Types Of Borrower Flashcards
The three P’s of assessing a mortgage application?
Person - is the lender able and willing to lend to the applicant
Property - is the property suitable security for the required mortgage
Purpose - is the purpose of the mortgage acceptable (E.g. home improvements capital raising)
Elena and Rita are in a business partnership together and have arranged a mortgage loan of £240,000. They agree between them that Elena will pay for a third of the mortgage and Rita two thirds.
However, Rita very suddenly leaves the country and does not leave any contact details. How much of the loan is Elena liable to pay?
A) £80,000
B) £160,000
C) £240,000
C) £240,000
Key features of a limited company -
How shareholders are remunerated?
What liability they have to company debts?
A limited company is a separate entity and can borrow in its own right
Share holders receive income in the form of dividends
Shareholders nor directors are responsible for the company debts
Shareholders may lose there investment but can not be pursued beyond this.
Corporate borrowers - basic rules regulation?
Corporate mortgages are not regulated by the FCA unless the loan is for a small business and secured on a residential property. MCOB rules then apply but firms can adapt some of the rules.
What is -
Ordinary Power of Attorney?
Lasting Power of Attorney?
An ordinary power of attorney enables the attorney to carry out activities relating to the donors financial and property affairs. Used by people who are mentally capable but physically infirm. Also used by people who are abroad for extended periods. They maintain there own rights and controls over everything. The power ceases when the donor becomes mentally incapable.
Lasting power of attorney is specifically designed to enable people to decide who will look after their affairs if and when they are mentally incapable to do so themselves. Must be registered with Office of Public Guardians (OPG)
Helena and Cath have a £120,000 mortgage in their joint names on their flat they bought two years ago. Helena and Cath have split up, Helena has moved out and Cath has not been able to contact her about paying the mortgage. Who will the lender hold liable if the mortgage payments are not made?
A) Cath for the whole amount, because she is the only person actually living in the flat.
B) Helena and Cath, but the lender will pursue Cath for the whole amount if Helena cannot be contacted.
C) Cath for 50% of the outstanding payments and Helena for the remainder.
D) Cath for 50% because she is only liable for half the amount borrowed.
B) Helena and Cath, but the lender will pursue Cath for the whole amount if Helena cannot be contacted.
What are the three main reasons a personal borrower might require a mortgage?
Purchase a family home
Arrange additional finance
Bridging finance
What must a lender establish before agreeing to lend to trustees?
That the trustees have the authority to borrow for the proposed transaction under the terms of the trust deed.
A partnership business has a legal existence of its own, separate from that of the individual partners, true or false?
False
A partnership is not a separate legal entity, assets and liabilities are jointly owned by the partners
James wishes to raise £30,000 for his small business by arranging a further advance on the mortgage of his family home. Would the further advance be a regulated mortgage?
Yes
Even though it is for business purposes it would be secured on the family home. As long as at least 40 % of the land is used as a main residence.
Banda has mortgages in two BTL properties. Which she owns via a special purchase vehicle. Are the mortgage regulated under MCOB?
No
The properties are regulated under the mortgage directive order 2015
An undischarged bankrupt cannot own a property. True or false?
False
An undischarged bankrupt can own a property, although the trustee in bankruptcy may take it to pay their debts. An undischarged bankrupt cannot aquire an interest in a property, they cannot buy whilst undischarged.
Alan was declared bankrupt for the first time in London on 5th May this year. He will be discharged on
A) 5 May next year
B) 5 May two years later
C) 5 May three years later
D) 5 May five years later
A) 5 May next year
Bankruptcy lasts 12 months
A person who makes a power of attorney is called a donor, true or false?
True
Jack established an enduring power of attorney in 2006, with his daughter as his attorney. Jack is now suffering from dementia and his daughter wishes to sell his house and use the proceeds to extend her own home so that Jack can move in with her. Is she permitted to do this?
Only if the EPA is registered with the office of the public guardian. An EPA must be registered when the donor loses mental capacity.
