Redmill Week 4

Question 1

Give 3 ways in which someone may be vulnerable?

Answer 1

Someone may be vulnerable due to:
- Physical health
- Education
- Age
- Life events (Divorce/bereavement)
- Learning difficulties
- High debt

Question 2

What is the aim of a discounted rate?

Answer 2

A discounted rate is used to incentivize variable rate borrowing

Question 3

Who does a discounted rate appeal to?

Answer 3

A discounted rate appeals to first time buyers usually.

Question 4

What happens at the end of a fixed rate term?

Answer 4

At the end of a fixed rate term, it reverts back to the SVR or higher

Question 5

Who may a flexible mortgage be suitable for?

Answer 5

A flexible mortgage may be suitable for someone who does not have a set income - such as self-employed or those who receive commissions.

A flexible mortgage could also be good for someone looking to repay their mortgage off quicker

Question 6

Who could an offset mortgage be suitable for?

Answer 6

An offset mortgage could be suitable for those with a few accounts with the same provider - The balances offset the interest.

Question 7

Who could a current account mortgage be suitable for?

Answer 7

A current account mortgage may be suitable for those who don’t mind having one account with a very large overdraft with everything running out of the one account

Question 8

What are your options once the fixed rate period ends?

Answer 8

Once the fixed rate period ends, you could either:
- Choose to stay on the SVR
- Look for a better deal with the same lender
- Shop around and look for a better deal with another lender

Question 9

Which one requires a further assessment of affordability? Drawdown or further advance?

Answer 9

Further advances require further assessment of affordability

Question 10

What is tacking?

Answer 10

Tacking is where the original lender adds a further advance to the original mortgage and combining the two.

Question 11

What is the difference between Closed Bridging and Open Bridging? In relation to bridging loans.

Answer 11

Closed bridging is where the property has sold and the contracts are binding, however open bridging is where there is no binding contract therefore riskier to both lender and borrower.

Question 12

Why may someone switch from interest only to capital repayment?

Answer 12

One may switch from interest only to capital repayment if:
- Want to cash in investment which is being used as the repayment vehicle
- May be in financial difficulty
- Want to make overpaymnets
- May not be happy with performance of the investment product and want peace of mind that the mortgage will be paid
- Improvement of financial circumstances

Question 13

Why may someone switch from capital repayment to interest only mortgages?

Answer 13

They may switch if they are in financial difficulty and want to reduce their payments

Question 14

What is transfer of equity?

Answer 14

Transfer of equity is removing someone from the mortgage and can only be done if both parties agree

Question 15

Is SDLT due on transfer of equity if they are married?

Answer 15

If married, there is no SDLT due on transfer of equity

Question 16

Is there SDLT due on transfer of equity if not married?

Answer 16

Yes SDLT could be payable on transfer of equity if not married

Question 17

What is equity of redemption?

Answer 17

Equity of redemption is ones right to repay the mortgage early

Question 18

What % by value of creditors need to agree for an IVA to be binding

Answer 18

75% of creditors by value need to agree for an IVA

Question 19

What is the usual timeframe for bancrupcy?

Answer 19

Bankruptcy usually lasts one year but can be extended up to 5 years

Question 20

Are debt obligations ended at the end of bankruptcy even if all debts are not paid?

Answer 20

Yes debt obligations end at the end of bankruptcy even if all debt is not paid

Question 21

How long do records in relation to mortgage arrears need to be kept for?

Answer 21

Records relating to mortgage arrears need to be kept for at least 3 years after the arrears have been paid

Question 22

On a regulated mortgage, when a customer falls into arrears, how soon does a warning need to be sent to the customer?

Answer 22

When falling into arrears, a customer should be sent a warning as soon as possible but always within 15 days of the lender becoming aware.

Question 23

What does ‘capitalising arrears’ mean?

Answer 23

Capitalising arrears is allowing the customer to add the arrears as a lump sum to the loan on property.

Question 24

What is ‘mortgage rescue’?

Answer 24

Mortgage rescue is where a customer sells part of the property to a housing association for a lump sum to pay the arrears on the mortgage