CH4

Question 1

Are consumer or business BTL’s covered under FCA’s definition of regulated mortgage?

Answer 1

• consumer BTL regulated
• business BTL not regulated

Question 2

If a ltd company enters into a mortgage, who is mortgage enforceable against?

Answer 2

• Against company, not directors or shareholders

Question 3

What is a remortgage?

Answer 3

• replacement loan with a new lender, who will apply similar criteria so borrowers will need to pay for valuations and other costs

Question 4

What is a Right To Buy?

Answer 4

Someone who lives in council home for qualifying minimum time has right to buy at substantial discount

Question 5

How long must someone have been in council house in order to buy via Right To Buy?

Answer 5

• three years

Question 6

How is discount calculated on Right To Buy?

Answer 6

• Calculated on number of years tenant has been council tenant and tenant does not have to live in same house over that period
• 3 - 5 years: 35% house, 50% flat
• after 5 years increased by 1% each year house, 2% each year flat
• max discount: £87,200 England, £116,200 London

Question 7

What is a Help To Buy Equity Loan?

Answer 7

• Newly built home can be purchased with at least 75% cost met by mortgage and 5% deposit
• Up to 20% paid for by Gov through equity loan
• Fees not charged for first five years of loan

Question 8

Who does not have legal capacity to borrow?

Answer 8

• undischarged bankrupts
• mentally incapacitated
• minors

Question 9

Is a Business Loan regulated (purchasing residential property to raise capital to invest in business)?

Answer 9

yes, providing business is unincorporated

Question 10

What are examples of semi-commercial mortgages?

Answer 10

• public houses;
• bed and breakfast establishments;
• doctor’s surgeries;
• shops and offices; and
• workshops and studios.

Question 11

What are commercial mortgages? Are the subject to MCOB?

Answer 11

• Loans secured on land that will not be used for residential purposes
• Not subject to MCOB regulations

Question 12

What rules surrounding funding are Building Societies subject to?

Answer 12

• 50% raised from retail sources
• 75% of commercial assets must be mortgages secured on land for residential use

Question 13

What is securitisation?

Answer 13

• process through which funds are raised in the secondary market by issuing mortgage-backed securities.

Question 14

What is correspondent lending?

Answer 14

• process whereby the firm that deals directly with the borrower is not the one actually providing the funds for the loan

Question 16

If owner wishes to sell property within ten years of Right To Buy purchase - what must they do?

Answer 16

Offer to old landlord (council), if does not agree within 8 weeks, can sell on open market

Question 17

Is a commercial mortgage subject to MCOB?

Answer 17

No