Topic 11

Question 1

Where a mortgage is supported by a guarantor, the guarantee can be rendered invalid as a result of:

a. a defect in the property title.

b. poor performance of any associated repayment vehicle.

c. the guarantor reaching state pension age.

d. undue influence being exerted on the guarantor.

Answer 1

d. undue influence being exerted on the guarantor.

Question 2

George has agreed to help his daughter Kate to buy her first house. Her lender has agreed to a joint borrower, sole proprietor mortgage.

This means that:

a. George will be registered as the legal owner, but Kate will have joint liability with him for the mortgage.

b. Kate will be registered as the legal owner, but George will have joint liability with her for the mortgage.

c. they will both be registered as legal owners, but only George will have liability for the mortgage.

d. they will both be registered as legal owners, but only Kate will have liability for the mortgage.

Answer 2

b. Kate will be registered as the legal owner, but George will have joint liability with her for the mortgage.

Question 3

Ron has agreed to stand as guarantor for 30% of his daughter’s mortgage.

This means that he has agreed to a:

a. conditional liability guarantee.

b. full liability guarantee.

c. limited liability guarantee.

d. mortgage indemnity guarantee (MIG).

Answer 3

c. limited liability guarantee.

Question 4

Which of the following is false in relation to mortgage guarantors?

A mortgage guarantor must be informed if the borrower misses any mortgage payments.

Mortgage guarantors must be informed if the borrower seeks a further advance.

The guarantor has no legal interest in the property and no right to inspect the mortgage documentation.

The lender has the right to refuse to release a guarantor from their obligations, even if the borrower’s circumstances improve.

Answer 4

A mortgage guarantor must be informed if the borrower misses any mortgage payments.

The guarantor does not have an interest in the property on which they are guaranteeing the mortgage and does not have the right to inspect mortgage documentation or be informed of mortgage payments missed.