement under FCA consummer duty

Answer 1

Intial discussions to access valnerabilty
Communicate to suit clients need eg. Phone, email
Adjust/adapt to meet clients’ needs
Provide information in writing
Benefits and drawbacks must be clear
Understandable no jargon
Check clients’ understanding/repeat back
Give enough information to make informed decisions
Allow time with no pressure
Be available for further discussion

Futs well with PATIENT

Question 2

Explain stamp duty land tax for first-time buyers and what extra on top of the deposit should be accounted for.

Answer 2

Stamp duty land tax relief is available for first-time buyers.
0% for properties under £300,000 up to £500,000
5% between £300,000 to £500,000
Solicitors fees
Search fees
Removals
Furnishing/home improvements and repairs

Question 3

What are the advantages of repayment mortgage

Answer 3

Cheaper pay less in interest over the term plus no cost for investment product
Level of debt and interest rate reduces over time
No investment, marketing, or shortfall risk
Peace of mind
Few interest only products on the market and is easier to remortgage

Question 4

Advantages of interest only mortage

Answer 4

Potential growth on investments
Reduced outgoings to lenders more disposable income
May repay early
Can access investments if needed
Tax efficient investments are available and matches ATR

Question 5

What are the disadvantages of an interest only mortage

Answer 5

Investment risk/increased total interest cost/interest rate risk
Shortfall risk and no guarantee of repayment
Temptation to withdraw funds
Needs advice, monitoring and fees, and charges
Limited choice of lenders.

Question 6

Key features of a lifetime ISA

Answer 6

Used for fist home or retirement
Aged 18 to 40 to open
Can invest £4000 a year up to 50 years old
Government adds 25% bonus up to £1000 per year paid monthly in arrears
Cash, stocks, and shares or both available
No contributions or bonuses are available over 50, but still grows
Funds can be withdrawn penalty free for first home, over the age of 60, or if given 12 months terminally ill.
Withdrawl charge if taken for any other reason
Max property price £450,000
Income and gains tax-free
Liquid but with a penalty for access
Aditional permitted subscription Retains tax efficiency due to marriage

Bonus is less than tax relief available for higher rate earner on pension
Must be held for a year to obtain bonus
Restricted use
Charges
Limited providers
Adotional admin

Question 7

How could Zophia and Bartek protect a mortgage

Answer 7

Life insurance first death to clear mortgage
Term assurance, either level or decreasing, depending on whether interest only or not
To prevent the survivor struggling with payments

Critical Illness Cover
Term assurance
To pay off in case off if severely ill and concentrate on recovery

Income protection
To cover monthly payments incase of Longterm ill.
To focus on recovery rather than mortgage

Question 8

Review appointment for saving for a mortage

Answer 8

Changes in circumstances
-changes in objectives relating to this goal
-have they stayed out of debt
-amount saved

Legislation
-changes in legislation, tax and regulation,
-Changes in interest
-Changes in housing market
I- sutability of savings vehicles being used to save for this objective

Charges
-can they afford repayment of mortage
-can they afford mortgage protection

Rebalance
-any rebalancing or switching to meet this objective

Question 9

What should be covered at a mortgage protection review

Answer 9

Circumstances
-changes in need for income and capital
-change in employment status
-change in repayment date for mortgage

Legislation
-any changes in tax, legislation, and regulation which affect this
-changes in state benefits

Investments
-are there any new products

Charges
-current level of mortage payments
-are they still afordable
-redemption penalties