C Under the ljara method, the lender purchases the property and immediately sells it to the applicant. D Under the Murabaha method, the property is purchased by the lender and sold to the applicant at a higher price.
D The lender can charge an early repayment charge within limits. Daily interest calculation and no MIG fees apply to all CAT mortgages. The arrangement fee for a fixed rate mortgage cannot exceed £150.
ANSWERS AND JUSTIFICATIONS
Q1 Correct answer: C
A Under a roll-up facility no interest is paid until the property is sold. B Lifetime mortgages are designed to cease at death or when the owner enters long term care. They are not expected to have a capital repayment vehicle in place other than the property value. C No interest is paid but is accumulated and repaid from the proceeds of the property sale, often on death of the owner. D SHIP offers a no negative equity guarantee.
Q2 Correct answer: A
A Under an offset mortgage the interest will be calculated on the net amount hence £150,000 less £15,000 = £135,000 @ 6.5% = £8,775. B Under an offset mortgage the interest will be calculated on the net amount hence £150,000 less £15,000 = £135,000 @ 6.5% = £8,775. C Under an offset mortgage the interest will be calculated on the net amount hence £150,000 less £15,000 = £135,000 @ 6.5% = £8,775. £9,075 assumes £150,000 @ 6.5% less £15,000 @ 4%. D Under an offset mortgage the interest will be calculated on the net amount hence £150,000 less £15,000 = £135,000 @ 6.5% = £8,775. £9,750 makes no allowance for the offsetting amount of £15,000.
Q3 Correct answer: B
A Daily interest calculation and no MIG fees apply to all CAT mortgages. The arrangement fee for a fixed rate mortgage cannot exceed £150. The lender can charge an early repayment charge within limits B Daily interest calculation and no MIG fees apply to all CAT mortgages. The lender can charge an early repayment charge within limits C Daily interest calculation and no MIG fees apply to all CAT mortgages. The arrangement fee for a fixed rate mortgage cannot exceed £150. The lender can charge an early repayment charge within limits
Q4 Correct answer: C
A Fixed rate mortgages commonly have early redemption penalties. B The selection of a fixed rate should not influence the overall mortgage repayment period. C Because rates are fixed for a pre-agreed period the mortgage is, for that time, free from the impact of interest rate movements. D The borrower’s state of health will not have a significant impact on the choice between fixed and variable rate mortgages.
Q5 Correct answer: D
A Commercial mortgages are available to those who wish to purchase non-residential property. The borrower could be an individual, a partnership or a company. B Commercial mortgages are available to those who wish to purchase non-residential property. The borrower could be an individual, a partnership or a company. C Commercial mortgages are available to those who wish to purchase non-residential property. The borrower could be an individual, a partnership or a company. D Commercial mortgages are available to those who wish to purchase non-residential property. The borrower could be an individual, a partnership or a company.
Q6 Correct answer: D
A Lifetime mortgages are defined as those available only to borrowers over a certain age, as defined by the lender. B Lifetime mortgages are defined as those available only to borrowers over a certain age, as defined by the lender. C Lifetime mortgages are defined as those available only to borrowers over a certain age, as defined by the lender. D Lifetime mortgages are defined as those available only to borrowers over a certain age, as defined by the lender.
Q7 Correct answer: D
A The security of the property concerned under usual circumstances will offer sufficient security for a low start mortgage. B A low start mortgage is usually a defined lender offer on terms determined by them.
C Under a low start mortgage there is no roll-up, and capitalisation of the unpaid interest portion unlike a deferred interest mortgage. D Under low start mortgages, the mortgage is interest-only at least for the agreed low start period, but then usually moves to capital repayment.
Q8 Correct answer: C
A A lender will usually consider the applicant’s income when lending on a share ownership basis, as it is from income that repayments will be paid. B A lender will usually consider the applicant’s income under a right-to-buy mortgage as it is from income that repayments will be paid. C As it is expected that rental income will pay the mortgage payments on a buy-to-let property, the applicant’s income is of less importance. D A lender will usually consider the applicant’s income when lending on an equity share mortgage as it is from income that payments will be paid.
Q9 Correct answer: D
A Deferred interest mortgages entail the full purchase of the property so no rent will be paid. B Equity share mortgages offer a reduction in the effective interest rate or payment in exchange for the lender retaining a proportion of the equity when the property is sold. C A LIBOR mortgage usually entails the full purchase of a property with no rent to be paid. D Shared ownership entails partial purchase of a property with rent to be paid on the remaining part.
Q10 Correct answer: D
A Only rent and capital are paid under the Ijara method. B No rent is paid under the Murabaha method, which involves only payment of capital based on the price of sale from lender to buyer. C Under the Ijara method, the bank buys the property and enters into a ‘promise to purchase’ a agreement by which the buyer pays capital and rent over the term. D Under the Murabaha method, the bank buys the property at an agreed price and then sells it immediately to the client at a higher price.
For more help with revision, lessons and how to get your own CPD certificate visit www.mortgageintroducer.com
mortgage introducer MAY 2010 39
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