MI32-33_CeMap.qxd 27/2/09 11:26 Page 2
32 | CPD
CeMAP
revision
So you think you know your stuff – but do you? Test yourself with
specimen CeMAP exam revision questions courtesy of ifs School of
Finance – don't worry we tell you the answers as well! For more help
with revision, lessons and to get your own personal CPD certificate
don't forget to visit the CPD section on our website
mortgageintroducer.com. This month's questions look at the different
types of mortgage available
Questions
1. With a 25-year capital and interest mort- 3. Ryan and Laura are buying a new house and A - £3,600.
gage, assuming interest rates remain have been offered a £120,000 25 year repay- B - £28,000.
unchanged, which of the following state- ment mortgage at 6%, giving a monthly pay- C - £225,000.
ments regarding the monthly payments is ment of £6.52 per £1,000 borrowed. How D - £1,600,000.
true? much would they save each month if any-
A - More capital will be repaid each month if thing, to the nearest £5, by opting for a pure 6. Which method of calculating the interest on
interest rates rise. interest only mortgage at the same rate a variable rate repayment mortgage would
B - Payments in the early years will be more instead? result in the lowest amount of interest
capital than interest. A - £20. payable over the term?
C - Payments in the last few years will be B - £180. A - The annual basis.
more capital than interest. C - £600. B - The daily basis.
D - Payments throughout the term will be D - It would be more expensive. C - The monthly basis.
evenly balanced between interest and- D - There would be no difference between
capital. 4. Alison paid £1,500 into a c the three methods.
A - £3,000.
2. Which of the following might be considered B - £4,000. 7. An advantage of a LIBOR mortgage is that the:
as a disadvantage of an interest-only mort- C - £5,500. A - borrower is protected against arbitrary
gage? The: D - £5,700. interest rate increases imposed by the
A - interest rate charged is usually higher lender.
than for a repayment mortgage. 5. Jason would like to arrange a pension B - borrower knows that the interest rate
B - mortgage cannot be arranged on a mortgage and has yet to start any pension charged will not exceed a pre-determined
monthly or daily rest basis. arrangements. Based on his income of level.
C - mortgage must have a repayment vehicle. £28,000, what is the maximum he could pay C - interest rate charged is reviewed annually
D - outstanding capital remains constant into a personal pension this tax year and gain to reflect changes in the Bank of England
throughout the mortgage term. full tax relief? base rate.
March 2009 Mortgage Introducer
www.mortgageintroducer.com
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