Unit 5 Flashcards
JULIAN AND SANDY’S CURRENT INTEREST-ONLY MORTGAGE IS DUE TO BE REPAID SHORTLY, BUT THEY DO NOT HAVE THE FUNDS TO REPAY IT. TO SOLVE THEIR PROBLEM THEY HAVE SUCCESSFULLY APPLIED FOR A RETIREMENT INTEREST-ONLY MORTGAGE.
THIS MEANS THAT:
- Julian and Sandy must be at least 65.
- the interest on the new mortgage can be rolled up.
- the lender is not required to carry out affordability checks.
- the new mortgage will run until they have both died or permanently vacated the property.
the new mortgage will run until they have both died or permanently vacated the property.
JODIE OPENED A HELP TO BUY ISA, MAKING HER FIRST CONTRIBUTION OF £1,100 ON 1 JULY 2017 AND PAID 23 REGULAR PAYMENTS OF £100 A MONTH. AT THAT POINT, HAVING EARNED £140 INTEREST, JODIE USED HER ISA FUND AS A DEPOSIT FOR HER NEW HOME. HOW MUCH, IN TOTAL, WOULD HER ISA HAVE PROVIDED TOWARDS HER PURCHASE?
- £3,540.
- £3,940.
- £4,425.
- £6,540.
£4,425.
Jodie saved £3540 + add government bonus of 25% (£885) = £4,425.
BRIAN IS AN INSURANCE ADVISER SUBJECT TO ICOB RULES. HIS FIRM MUST ENSURE THAT HE HAS APPROPRIATE KNOWLEDGE AND ABILITY IN ORDER TO COMPLETE HIS TASKS AND PERFORM HIS DUTIES ADEQUATELY. ONE OF THE REQUIREMENTS IS THAT BRIAN MUST:
- attain an appropriate professional qualification within 36 months of starting his role.
- complete at least 15 hours of continuing professional development every 12 months.
- attain an appropriate professional qualification within 48 months of starting his role.
- complete at least 35 hours of continuing professional development every 12 months.
15 hours of CPD every 12 months.
WITH AN IJARA HOME PURCHASE PLAN, THE:
- bank buys the property and sells it immediately to the borrower at a higher price.
- first payment is usually 20% of the purchase price.
- maximum term is usually 15 years.
- monthly payment is usually fixed for 12 months at a time.
Monthly payment is usually fixed for 12 months at a time.
TONY AND ANNA HAVE AN INTEREST-ONLY MORTGAGE WITH A LOW-COST, WITH-PROFITS ENDOWMENT POLICY AS THE REPAYMENT VEHICLE. WHICH OF THE FOLLOWING STATEMENTS IN RESPECT OF THE POLICY IS CORRECT?
- Annual reversionary bonuses and a terminal bonus may be added to the guaranteed sum assured, but these are not guaranteed.
- Annual terminal bonuses and a final reversionary bonus may be added to the guaranteed sum assured, but these are not guaranteed.
- Guaranteed annual reversionary bonuses are added to the guaranteed sum assured, and a terminal bonus may be added, although this is not guaranteed.
- Non-guaranteed annual reversionary bonuses may be added to the guaranteed sum assured, and a terminal bonus is guaranteed to be added at maturity.
Annual reversionary bonuses and a terminal bonus may be added to the guaranteed sum assured, but these are not guaranteed.
WHICH OF THE FOLLOWING STATEMENTS IS TRUE IN RELATION TO AN APPLICATION IN JULY 2019 FOR A THREE-YEAR FIXED-RATE BUY-TO-LET MORTGAGE FOR BUSINESS PURPOSES FOR A BASIC-RATE TAXPAYER?
WHEN ASSESSING AFFORDABILITY, PRUDENTIAL REGULATION AUTHORITY (PRA) RULES MEAN LENDERS:
- cannot take other income into account if the rent is not sufficient to pay the mortgage.
- must apply the process to existing borrowers who wish to switch to a new deal without borrowing more.
- must assume interest rates will rise by at least 2% during the next five years.
- must require rent (after taxes and expenses) to be at least 145% of the monthly mortgage payment.
must assume interest rates will rise by at least 2% during the next five years.
