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Training
37
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
Question: Mortgage payment
methods and products B - The capital would reduce more slowly than 6. A standard variable rate mortgage:
with a repayment mortgage. A - changes at the discretion of the lender.
1. John has just taken out a 20-year capital and C - The monthly payments would be higher. B - is fixed for three months at a time.
interest repayment mortgage for £75,000 on D - There is no guarantee that it will be repaid C - is linked to the London Interbank Offered
an annual rest basis. If the interest rate was to at the end of the term. Rate.
remain constant at 6% for the first 12 months D - must change with the Bank of England
and the monthly repayments are calculated at 4. Paul, aged 25, earns £20,000 pa and wishes to base rate.
the rate of £7.30 per £1,000 borrowed, how use his personal pension plan, to which he
much capital will he repay in the first year? contributes £150 per month to repay a new 7. A capital repayment tracker mortgage can be
A - £1,090. £70,000 25-year interest-only mortgage. correctly described as a:
B - £1,640. Which of the following facts is most likely to A - discounted rate mortgage.
C- £1,900. make this an unsuitable option? B - drawdown mortgage.
D -£2,070. A - He has no suitable life assurance policy. C - low-start mortgage.
B - He is self-employed. D - variable rate mortgage.
2. Which of the following is true in relation to C - His age.
interest-only mortgages? D - The pension plan only has a projected 8. Tom and Sally both have £100,000 25-year
A - Based on the same interest rate, they cost fund value of £210,000 based on his repayment mortgages. Tom’s mortgage
less each month than a repayment current contributions. has a fixed interest rate of 4.75% and
mortgage. Sally’s mortgage has a capped rate of 5.50%.
B - They are suitable for those who do not 5. Which of the following is a benefit of using a Both rates apply for two years.
wish to take any risks that the mortgage unit-linked endowment policy in conjunction Which of the following statements is
will not be repaid. with an interest-only mortgage? true?
C - They have become increasingly popular in A - A choice of funds in which to purchase A - Sally may pay less than Tom at some
recent years. units. point.
D - They must have an associated repayment B - It is ideally suited to the risk averse B - Sally's payments will increase in the third
vehicle. customer. year.
3. What may be a potential drawback of an C - Reversionary bonuses are normally C - Tom will pay a lower rate than Sally in
interest only mortgage compared to a credited to the policy each year. the third year.
repayment mortgage? D - This type of policy will always have a fixed D - Tom will pay less than Sally throughout
A - No life assurance is built in. maturity date which cannot be extended. the first two years.
www.mortgageintroducer.com July/August 2009 Mortgage Introducer
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