TOPIC 25 Flashcards
he minimum and maximum initial shares available through the Help to Buy shared ownership (England) taken out today are:
10% and 50%.
25% and 75%.
10% and 75%.
10% and 75%.
A buyer using a shared ownership scheme will pay a maximum rent of 3% to the:
provider, based on the value of the part retained by the provider.
lender, based on the value of the part retained by the lender.
provider, based on the value of the property when purchased.
provider, based on the value of the part retained by the provider.
Shelley bought a property in July 2022 through the Help to Buy shared ownership (England). The property will be:
freehold.
leasehold on a 99-year lease.
leasehold on a 990-year lease.
leasehold on a 990-year lease.
All property bought using the scheme is leasehold. From April 2021 the standard lease term was increased from 99 years to 990 years.
Jason bought a flat in England using the Help to Buy Equity Loan scheme, with an equity loan of £15,000 to help afford the £150,000 purchase price. He has made no repayments of the loan and is now selling the flat for £200,000. How much will he have to repay to settle the equity loan?
£15,000.
£20,000.
£50,000.
£20,000.
If no repayments of the equity loan have been made and the property is sold, the equity loan is repaid as a percentage of the sale price. In this case it would be 10% of £200,000 = £20,000.
Ed and Kelly have been living in their local authority house in London for eight years and now want to exercise their right to buy it. What discount are they entitled to, ignoring any monetary cap that might apply?
35%.
38%.
41%.
The discount for houses starts at 35% after 5 years’ tenancy and accrues at the rate of 1% for each additional year, up to 70%. Kelly and Ed have been tenants for 8 years, which would give a discount of 35% + 3% = 38%.
38%.
The discount for houses starts at 35% after 5 years’ tenancy and accrues at the rate of 1% for each additional year, up to 70%. Kelly and Ed have been tenants for 8 years, which would give a discount of 35% + 3% = 38%.
Aleksy and Danuta exercised their right to buy their local authority flat, receiving a discount. At what point could they sell the flat without having to repay any of the discount?
Three years after purchase.
Five years after purchase.
Ten years after purchase.
Five years after purchase.
The discount is repayable during the first five years of ownership, with the proportion of the discount payable reducing each year.
Which of the following would not be defined as a lifetime mortgage by the FCA? A mortgage:
requiring interest and partial capital repayments each month.
with no capital repayments that allows interest to be accumulated each month.
requiring interest and full capital repayments each month.
requiring interest and full capital repayments each month.
A lifetime mortgage cannot require full capital repayment until the borrower dies, leaves the property without a reasonable expectation of returning, sells the property or moves to another main residence. However, a lifetime mortgage can contain a condition requiring some repayment of capital during the term.
Which type of lifetime mortgage arrangement would result in the lowest interest accumulation?
Roll-up.
Drawdown.
Annuity-based scheme.
Drawdown.
A roll-up scheme would result in interest accumulating on the whole loan each month. An annuity-based scheme would use the amount borrowed to buy an annuity, but as a large lump sum is taken at the start to buy the annuity, interest would accumulate on the whole loan each month. A drawdown scheme means that part of the total advance available is taken each time. This will reduce the total interest accumulated, as interest is only accumulated on the amount actually drawn.
John took out a home reversion scheme when his house was valued at £200,000, entering 70% of his house into the scheme. On his death the property was valued at £300,000. How much, if anything, would pass to his estate?
Nothing.
£60,000.
£90,000.
£90,000.
The home reversion company owns 70% of the property so will receive 70% of the sale proceeds. This leaves 30% (£90,000) to John’s estate. The value of the property when the plan started is not relevant.
Which of the following is untrue of a home reversion plan?
The minimum age for the plan tends to be higher than for a lifetime mortgage.
Drawdown is not generally an option on such plans.
The planholder’s right to occupy the property is guaranteed by a lifetime lease.
Drawdown is not generally an option on such plans.
Many home reversion companies offer a drawdown option, whereby the planholder can sell further ‘chunks’ of the property at a later date.
Which of the following is untrue in relation to shared ownership?
The property is bought on a freehold basis.
It involves paying rent to the provider.
The maximum initial share is 75%.
The property is valued at its open market value.
The property is bought on a freehold basis.
Shared‑ownership properties are bought on a leasehold basis, not freehold.
A shared‑ownership mortgage is one on which part of the loan attracts zero or very low rate of interest. True or false?
True False
False: a loan on which part is repayable at zero or a very low rate of interest is a feature of the equity‑share mortgage.
In an equity‑share mortgage arrangement, the borrower pays rent for a portion of the property while owning the remainder. True or false?
True False
False: rent paid on a portion of the property is a feature of a shared‑ownership mortgage.
Ben and Gerry are hoping to buy a property in London, using the First Homes initiative (England) scheme. Which of the following is true?
They must arrange a mortgage to fund at least 75 per cent of the discounted price.
Their combined income cannot exceed £80,000.
The property price cannot exceed £420,000.
The discount will be 20 per cent of the market price.
The property price cannot exceed £420,000.
The property price in London cannot exceed £420,000.
Jay and Emma are buying a 50% share in their new home. What type of government scheme are they using?
Discount starter homes.
Help to Buy shared ownership.
Help to Buy Equity Loan.
Help to Buy shared ownership.