WHICH OF THE FOLLOWING DIRECTLY HELD INVESTMENTS IS NOT PERMITTED IN AN ISA? • Gilts. • Investment trust shares. • Peer-to-peer lending. • Property.
Property
WHICH OF THE FOLLOWING STATEMENTS ABOUT UNIT-LINKED ENDOWMENTS IS TRUE?
- It may be possible to change the policy term, sum insured or premiums.
- The policy death benefit consists of the bid value of units at the time of death.
- The policy offers no guarantees at all.
- The policy provides a guaranteed sum on maturity, although it may not be enough to pay off the mortgage.
It may be possible to change the policy term, sum insured or premiums.
BEN HAS BOUGHT A 50% SHARE IN A SHARED OWNERSHIP FLAT. WHICH OF THE FOLLOWING CONDITIONS WOULD NOT BE CONTAINED IN THE LEASE?
- If Ben wants to sell the flat, he must first offer it to the landlord.
- The maximum share Ben could own by staircasing.
- The landlord’s right to take court action to gain possession if Ben falls behind with the rent.
- The terms on which Ben could rent out the flat.
The terms on which Ben could rent out the flat.
WHICH OF THE FOLLOWING MEDICAL PROBLEMS WOULD NOT BE A CORE CONDITION UNDER THE ABI’S 2018 GUIDE TO MINIMUM STANDARDS FOR CRITICAL ILLNESS COVER, ASSUMING ALL OF THE MEDICAL PROBLEMS MEET THE SPECIFIED CRITERIA ON DIAGNOSIS?
- Cancer.
- Heart attack.
- Kidney failure.
- Stroke.
Kidney Failure
GWYNETH IS A QUALIFIED MORTGAGE ADVISER, AND IS ABLE TO GIVE ADVICE ON PROTECTION PRODUCTS ASSOCIATED WITH MORTGAGES. UNDER THE ICOBS RULES, WHICH OF THE FOLLOWING REQUIREMENTS WOULD NOT APPLY IF SHE ARRANGED A LEVEL TERM POLICY FOR A MORTGAGE CUSTOMER?
TO:
- give the customer a statement of demands and needs.
- take care to ensure that the cost of the policy is suitable for the customer.
- give the customer a suitability report.
- take care to ensure that the customer would be eligible to make a claim.
Give the customer a suitability report.
WHICH OF THE FOLLOWING IS NOT AN ASSUMPTION WHEN CALCULATING THE ANNUAL PERCENTAGE RATE OF CHARGE (APRC) ON AN MCD REGULATED MORTGAGE?
THAT:
life insurance premiums are excluded from the calculation.
the borrower will make all payments on the due dates.
the borrower will redeem the mortgage before the end of the term.
the initial interest rate will apply throughout the entire term.
the borrower will redeem the mortgage before the end of the term.
WHICH OF THE FOLLOWING IS TRUE IN RELATION TO HELP TO BUY ISAS AND LIFETIME ISAS?
Both can be invested in cash or stocks and shares, but count towards the overall ISA limit.
It is possible to invest in both types of ISA at the same time and receive bonuses from both on buying a property.
The minimum age an investor can open either type of ISA is 18.
There is a penalty for early withdrawal from a Lifetime ISA, but not a Help to Buy ISA.
There is a penalty for early withdrawal from a Lifetime ISA, but not a Help to Buy ISA.
SUBJECT TO THE OVERALL FINANCIAL LIMITS, WHAT IS THE MAXIMUM DISCOUNT AVAILABLE TO A TENANT OF A LOCAL AUTHORITY HOUSE IN ENGLAND, UNDER THE RIGHT-TO-BUY LEGISLATION?
35%.
50%.
60%.
70%.
70%.
AN ADVANTAGE OF A LIBOR-LINKED MORTGAGE RATE IS THAT THE:
borrower is protected against arbitrary interest rate increases imposed by the lender.
interest rate charged is reviewed monthly to reflect changes in the Bank of England base rate.
borrower knows that the interest rate charged will not exceed a predetermined level.
interest rate charged will always be less than the lender’s standard variable rate.
borrower is protected against arbitrary interest rate increases imposed by the lender.
