Topic 23 Flashcards
Which one of the following recent changes in circumstances would lead to a ‘consent to mortgage’ form being required before a further advance could be granted to an existing borrower?
A. The borrower and his wife have recently adopted a baby.
B. The borrower’s 17-year old grandson has moved in to live with the family.
C. The borrower has built a conservatory at the property.
D. The borrower’s daughter has moved away to be married.
B. The borrower’s 17-year old grandson has moved in to live with the family.
Adding a subsequent mortgage to an existing one and postponing an intervening second charge is known as:
A. consolidation
B. decharging
C. tacking
D. remortgaging
C. tacking
Lenders insist on all necessary planning and related consents being obtained before making a further advance for home improvement because:
A. they have an agreement with local authorities that they will do so.
B. their security could be unmarketable if changes had been made without consent.
C. the law requires them to do so.
D. plans are required before the solicitor can draw up a contract.
B. their security could be unmarketable if changes had been made without consent.
Oliver and Harriet are considering remortgaging their property valued at £200,000, from the £160,000 variable rate to a £175,000 fixed rate deal in order to build a conservatory. What should they be wary of?
A. A new lender might impose a higher lending charge.
B. The conservatory is unlikely to add any value to the property.
C. The need to postpone the existing lender’s charge.
D. They will have to pay early repayment charges on their existing mortgage.
A. A new lender might impose a higher lending charge.
What is the most likely reason for a lender requiring a new valuation when a borrower applies for a further advance?
A. The original loan-to-value ratio was high.
B. The original loan-to-value ratio was low.
C. The unexpired mortgage term is less than 20 years.
D. The original mortgage was subject to a retention for essential repairs.
A. The original loan-to-value ratio was high.
A deed of postponement might be necessary when:
A. A second party is to be added to a mortgage.
B. The order of priority of charges against a property is to be changed.
C. An existing mortgage is to be redeemed and replaced with a new charge.
D. Arrears on a mortgage account are to be capitalized.
B. The order of priority of charges against a property is to be changed.
When a lender offers a further advance to a borrower, a new valuation of the property is normally required. The lender will wish to consider this new value in relation to:
A. the amount of the further advance.
B. the proposed new total debt.
C. the original valuation.
D. the original loan.
B. the proposed new total debt.
A mortgage deed that obliges the lender to make further advances:
A. will result in other lenders being unable to take a charge over the property.
B. will require a subsequent mortgage to execute a deed of postponement.
C. means that borrowers can only apply to their original lender for an advance.
D. means that the further advances will take priority over other lenders’ charges.
D. means that the further advances will take priority over other lenders’ charges.
Under the Law of Property Act 1925, what determines the priority of legal mortgages in England and Wales?
A. Date of registration
B. Order in which claims for repayment are made
C. Amount of equity
D. Size of mortgage
A. Date of registration
The MCOB Rules cover the requirements for an illustration for a further advance. Which of the following is true of such an illustration?
A. It is not required to show the total borrowing.
B. It must be based on the amount of the further advance only.
C. It must be based on the new total lending.
D. It uses a different format from the illustration required for a new mortgage.
B. It must be based on the amount of the further advance only.
Which one of the following BEST describes the situation if a first lender is asked to supply information about a borrower’s account to a prospective second mortgagee?
A. Not obliged to supply information but will normally do so with the borrower’s permission.
B. Must supply the information but may not charge a fee.
C. Must supply personal and property details but not financial details.
D. Is permitted to charge a fee for information held on computer records.
A. Not obliged to supply information but will normally do so with the borrower’s permission.
Annie is a 50-year-old widow and is interested in a home income plan on a roll up basis. Which factor might make such a plan unsuitable:
A. her age.
B. she has no children.
C. she only requires cash.
D. she wants to retain ownership of the property.
A. her age.
George and Joan would like to raise the maximum capital from their home, which they own outright and are considering lifetime mortgages and home reversion schemes both of which follow the FCA code of practice. What is an advantage offered by the home reversion scheme compared to the mortgage based scheme?
A. They will retain ownership of the property.
B. They will probably be able to receive more cash.
C. The amount owed will never exceed the value of the property.
D. Increases in income or capital will not affect state benefits.
B. They will probably be able to receive more cash.
A borrower who buys a new property WITHOUT having obtained a buyer for the old one will require:
A. closed bridging
B. an arrangement
C. open bridging
D. a release of part security
C. open bridging
Which one of the following statements regarding bridging finance is FALSE?
A. Open bridging is where a new property is purchased without obtaining a buyer for the existing property.
B. Lenders prefer open bridging situations to closed bridging.
C. Open bridging is a higher risk for the borrower than closed bridging.
D. Closed bridging is where a buyer has found a buyer for his current property but he wishes to move ahead of disposing of this property.
B. Lenders prefer open bridging situations to closed bridging.
