Topic 9&10 Flashcards
Under the new mortgage affordability rules introduced in April 2014, which of the following is likely to be considered a committed expense:
A. council tax
B. personal loan
C. childcare
D. electricity
B. personal loan
Harry provides an advised sales service to his customers. Which one of the following would indicate that he is following the principles of ethical advice?
A. Presenting a range of products that might be suitable, allowing the customer to choose the most appropriate.
B. Recommending the lowest cost product.
C. Recommending the product that best meets the needs of the advisor and the customer.
D. Using plain customer friendly language when explaining recommendations.
D. Using plain customer friendly language when explaining recommendations.
In order to be seen to give ethical advice, the adviser’s fundamental approach should be to:
A. always provide an ‘advised’ sale.
B. focus on completing the fact find.
C. gather all relevant facts and attitudes from the consumer.
D. provide information on a range of products.
C. gather all relevant facts and attitudes from the consumer.
In offering mortgage finance, it is ILLEGAL to discriminate on grounds of:
A. type of property.
B. age of applicant.
C. occupation of applicant.
D. nationality of applicant.
D. nationality of applicant.
When determining borrowing limits, a lender is LEAST likely to be influenced by whether a person’s income:
A. includes overtime.
B. is paid weekly or monthly.
C. fluctuates on a seasonal basis.
D. is fixed or related to performance.
B. is paid weekly or monthly.
A lender considering the credit risk of making a loan to a limited company in 2019 will usually review the company’s performance at LEAST over the period since:
A. 2016
B. 2018
C. 2014
D. 2013
A. 2016
For what principal reason would a mortgage lender collect the details of all the likely occupants of a property that a consumer is intending to purchase?
A. To ascertain whether they are likely to default.
B. Because, in case of default, the property will be difficult to sell if it has sitting tenants.
C. ensure that an overriding interest is not created.
D. To establish that the property will be used only for residential purposes.
C. ensure that an overriding interest is not created.
What figure will lenders normally use for affordability calculation purposes, when assessing the income of a self-employed prospective borrower?
A. Turnover
B. Personal drawings from the business
C. Net profits after tax
D. Net profits before tax
D. Net profits before tax
Marion is regarded as a non-UK resident, as she has worked in France for several years. She expects to return to the UK permanently within the next two years but wishes to buy a property in England now, ready for her return. How might a lender deal with this?
A. The loan might be considered but only if Marion can provide some additional security
B. If a loan is approved, it is likely to have specific conditions attached
C. In the same way as for a UK resident
D. Her application can only be accepted when she resumes UK residency
B. If a loan is approved, it is likely to have specific conditions attached
To assess the underlying profitability and structure of a business, a lender will normally want to examine several items of financial information. Which of the following will provide a clear picture of a company’s assets at the end of its trading year?
A. The balance sheet
B. The profit and loss account
C. The statement of drawings
D. The cash flow statement
A. The balance sheet
Graham is self-employed and has been asked to provide various pieces of information in support of his application for a mortgage. In which of the following documents would a figure for his personal drawings be found?
A. Balance sheet
B. Business taxation computation
C. Cashflow statement
D. Profit and loss account
A. Balance sheet
Marion, a self-employed consultant, has applied for a re-mortgage. Which one of the following is her new lender LEAST likely to ask to see when verifying information on her application form?
A. Several recent profit and loss accounts
B. A business plan
C. A self-assessment tax calculation
D. Existing mortgage account statements.
B. A business plan
Sam is hoping to secure a five-year fixed rate mortgage at 4%. In relation to stress testing, the latest Financial Policy Committee recommendation was to use an increase of 3%, and independent market analysis suggested a maximum increase of 2%. What is the minimum interest rate the lender must use when applying the interest rate ‘stress test’ to Sam’s application?
A. 4%
B. 5%
C. 6%
D. 7%
A. 4%
Which of the following is not one of the FCA’s Fair Treatment of Customers (FToC) outcomes?
A. Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.
B. Consumers are provided with products that are guaranteed to perform as the firm indicated.
C. Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture.
D. Where consumers receive advice, the advice is suitable and takes account of their circumstances.
B. Consumers are provided with products that are guaranteed to perform as the firm indicated.
John is a sole trader. His accounts show the following figures: Turnover £70,000
Basic materials for carrying out his day-to-day work £20,000 Routine business expenses £10,000, Personal drawings £30,000, Based on these figures his net profit would be:
A. £10,000
B. £40,000
C. £50,000
D. £60,000
B. £40,000
