Unit 6 Topic 27 Flashcards
Penelope wishes to remortgage in order to raise finance to repay her credit card
debts. Of what particular issue should she be made aware if she follows this
route?
A It is likely that the overall long-term costs will be higher.
B It is likely that her credit rating will be affected.
C She will be charged an interest rate above the standard variable rate.
D The loan will always be regulated by the Consumer Credit Act.
A It is likely that the overall long-term costs will be higher.
Margot has good credit history and is considering increasing her mortgage to
consolidate a number of debts, totalling £6,500. Under FCA rules, which of the
following is true?
A she can opt to proceed on an execution only basis if she rejects the lender’s initial
advice
B she will always need to provide evidence that she has repaid the consolidated debts
C the consolidated borrowing can only be taken on a repayment basis
D the lender is unlikely to assess the affordability of the new arrangement
A she can opt to proceed on an execution only basis if she rejects the lender’s initial
advice
Which of the following would be most likely to apply in respect of a remortgage but not a further advance? A administration fee B affordability assessment C legal fees D valuation fee
C legal fees
Which of the following is true where a mortgage is arranged as part of a debt
consolidation programme?
A The lender will not impose a higher lending charge.
B It is likely to increase the risk of the property being repossessed.
C The interest rate will be higher to reflect the reason for the additional borrowing.
D The homeowner’s overall risk will be reduced by securing the loans in this way
B It is likely to increase the risk of the property being repossessed.
Irene has applied for a further advance. Since taking out her mortgage, she has
married Phillip, who will now become a party to the mortgage, and her 20-year
old daughter, Charlotte, has left home. From whom, will the lender require a
consent to mortgage form?
A Phillip
B Irene
C Charlotte
D Nobody
D Nobody
What risk is a borrower taking by consolidating unsecured debts into a
repayment mortgage?
A The risk that the mortgage interest rates might be higher than for the
unsecured borrowing.
B The risk that the associated repayment vehicle will not be enough to repay the
capital.
C The increased risk of negative equity at some point in the future.
D There is no particular risk to this arrangement.
C The increased risk of negative equity at some point in the future.
Following divorce from Sandie, Joe wants to continue as sole borrower on a
mortgage that was previously in joint names. What new or altered factor might
make the lender concerned about Joe’s ability to make future repayments?
A Loss of tax relief on interest
B Increased premiums on the endowment
C Possibility of maintenance payments
D Change in Joe’s tax status
C Possibility of maintenance payments
Phil and Vicky have decided to change their existing £100,000 mortgage which
started in May 2010. They wish to stay with their existing lender. In which of the
following situations must the lender carry out a full affordability assessment? If
they wish to:
A change from a 4% fixed rate to a 4% capped rate
B increase the borrowing by £6,000 to pay for a new conservatory
C change mortgage products and add the £295 mortgage arrangement fee to their new mortgage
D increase their borrowing by £1,000 to pay for essential repairs to their roof following
a storm
B increase the borrowing by £6,000 to pay for a new conservatory
A court might set aside a mortgage lender’s early redemption fee if:
A the clause specifying the size of the fee were not included on the actual mortgage
deed.
B the mortgage were linked to a personal pension.
C it considered that it was so large that it effectively prevented early redemption.
D the mortgage had been running for more than five years.
C it considered that it was so large that it effectively prevented early redemption.
Kevin is moving in with Paula into her house in the north of England. He will
become joint owner of the £300,000 property currently held in her sole name.
Kevin will also become a party to the £180,000 mortgage. Which of the following
is true in relation to Stamp Duty Land Tax (SDLT)
A Kevin will have to pay SDLT on his £90,000 share of the mortgage
B Kevin will have to pay SDLT on his £150,000 share of the house
C Such arrangements are never subject to SDLT because the original purchaser would have paid it.
D There would only be an SDLT charge if Kevin also paid Paula more than £35,000 to become joint owner
D There would only be an SDLT charge if Kevin also paid Paula more than £35,000 to become joint owner
Which of the following is true in relation to a transfer of equity?
A A transfer of equity can only take place once during the lifetime of a mortgage.
B It is not an effective way for the person transferring to avoid creditors.
C Most requests for a transfer are originated by the lender.
D The final decision on whether a transfer of equity will occur rests with the
borrower.
B It is not an effective way for the person transferring to avoid creditors
Which of the following is NOT true in relation to a borrower making a partial
redemption of his mortgage:
A All payments made in addition to the normal monthly amount will be
deducted immediately from the amount outstanding.
B Some lenders will allow the borrower to keep a nominal amount outstanding
to keep the account open.
C The borrower will usually be able to keep the original monthly payment with a view to reducing the term of the mortgage.
D The lender will usually set a minimum part redemption figure.
A All payments made in addition to the normal monthly amount will be
deducted immediately from the amount outstanding.
What is meant by the term ‘a clog on the equity of redemption’?
A When the borrower refuses a request from the lender to repay the mortgage.
B When the lender delays providing the borrower with a redemption statement.
C Where a lender includes a term in the mortgage deed that deliberately
prevents a borrower from repaying a mortgage early.
D when a borrower defaults on payments.
C Where a lender includes a term in the mortgage deed that deliberately
prevents a borrower from repaying a mortgage early.
Paul wishes to make a part redemption payment on his mortgage. Which of the
following statements is correct?
A An early repayment charge must not be applied.
B If the payment is made, Paul must reduce his monthly payment.
C If the payment is made, the existing mortgage term must be maintained.
D The lender may stipulate a minimum amount.
D The lender may stipulate a minimum amount
Leo and Karen are planning to divorce and Leo wishes to be released from the
mortgage that they hold in joint names. Which of the following is correct?
A Leo is entitled to be released if the lender agrees, irrespective of Karen’s
agreement.
B The lender must agree if Leo’s release is part of the divorce agreement.
C Leo can be released immediately if Karen is in agreement.
D The lender can refuse the request even if Karen agrees to Leo’s release.
D The lender can refuse the request even if Karen agrees to Leo’s release.
