Topic 25 Flashcards
Kristina bought a flat in London, in May 2022, under the Help to Buy Equity Loan scheme.
Which of the following statements is true regarding the arrangement?
a. A monthly fee of £2 is payable until the end of the arrangement.
b. Kristina can repay some of the equity loan at any time, subject to a minimum repayment of 10% of the property’s market value at the time.
c. Kristina’s mortgage could be on an interest-only basis.
d. Kristina will be required to pay interest on the equity loan at 1.75% from the third year.
b. Kristina can repay some of the equity loan at any time, subject to a minimum repayment of 10% of the property’s market value at the time.
Jennie has taken out a lifetime mortgage that meets the Equity Release Council’s rules and product standards.
If she takes advantage of the scheme’s mortgage interest roll-up facility, what are the implications?
a. Her interest payments will gradually decrease year on year.
b. Her repayment vehicle may not be sufficient to repay the mortgage at the end of the term.
c. The arrangement increases the debt that needs to be repaid on her death.
d. The arrangement might result in a negative-equity situation if interest rates increase.
c. The arrangement increases the debt that needs to be repaid on her death.
Annie is a 55-year-old widow and Sophia is a 75-year-old widow. Both are interested in a lifetime mortgage on an interest roll-up basis, raising the maximum amount possible.
Assuming both are in good health, which factor might make such a plan less suitable for Annie than Sophia?
Annie’s age.
Annie has no children.
Annie only requires a cash lump sum.
Annie wants to retain ownership of the property.
Annie’s age.
Harry, aged 60, and Grace, aged 58, are reaching the end of their interest-only mortgage term but are facing a £15,000 shortfall. They will not consider equity release, but may be interested in a retirement interest-only mortgage.
Which of the following is true?
As there is no repayment vehicle, the lender would have to include the cost of an endowment policy or ISA in the affordability assessment.
The affordability assessment requirement for such a mortgage can be met if they certify their own income and expenditure.
The lender must carry out an affordability assessment based on interest-only payments.
The lender would not have to carry out a full affordability assessment on such a mortgage.
The lender must carry out an affordability assessment based on interest-only payments.
Julian and Sandy’s current interest-only mortgage is due to be repaid shortly, but they do not have the funds to repay it. To solve their problem, they have successfully applied for a retirement interest-only mortgage.
This means that:
Julian and Sandy must be at least 67.
the interest on the new mortgage can be rolled up.
the lender is not required to carry out affordability checks.
the new mortgage can run until they have both died or permanently vacated the property.
the new mortgage can run until they have both died or permanently vacated the property.
Aaron and Sarah moved into their first local authority house in England in January 2024 as secure tenants. When will they first gain the right to buy their home?
January:
2025.
2026.
2027.
2029.
2027
The minimum period to be eligible for “right to buy” is 3 years with a maximum discount of 70%.
