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 With a 25-year capital and interest mortgage, assuming interest rates remain unchanged, which of the following statements regarding the monthly payments is true?

A More capital will be repaid each month if interest rates rise. B Payments in the early years will be more capital than interest. C Payments in the last few years will be more capital than interest. D Payments throughout the term will be evenly balanced between interest and capital.

2 Which of the following might be considered as a disadvantage of an interest-only mortgage? The:

A interest rate charged is usually higher than for a repayment mortgage. B mortgage cannot be arranged on a monthly or daily rest basis. C mortgage must have a repayment vehicle. D outstanding capital remains constant throughout the mortgage term.

3 Ryan and Laura are buying a new house and have been offered a £120,000 25 year repayment mortgage at 6%, giving a monthly payment of £6.52 per £1,000 borrowed. How much would they save each month if anything, to the nearest £5, by opting for a pure interest only mortgage at the same rate instead?

A £20. B £180. C £600.

D It would be more expensive.

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4 George is considering remortgaging to reduce his outgoings. He currently has an £80,000 interest only mortgage on a variable rate of 6.2%. Which of the following packages would cost the least overall over the next three years, assuming variable rates remain the same and a lock in to the variable rate after the deal ends?

A 1 year fixed rate of 3.5% with no arrangement fee. B A 2 year fixed rate of 4.5% with an arrangement fee of £399. C A 3 year fixed rate of 5.15% with an arrangement fee of £199. D A stepped discount of 1% in year 1 and 2% in year 2, with a £50 arrangement fee.

5 Which of the following statements in relation to bridging finance is true?

A Closed bridging finance is less risky than open bridging finance. B Closed bridging finance is more expensive than open bridging finance. C Open bridging finance is no more risky than closed bridging finance. D Open bridging finance is only appropriate if a client has exchanged contracts on his existing property.

6 Which method of calculating the interest on a variable rate repayment mortgage would result in the lowest amount of interest payable over the term?

A The annual basis. B The daily basis. C The monthly basis.

D There would be no difference between the three methods.

7 An advantage of a LIBOR mortgage is that the:

A borrower is protected against arbitrary interest rate increases imposed by the lender. B borrower knows that the interest rate charged will not exceed a pre-determined level. C interest rate charged is reviewed annually to reflect changes in the Bank of England base rate. D interest rate charged will always be less than the lender’s standard variable rate.

8 Nicky pays an arrangement fee of £150 when applying for a five year fixed rate mortgage, with a one year ‘overhang’. Which of the following statements is true?

A Early repayment charges will not usually apply. B Monthly payments will only increase when the Bank of England rate changes. C The early repayment charge will last for the fixed period only. D The fee is not usually refundable if the application is subsequently cancelled.

9 Sally has started a discount mortgage. What are the implications of this arrangement?

A It will not protect her from rising interest rates. B She is certain not to pay more than the Bank of England base rate during the discounted period. C She will receive a bonus payment on completion of the discounted period. 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