Topic 23 Flashcards
Which of following statements is true in respect of a five-year fixed-rate mortgage?
a. It cannot be redeemed during the five-year fixed-rate period.
b. The lender is likely to levy an early repayment charge in the fixed-rate period.
c. The rate charged will always be higher than the lender’s standard variable rate.
d. The rate charged will always be linked to the Bank rate.
b. The lender is likely to levy an early repayment charge in the fixed-rate period.
Kristina has just arranged a discounted-rate mortgage.
This means that:
a. any product fee must be refunded if the mortgage does not go ahead.
b. early repayment charges would not apply to the mortgage.
c. the interest rate will be at a discount from the Bank of England base rate.
d. the mortgage may, in some circumstances, be subject to an interest rate floor.
d. the mortgage may, in some circumstances, be subject to an interest rate floor.
Jules and Mia, aged 55, have a comfortable income and are 16 years into their mortgage term. They are looking to remortgage, purely to achieve a lower interest rate on their outstanding mortgage balance of £30,000. Luke and Fiona are in their late 20s and about to embark on their first house purchase with a £130,000 mortgage.
Why is a fixed-rate mortgage likely to be of less importance to Jules and Mia than to Luke and Fiona?
a. Their attitude to risk is more cautious.
b. They are more concerned with reducing costs than payment stability.
c. They are older.
d. They only want a short-term arrangement.
b. They are more concerned with reducing costs than payment stability.
Which of the following is a difference between fixed and capped-rate mortgages?
a. Fixed-rate mortgages may be subject to a collar.
b. Only capped-rate mortgages may have extended early repayment charges.
c. Only fixed-rate mortgages have a product fee.
d. Payments on a capped-rate mortgage may go down.
d. Payments on a capped-rate mortgage may go down.
Maureen’s proposed house purchase will use up most of her savings. She is attracted to a cashback mortgage with a £500 cashback and a three-year early repayment charge period. Which of the following is true?
The cashback:
amount is added to the capital outstanding.
is paid in instalments over the three years.
will always be paid on exchange of contracts.
will be tax free.
will be tax free.
Nikki is considering a capped-rate mortgage.
Which of the following statements is true?
Capped-rate mortgages always have a collar.
The interest rate will always be lower than the lender’s standard variable rate.
The interest rate will always track the Bank of England base rate.
The interest rate will vary with the lender’s variable rate up to the capped level.
The interest rate will vary with the lender’s variable rate up to the capped level.
