Topic 15

Question 1

Edward and Wendy wish to make some improvements to their home. Which is the MOST likely to require planning consent?

A. Building a garage
B. Rebuilding the conservatory
C. Replacing a greenhouse
D. Building a patio area

Answer 1

A. Building a garage

Question 2

Many alterations to a property require planning consent from a local authority. Which one of the following changes does certainly NOT require such consent?

A. Relocating a kitchen
B. Adding a two-room extension
C. Changing the use of the building
D. Installation of central heating

Answer 2

D. Installation of central heating

Question 3

Sometimes, building regulations are clearly inappropriate to a particular situation. Who then has discretion to OVERRULE them?

A. The Ombudsman
B. National House Building Council
C. The local authority
D. The County Court

Answer 3

C. The local authority

Question 4

What amount would be subject to a higher lending charge for a loan of £140,000 on a property valued at £160,000, when the lender offers up to 80% of the valuation without a higher lending charge?

A. £6,000
B. £12,000
C. £16,000
D. £20,000

Answer 4

B. £12,000

Question 5

What feature of a with-profits endowment policy makes it acceptable as additional security?

A. Reversionary bonuses
B. Terminal bonus
C. Surrender value
D. Regular premiums

Answer 5

C. Surrender value

Question 6

Geraint is a first-time buyer looking to buy a house in Cardiff for £220,000. How much Land Transaction Tax (LTT) will he be liable for?

A. None
B. £1,400
C. £1,900
D. £7,700

Answer 6

B. £1,400

Question 7

Which one of the following is FALSE in relation to mortgage indemnity guarantee insurance policies ?

A. They are a single premium insurance policy.
B. The borrower is protected in the event of default.
C. They are paid for by the mortgagor.
D. The premium can often be added to the loan.

Answer 7

B. The borrower is protected in the event of default.

Question 8

A lender would be MOST likely to require a higher lending charge when:

A. the interest rate is likely to fall.
B. the loan-to-income ratio is low.
C. the loan-to-value ratio is high.
D. the property market is rising.

Answer 8

C. the loan-to-value ratio is high.

Question 9

A higher lending charge used by a lender to buy a mortgage indemnity guarantee insurance policy is paid for by the:

A. lender and protects both the lender and the borrower.

B. lender but protects the borrower only.

C. borrower and protects both the borrower and the lender.

D. borrower but protects the lender only.

Answer 9

D. borrower but protects the lender only.

Question 10

If the guidelines produced by the Association of British Insurers (ABI) were strictly applied, how much of a mortgage indemnity claim for £30,000 is likely to be paid?

A. £18,000
B. £21,000
C. £24,000
D. £30,000

Answer 10

C. £24,000

Question 11

Daisy is planning to use a low-cost endowment policy as the repayment vehicle for her interest only mortgage. The lender can ensure that the policy’s proceeds on maturity are applied to the mortgage account by:

A. insisting that Daisy provides a written undertaking to apply the proceeds.

B. insisting that the policy is deposited with the title deeds.

C. taking a written guarantee from the endowment provider.

D. taking an assignment of the policy.

Answer 11

D. taking an assignment of the policy.

Question 12

How much would be payable to the Land Registry for registering a property in the new owner’s name?

A. £5-£10
B. £30
C. £39
D. £40-£910

Answer 12

D. £40-£910

Question 13

Mo and Aman’s existing lender has been asked to provide a reference for their new lender. How much is this likely to cost?

A. £10
B. £50
C. £75
D. £100

Answer 13

B. £50

Question 14

Which of the following fees would not be charged (or would be refunded) if the purchaser withdrew from the sale on the day he was due to exchange contracts?

A. bankruptcy search fees
B. environmental search fees
C. Land Registry fee
D. valuation fee

Answer 14

C. Land Registry fee

Question 15

Which one of the following would not be covered by an environmental search?

A. A history of flooding in the area
B. Mining subsidence
C. Planned development in the area
D. The presence of radon gas

Answer 15

C. Planned development in the area

Question 16

Why might a mortgage lender wish to take assignment of an endowment policy that is being used as the repayment vehicle for an interest-only mortgage?

A. To earn commission from the life insurance company.

B. To ensure that the policy documents are not lost by the borrower.

C. To ensure that they are made aware if the policy is in danger of lapsing.

D. To monitor the performance of the policy by receiving regular bonus statements from the assurance company.

Answer 16

C. To ensure that they are made aware if the policy is in danger of lapsing.

Question 17

Eric is arranging an endowment mortgage and has been advised that the endowment policy may be required to be assigned to the lender. Which of the following statements about assignment is INCORRECT?

A. The lender can surrender the policy should it need to.

B. The lender acquires certain legal rights over the policy proceeds.

C. The lender acquires an equitable right over the policy.

D. The lender gains the right to be notified if the policy lapses.

Answer 17

C. The lender acquires an equitable right over the policy.

Question 18

A deposit of an endowment policy used as a mortgage repayment vehicle gives the lender:

A. a legal right over the policy.
B. an equitable right over the policy.
C. rights to the policy proceeds.
D. the right to surrender the policy without the borrower’s consent.

Answer 18

B. an equitable right over the policy.

Question 19

Dawn has offered £256,000 for a house in Manchester. She does not currently own a property but she has previously been a property owner. The survey report highlighted essential repairs and the vendor later agreed a new purchase price of £225,000. How much did Dawn save in Stamp Duty Land Tax if the purchase completed?

A. £800
B. £2,250
C. £930
D. £310

Answer 19

A. £800