Secured And Unsecured Lending Flashcards
Define
A) A mortgagor
B) A mortgagee
A) mortgagor is the borrower
B) mortgagee is the lender
Whichbif the following is not true in relation to a replayment mortgage?
A) the higher the interest rate, the higher the monthly repayment to the lender.
B) life cover is built in
C) the loan is guaranteed to be fully repaid at the end of the term, providing monthky repayments are maintained
D) at the beginning of the term most of the monthly reoayment is paying interest on the loan
B) life cover is built in
For what reason might an ISA not be suitable for someone who is arranging an interest only mortgage of 300,000 over a 5 year term
An ISA has an annual investment limit which would make it difficult to fund a large mortgage over a short period
It is not the responsibility of the lender to ensure that a borrower has a replayment vehicle in place for an interest only mortgage. True or false?
False
MCOB rules state that the lender must make sure there is a credible repayment vehicle in place and check it at least once during the term
Chris is 53 and is pleased to see from his annual personal pension statement that his pension pot has grown enough to enable him to take a tax free lump sum and pay off his interest only mortgage. Will this he possible?
Not yet as Chris has to be 55 in order to release funds from his pension
An advantage of a flexible mortgage is the ability to take further advances up to the lenders pre arranged limit. True or false?
True
What is the main advantage if a capped rate mortgage?
A) if interest rates go up, the mortgage interest rate will not exceed a prearranged limit.
B) the mortgage interest rate will never exceed bank rate
C) the amount payable is fixed for the duration of the capped rate
D) there is a discount off the normal variable mortgage interest rate
A) if interest rates go up, the mortgage interest rate will not exceed a prearranged limit.
Describe how home reversion plan works?
Home reversion plans involve the homeowner selling a percentage or all of their property to the scheme provider. The customer retains thebright to remain in the property, rent free or nominal rent, until their deaths or until they move into permanent residentual care. At that point the property is sold and the scheme receives a share of the profits equivalent to their share of owner-ship
Which form of borrowing is likely to have the highest interest rate?
A 25 year repayment mortgage
A personal loan with a 5 year term
A personal loan with a 5 year term
What is revolving credit?
A facility ti borrow more before you have paid the original amount borrowed. Credit cards are the most common type available.
