Topic 24 Flashcards
Penelope wishes to remortgage in order to raise finance to repay her credit card debts. Of what particular issue should she be made aware if she follows this route?
A. It is likely that the overall long-term costs will be higher.
B. It is likely that her credit rating will be affected.
C. She will be charged an interest rate above the standard variable rate.
D. The loan will always be regulated by the Consumer Credit Act.
A. It is likely that the overall long-term costs will be higher.
A new adult occupant moves in to a house that is subject to a mortgage. What responsibility does that impose on the borrower at that stage in relation to the mortgage?
A. He must make the new occupant a party to the mortgage.
B. He must obtain a signed ‘consent to mortgage’ form.
C. He must inform the lender.
D. None.
D. None.
Jim is a sole borrower and his girlfriend, Maggie, has just moved in with him. Jim now applies for a further advance and confirms in the application form that Maggie is an undischarged bankrupt. What is the lender’s best step?
A. Allow Maggie to become a party to the mortgage but only if Jim’s income is sufficient to meet the increased payments.
B. Insist that Maggie becomes a party to the mortgage if the further advance is approved in principle.
C. Refuse to consider the advance request but give formal recognition to Maggie’s status as a tenant.
D. Insist that Maggie signs a consent to mortgage form if the further advance is approved in principle.
D. Insist that Maggie signs a consent to mortgage form if the further advance is approved in principle.
Which of the following is true where a mortgage is arranged as part of a debt consolidation programme?
A. The lender will not impose a higher lending charge.
B. It is likely to increase the risk of the property being repossessed.
C. The interest rate will be higher to reflect the reason for the additional borrowing.
D. The homeowner’s overall risk will be reduced by securing the loans in this way.
B. It is likely to increase the risk of the property being repossessed.
Irene has applied for a further advance. Since taking out her mortgage, she has married Phillip, who will now become a party to the mortgage, and her 20-year old daughter, Charlotte, has left home. From whom, will the lender require a consent to mortgage form?
A. Phillip
B. Irene
C. Charlotte
D. Nobody
D. Nobody
What risk is a borrower taking by consolidating unsecured debts into a repayment mortgage?
A. The risk that the mortgage interest rates might be higher than for the unsecured borrowing.
B. The risk that the associated repayment vehicle will not be enough to repay the capital.
C. The increased risk of negative equity at some point in the future.
D. There is no particular risk to this arrangement.
C. The increased risk of negative equity at some point in the future.
A borrower is considering a remortgage from his existing 6.5% interest only loan to a three-year fixed rate at 5%. He will not increase the £120,000 borrowing and has calculated that it will cost £750 in charges, fees and legal costs, which he will pay from savings. At what point will he start to benefit financially from the new arrangement?
A. Immediately
B. 4 months
C. 6 months
D. 13 months
C. 6 months
Following divorce from Sandie, Joe wants to continue as sole borrower on a mortgage that was previously in joint names. What new or altered factor might make the lender concerned about Joe’s ability to make future repayments?
A. Loss of tax relief on interest
B. Increased premiums on the endowment
C. Possibility of maintenance payments
D. Change in Joe’s tax status
C. Possibility of maintenance payments
A transfer of equity is where a:
A. borrower is added to or removed from the mortgage contract.
B. borrower takes out a second mortgage.
C. borrower assigns the endowment to the lender.
D. lender takes a property into possession.
A. borrower is added to or removed from the mortgage contract.
A court might set aside a mortgage lender’s early redemption fee if:
A. the clause specifying the size of the fee were not included on the actual mortgage deed.
B. the mortgage were linked to a personal pension.
C. it considered that it was so large that it effectively prevented early redemption.
D. the mortgage had been running for more than five years.
C. it considered that it was so large that it effectively prevented early redemption.
The action of a lender releasing a borrower from his covenants is known as:
A. discharge
B. vacation
C. redemption
D. release
B. vacation
Which of the following is true in relation to a transfer of equity?
A. A transfer of equity can only take place once during the lifetime of a mortgage.
B. It is not an effective way for the person transferring to avoid creditors.
C. Most requests for a transfer are originated by the lender.
D. The final decision on whether a transfer of equity will occur rests with the borrower.
B. It is not an effective way for the person transferring to avoid creditors.
Which of the following is NOT true in relation to a borrower making a partial redemption of his mortgage:
A. All payments made in addition to the normal monthly amount will be deducted immediately from the amount outstanding.
B. Some lenders will allow the borrower to keep a nominal amount outstanding to keep the account open.
C. The borrower will usually be able to keep the original monthly payment with a view to reducing the term of the mortgage.
D. The lender will usually set a minimum part redemption figure.
A. All payments made in addition to the normal monthly amount will be deducted immediately from the amount outstanding.
What is meant by the term ‘a clog on the equity of redemption’?
A. When the borrower refuses a request from the lender to repay the mortgage.
B. When the lender delays providing the borrower with a redemption statement.
C. Where a lender includes a term in the mortgage deed that deliberately prevents a borrower from repaying a mortgage early.
D. when a borrower defaults on payments.
C. Where a lender includes a term in the mortgage deed that deliberately prevents a borrower from repaying a mortgage early.
Paul wishes to make a part redemption payment on his mortgage. Which of the following statements is correct?
A. An early repayment charge must not be applied.
B. If the payment is made, Paul must reduce his monthly payment.
C. If the payment is made, the existing mortgage term must be maintained.
D. The lender may stipulate a minimum amount.
D. The lender may stipulate a minimum amount.
