TOPIC 3 - Mortgage Regulation Flashcards
Anita took out a second mortgage on her home in January 2016. Is her mortgage subject to MCOB?
Yes
Brian has just bought a three storey property with the help of a mortgage. Two floors provide office accommodation and the top floor is a two bedroom flat. Is the mortgage regulated?
No, less than 40% of the land is to be used as a dwelling.
What type of lending became subject to MCOB rules in 2016, and included back book loans?
Second charge mortgages
All mortgages on BTL property owned by individuals are consumer buy to let mortgages. True or false?
False
Gabby, aged 56, has entered into an arrangement where a lender has given her a mortgage that must be repaid only when she moves, goes into care or dies. What type of arrangement does she have?
a) A home reversion plan.
b) A home purchase plan.
c) A lifetime mortgage.
c) A lifetime mortgage.
Andy has arranged a home reversion plan, entering 50 per cent of his property into the plan in exchange for a lump sum of £80,000. On his death the property is valued at £300,000. How much, if any, of the property value would be included in his estate for distribution to his heirs?
a) Nothing.
b) £110,000.
c) £150,000.
d) £220,000.
c) £150,000.
Which of the following is not a chapter of MCOB?
a) Application and purpose.
b) Training and competence.
c) Financial promotions.
d) MCD: further advances.
b) Training and competence.
True or false? Regulated mortgages of less than £25,000 on residential property are regulated under the Consumer Credit Acts 1974 and 2006.
False. Regulated mortgages are regulated under MCOB.
True or false? George wants to borrow £20,000 in the form of a personal loan to install a new bathroom and kitchen in his house. This loan would be subject to consumer credit legislation.
True
An estate agent that makes misleading claims about the properties it is marketing is potentially in breach of:
a) Consumer Protection from Unfair Trading Regulations 2014.
b) The Consumer Protection (Amendment) Regulations 2014.
c) Consumer Credit Act 1974.
d) Consumer Credit Act 2006.
b) The Consumer Protection (Amendment) Regulations 2014.
A mortgage can only be secured using property or land. True or false?
False. Other assets such as share portfolios.
Some time ago, Anita built a family house on a plot of land she bought, and she is now looking to remortgage. The mortgage will be regulated if:
at least 40% of the house and garden will be used as family accommodation.
the house and garden occupies at least 40% of the land.
the house was built after 31 October 2004.
the house and garden occupies at least 40% of the land.
Vladimir today applied for a commercial mortgage to buy a three-storey building with a shop on the ground floor and a two-storey maisonette on floors one and two. All floors are of an equal size. Vladimir intends to live in the maisonette and rent out the shop. The mortgage will be:
an MCD regulated mortgage.
a buy-to-let mortgage.
a regulated mortgage.
an MCD regulated mortgage.
As roughly 66% of the building will be used as Vladimir’s home, and the mortgage will be arranged after 21 March 2016, it will be a Mortgage Credit Directive (MCD) regulated mortgage.
Brenda and Tom have been informed that their mortgage is a regulated lifetime mortgage. Which of the following statements are not true? Select all the false statements.
a) Brenda and Tom must be in their 30s.
b) The lender can require full repayment of the mortgage after a stated time.
c) The lender may require Tom and Brenda to make regular interest payments.
d) The lender can allow Brenda and Tom to roll up any interest payments.
e) The mortgage will end if Tom and Brenda sell their house.
a) Brenda and Tom must be in their 30s.
b) The lender can require full repayment of the mortgage after a stated time.
Shahid is buying a house through an Islamic home finance plan. Which of the following would not be acceptable under Islamic law?
The provider buys the property and sells it to Shahid at a higher price, with Shahid making regular payments of capital over an agreed term.
Shahid arranges a mortgage to buy the property, but any interest due is added to the capital and repaid at the end of an agreed term.
The provider buys the property and sells it to Shahid at the same price. Shahid then makes regular payments of capital and rent over an agreed term.
Shahid arranges a mortgage to buy the property, but any interest due is added to the capital and repaid at the end of an agreed term.
