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questions 4 Which of the following is true where a remortgage repayment mortgage. One of the disadnullantages of
1 What is meant by the term ‘a clog on the equity of is arranged as part of a debt consolidation this approach is that:
redemption’? When: programme? a an early repayment charge will be payable.
a a borrower defaults on payments. a It is likely to increase the risk of the property B replacement life cover is needed.
B a borrower refuses a request from the lender being repossessed. c the mortgage term must be extended.
to repay the mortgage. B The homeownernulls overall borrowing risk will D there will be repayment shortfall at the end of
c a lender includes a clause in the mortgage be reduced by securing the loans in this way. the mortgage term.
deed that deliberately prevents a borrower from c The interest rate will be higher to renullct the
repaying a mortgage early. reason for the additional borrowing. 8 nullanne’s property has recently been taken into
D the lender delays providing the borrower with D The lender will not impose a higher lending possession by her mortgage lender. What are the
a redemption statement. charge. implications for nullanne?
a If the lender sells the property for more than
2 Paul wishes to make a part redemption 5 What risk is a borrower taking by consolidating the original loan taken out by nullanne, then any
payment on his mortgage. Which of the following unsecured debts into a repayment mortgage? difference between the original loan and the
statements is correct? a The increased risk of negative equity at some sale price must always be immediately passed
a An early repayment charge must not be point in the future. to nullanne.
applied. B The risk that mortgage interest rates might be B nullanne can only stop the lender selling the
B If the payment is made, Paul must reduce his higher than for unsecured borrowing. property by clearing the outstanding arrears.
monthly payment. c The risk that the associated investment c nullanne can reclaim her property by
c If the payment is made, the existing mortgage vehicle will fail to repay the capital at the end of redeeming her loan in full before the property
term must be maintained. the term. is sold.
D The lender may stipulate a minimum amount. D There is no particular risk to this arrangement. D The lender must delay the sale of the property
until the sale price covers nullannenulls original loan.
3 Penelope wishes to remortgage in order to raise 6 nully is planning to remortgage her property to
finance to repay her credit card debts. Of which consolidate a number of unsecured debts. Which of 9 nulldy’s mortgage account has recently gone into
particular issue should she be made aware if she the following might be a sensible option? arrears. nulls first missed payment was on nullnday
follows this route? a A null cashback mortgage. nullnullly. nulls lender became aware of the missed
a It is likely that her credit rating will be severely B A variable rate tracker mortgage. payment on Wednesday nullnullly. When is the latest
affected. c An interest only mortgage. date that the lender must write to warn nulldy of the
B It is likely that the overall long-term costs will D nulltending the term to null years to minimise situation?
be higher. monthly repayments. a nullnday nullnullly.
c nulle will be charged an interest rate above the B nullednesday null nullly.
standard variable rate. 7 nullborrower with a lownullost endowment c nullnday null nullly.
D The loan will always be regulated under the mortgage is in financial difficulties and considering D nullednesday null nullly.
nullnsumer nulledit legislation. surrendering his policy and switching to a
2238 mortgage introducer march 2010
MI p38-39_0310.indd 2 23/02/2010 11:06
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