Unit 3 Flashcards
What is likely to cause a downturn in the mortgage market?
A low rate of general inflation
Oxbridge building society intends to alter its lending policy and restrict its lending on residential mortgages to a maximum of 50% of its total lending activities. If it proceeds what will it need to do?
Convert to PLC status
To meet the fca definition of a home reversion plan, it must be for a specified period. The specified period must be at least how many years?
20 years
A satisfactory report on title would be a standard condition on what?
Mortgage offers
What must happen with an energy performance certificate before a property is marketed for sale?
Be commissioned
In relation to registered land, possessory title means what?
The owner or applicant could not produce the title deeds when the land was first registered
If a successful bid is made on a property at auction and the deposit has been paid. What are the implications if they cannot go through with the purchase?
The seller can keep the deposit and seek recompense if they later sells the property for a lower price
Are right to buy customers known as vulnerable customers?
Yes
What steps would a lender take if they discover that a borrower has allowed the property insurance on his mortgages property to lapse?
Pay the premium and charge it to the account
For a leasehold mortgage what will a lender want?
Lender will want 40 years plus the mortgage term
What is the magic number for commonhold & leasehold questions?
21
What does the commonhold & leasehold reform act 2002 enable?
Leaseholders to purchase freehold or to extend the lease up to max 90 years
If under the commonhold and leasehold reform act what are the requirements of the person wants to extend the lease?
Must be 2 or more flats
2/3 must be held on a large lease, originally granted in excess of 21 years
Must have been a tenant for 2 years
(Remember the numbers 2&21)
If under the commonhold and leasehold reform act what are the requirements of the person wants to buy the property?
A commonhold association must be formed
At least 50% of the leaseholders must agree to participate in purchase
What does a freeholder own?
The land
What is a flying freehold?
A flying freehold occurs where one freehold overhangs or projects into another. Flying freeholds are usually found in old properties and commonly exist above archways allowing access between properties or in cellars which encroach under another property
Can the freeholder refuse to sell the freehold to the leaseholder?
Yes
If it’s a converted property of 4 or fewer flats
If the freeholder owns 2 or more of the flats
Charitable housing trust
Lease is for commercial purposes
When can you get a waiver of premiums?
Only on life cover
In terms of title what is it that lenders want?
Absolute
What does an absolute title mean?
This is what lenders want, there is no question about the ownership of the property.
On unregistered land after ……..(how long) possessory title can be applied for?
What’s this called?
12 years
Squatters rights
Oh registered land after ten years of occupancy what title do you receive?
Absolute
Is all land currently registered?
No
Who are BTLs owned by?
Limited companies
A spv is like a what????
A buy to let which is limited company
What can SPV/BTL claim on?
Mortgage interest in full as an expense
Selling property for a SPV is liable to what tax?
Corporation tax
Spv is basically a limited company that ways to get a mortgage
Simples
If you transfer existing property into a spv what tax would it be liable for?
CGT
What is securitisation?
Mortgages are packed together and sold as an asset
For non residential property borrowers what will lenders want to be assured on for an SPV?
And where will these requirements be set out?
Companies powers to borrow
Memorandum of association
What will a lender want to see when lending to trusts?
Trust deed
Where are drawings found when lending to a partnership agreement?
Balance sheet
What is Gazumping?
The vendor accepts a higher offer before exchange of contracts
What is private treaty?
A sale usually done through the estate agent
How much deposit is due immediately when selling at a public auction?
10% deposit
A deposit paid at a public auction needs to be in what?
Bankers draft/Cash
What is the modern method for an auction?
Online auction
How much is the reservation fee for online auction?
5%
For an online auction how long do you have to exchange?
28 days
What is a mortgage trapped?
Mortgage before April 2014 and can’t transfer mortgage due to ‘affordability criteria’
What does the right to buy scheme do?
Give tenants of council houses the option to buy the property they live in
What does the right to acquire do?
Gives housing association tenants a discount on buying the property they live in
What is a legal charge?
Gives the lender certain rights over the property while the mortgage is outstanding
A legal mortgage deed contains what?
Mortgage terms
A legal mortgage is defined as what?
Using a property as security for money borrowed
Is a second mortgage low or high risk?
Higher
Do second mortgages usually have lower interest rates?
No
What are borrowers covenants?
Promises
What does restrictive covenants run with?
The land
What do positive covenants run with?
They don’t run with anything
