U6: T27 - TRANSFERRING MORTGAGES Flashcards
Nicola has not made any changes to her current mortgage, which started in 2012, and is now considering whether to switch to a different arrangement with her current provider. In what circumstances would her lender not be able to apply the transitional arrangements in MCOB 11.7 regarding an affordability assessment? Where Nicola wants to:
a) increase the borrowing to pay for the mortgage arrangement fee.
b) increase the borrowing to fund essential repairs.
c) increase the borrowing to build an extension.
d) reduce her mortgage with a small capital payment.
C) Her current lender will not need to carry out a full affordability assessment, providing she is not increasing her borrowing other than to cover application fees or to pay for essential repairs or maintenance.
The facility to transfer a mortgage product to a new property during the term of a special deal, without incurring charges, is called:
a) transfer of equity.
b) redemption.
c) portability.
d) remortgaging.
c) portability.
The facility to transfer a mortgage product to a new property during the term of a special deal, without incurring charges, is called portability.
A transfer of equity occurs when a mortgage or block of mortgages is sold by one lender to another. True or false?
False: transfer of equity is the addition or removal of a borrower from the mortgage deed.
The terms and conditions of a mortgage contract can be changed by the lender without the borrower’s agreement. True or false?
False: contract terms can only be changed with the consent of both parties.
Removing a borrower from a mortgage deed cannot be done without the lender’s permission. True or false?
True: removing a borrower from the deed may result in a fundamental change in the remaining borrower’s ability to pay the mortgage.
Alan and Ann are divorcing and Ann is going to take over their interest‐only mortgage. What would be an appropriate course of action in relation to their joint endowment policy?
Alan and Ann are not obliged to make any changes to their endowment policy but as the policy is designed to repay the mortgage, and Ann is now solely responsible for the mortgage, it would be appropriate to transfer the policy to Ann.
Jack and Tom have a joint mortgage on their flat, with Jack’s mother as guarantor. The couple have split up and Tom wants to be released from the mortgage. Does Jack’s mother have to be informed of Tom’s request?
Yes. Changes to terms and conditions may affect the likelihood of a guarantee being called in and the guarantor must therefore agree to any such changes.
SDLT is always payable if a new owner is added to the property and the mortgage. True or false?
False: SDLT is only payable if the total of any consideration plus the share of any mortgage taken on by the new owner exceeds the nil‐rate band. When one person is removed from ownership as a result of a court order or agreement between the partners in a divorce, judicial separation or dissolution of a civil partnership, the transfer will be exempt from SDLT.
Releasing a borrower from their mortgage obligations when the mortgage is repaid is known in England and Wales as:
a) discharge.
b) redemption.
c) completion.
d) vacation.
d) vacation
Vacation is the technical term in England and Wales for the release from obligation when the mortgage is repaid (‘discharge’ in Scotland).
What is meant by the term ‘a clog on the equity of redemption’?
‘A clog on the equity of redemption’ is a condition that, in the opinion of the courts, has been imposed deliberately to prevent or discourage a borrower from paying back a loan. In such cases, the court can set aside the condition, thereby allowing the borrower to make early redemption.
Consider the situation where an existing borrower wishes to vary the terms of, or replace, an existing mortgage with the same lender, either on the original property or a new property. Does a lender have to carry out an affordability assessment for an existing customer in these circumstances?
Define Portability
The facility to transfer an existing mortgage to a new property during the term of a special deal without penalty.
What is contained in MCOB 7.6?
Regulator considerations
When a party is added to a mortgage, the lender must provide them with?
A) KFI
B) ESIS
For:
C) Their portion of the loan
D) The Whole Loan
B) ESIS
D) The Whole Loan
What is contained in MCOB 7A.3
Early Repayment Disclosure