Topic 28 Flashcards
Margot has a good credit history and is considering increasing her mortgage to consolidate a number of debts, totalling £6,500.
Under FCA rules, which of the following is true?
a. She can opt to proceed on an execution-only basis if she rejects the initial advice.
b. She will always need to provide evidence that she has repaid the consolidated debts.
c. The consolidated borrowing can only be taken on a capital repayment basis.
d. The lender is unlikely to need to assess the affordability of the new arrangement.
a. She can opt to proceed on an execution-only basis if she rejects the initial advice.
Calvin has a good mortgage repayment record, and although he has no major financial problems, he has some credit card balances.
He would like to reduce his outgoings and save about £150 a month by consolidating his credit card balance into his mortgage. His mortgage adviser has provided advice on the most appropriate way to mitigate the longer-term effect of this approach.
Assuming he proceeds with a remortgage, the advice is most likely to be to:
a. arrange the additional borrowing on a fixed-rate basis.
b. seek a sub-prime mortgage, which would better suit his needs.
c. seek an arrangement with the credit card companies to write off some of the debt.
d. use some of the monthly savings to gradually reduce the increased borrowing.
d. use some of the monthly savings to gradually reduce the increased borrowing.
Ian and Beth have run up debts on their credit cards and have received warnings about exceeding their credit limit and failing to make the minimum payments. They have been advised that consolidating these debts by using a remortgage would save them money each month.
Which of the following strategies would be least appropriate if they decided to change their current position?
a. Arrange a fixed-rate mortgage.
b. Choose a cashback mortgage.
c. Increase their credit card limit to allow for increased future borrowing.
d. Overpay the new mortgage each month.
c. Increase their credit card limit to allow for increased future borrowing.
Under the MCOB rules regarding the automatic capitalisation of payment shortfalls, the impact of such capitalisation, together with any previous automatic capitalisations, is not considered to be material where the:
a. borrower’s monthly payments will increase by less than £10.
b. borrower’s mortgage is at a loan to value of less than 50%.
c. total interest payable over the mortgage term will increase by less than £50.
d. total of the capitalised payment shortfalls is less than £1,000.
c. total interest payable over the mortgage term will increase by less than £50.
Which of the following would not normally be a requirement for a lender considering a request to suspend mortgage payments for a specified period from a borrower who is currently struggling to meet their mortgage payment?
That:
a. the missing payments must be cleared within a set time of the suspension ending.
b. the mortgage is on a repayment basis.
c. the suspension must be for at least 12 months.
d. there is reasonable equity in the property.
c. the suspension must be for at least 12 months.
Waqar and Grace are in trouble with their mortgage, having missed the last two payments. They have sought help from Citizens Advice.
The initial advice is most likely to be to contact:
a. a financial adviser.
b. an insolvency adviser.
c. the StepChange Debt Charity.
d. their lender.
d. their lender.
Penelope has 20 years remaining on her mortgage and she wishes to remortgage to raise finance to repay her credit card debts.
Of which particular issue should she be made aware if she follows this route?
It is likely that her credit rating will be severely affected.
It is likely that the overall cost will be higher over the long-term.
She may be charged an interest rate above the standard variable rate.
The additional borrowing would be always regulated under consumer credit legislation.
It is likely that the overall cost will be higher over the long-term.
A mortgage borrower in financial difficulty approaches Citizens Advice for help.
Its advice is:
free of charge to the borrower at all stages of the process.
subject to a charge that the borrower can reclaim from the lender.
subject to a charge to the borrower that can be added to the mortgage account.
subject to a nominal charge to the borrower, payable on receiving the advice.
free of charge to the borrower at all stages of the process.
