Training

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

QUESTIONS

1 Jennie has taken out a lifetime mortgage, which meets the SHIP Code of Practice requirements. If she takes advantage of the scheme’s mortgage interest ‘roll up’ facility, what are the implications?

A Her interest payments will gradually decrease year on year. B Her repayment vehicle may not be sufficient to repay the mortgage at the end of the term. C It increases the debt which needs to be repaid on death. D The arrangement might result in a negative equity situation if interest rates increase.

2 Sandra is considering a £150,000 interest only offset mortgage with a variable interest rate of 6.5%. After meeting the costs of the mortgage she will have £15,000 in a deposit account, earning 4% interest. Assuming no changes to interest rates, how much interest will she be charged each year if she offsets her savings?

A £8,775. B £9,270. C £9,375. D £9,750

3 In relation to CAT standard mortgages, some conditions apply to all loans and some to certain loans. Which of the following is a specific requirement for a fixed rate mortgage to meet CAT standards?

A Interest must be calculated on a daily basis. B The arrangement fee cannot exceed £150. C There can be no separate charge for a mortgage indemnity guarantee.

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D There must be no early repayment charge levied at any time.

4 Apart from the need to budget, what other key factor can influence the attractiveness of a fixed rate mortgage compared to a variable rate mortgage?

A A desire to avoid early repayment charges. B A desire to keep the mortgage term as short as possible. C The ability to avoid future interest rate volatility. D The borrower’s state of health.

5 A commercial mortgage is best described as a mortgage where:

A the associated repayment vehicle is paid for with company funds. B the borrower is a corporate entity. C the lender makes a loan to a group of borrowers. D the security for the loan is non-residential property.

6 Aggie is remortgaging her home using a lifetime mortgage. Will the loan be regulated by the Financial Services Authority?

A No, irrespective of her age. B Only if she is over the age of 65. C Only if she is under the age of 75. D Yes, irrespective of her age.

7 Which of the following statements in respect of a low-start mortgage is correct?

A Additional forms of security are usually required.

B The borrower may be allowed to select an initial rate of interest within certain limits. C The outstanding debt at the end of the low- start period will always be more than the original loan. D They are structured on an interest-only basis for the initial period.

8 In which of the following transactions is the lender least likely to use the applicant’s income from employment in determining how much to lend?

A Brian, who is purchasing a property on a shared ownership basis. B Dean, who is purchasing his flat from his landlord, the local authority. C Emma, who is purchasing a property with a buy-to-let mortgage. D Lisa, who is purchasing a small house with an equity share mortgage.

9 Nigel has taken out a new mortgage that requires him to pay monthly rent as well as mortgage payments. What type of mortgage does he have?

A Deferred interest. B Equity share. C LIBOR. D Shared ownership.

10 Which of the following statements is correct in respect of Sharia-compliant mortgages?

A Only the ljara method involves the payment of interest to the lender. B The Murabaha method involves the payment of rent to the lender. Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48