Topic 9 Flashcards
The role of the mortgage advisor (46 cards)
What is the primary purpose of the mortgage advice process?
To provide a suitable mortgage recommendation based on the customer’s needs, preferences, and financial situation.
Why is ethical advice important in mortgage advising?
Ethical advice ensures the customer’s best interests are prioritised by verifying information and giving suitable, honest recommendations.
What four stages make up the advice process?
Factfind, Research, Present, Implement.
What are the two key factors the factfind aims to determine?
How much the borrower can afford and the type of mortgage they prefer.
Name three things covered in the factfind interview.
Income and outgoings, protection needs, employment status/history.
What information is gathered about the customer’s property intentions during the factfind?
The intended purchase price and the type of property to be purchased.
What does the adviser need to know about the customer’s repayment plans?
Whether the customer intends to make early repayments, either partially or in full.
What should the adviser ask about the mortgage term?
The customer’s feelings and preferences regarding the length of the mortgage term.
What protection needs might the adviser consider during the factfind?
Life cover, critical illness cover, mortgage payment protection (if authorised to advise on these).
Why are the customer’s income and outgoings important in the factfind?
To determine how much they can comfortably afford to borrow.
What financial resources are considered during the factfind aside from income?
The amount of deposit available and any other cash available to meet expenses.
What does the adviser assess about the customer’s financial habits?
How the customer manages their finances – e.g., whether their bank account is usually in credit or overdrawn.
What financial habit might indicate a customer struggles with managing finances?
Frequently being overdrawn on their bank account.
What employment details are important in the factfind?
Current status, history, future income prospects, or any recent redundancies/cutbacks.
What should the adviser understand about the customer’s budget and interest rates?
Whether they can cope with potential rate rises and whether they’re borrowing the maximum with little financial cushion.
How is a customer’s attitude to mortgage risk usually assessed?
Through a risk questionnaire resulting in a risk profile.
How does an adviser use the factfind information?
To research and recommend a mortgage that is suitable for the customer’s exact circumstances.
What is the adviser’s responsibility when presenting the mortgage recommendation?
To clearly explain the product and ensure the customer fully understands it, encouraging questions and avoiding jargon.
What is the difference between an ESIS and a KFI?
An ESIS is required for new MCD-regulated mortgages; a KFI is for changes to mortgages from before 21 March 2016.
What happens once the customer agrees to the recommendation?
The adviser submits the application and liaises between the lender and the customer during the underwriting process.
What are three parts of the adviser’s role after submitting the application?
Explain offer documentation, liaise with the lender, and clarify any additional information needed.
Why is ethical advice important in mortgage advising?
Because mortgage advice leads to a long-term commitment; poor advice can cause serious harm to the customer and consequences for the adviser.
What is the fundamental principle of ethical advice?
It must be based on what is best for the customer, not the adviser’s interests (e.g. commission or bonuses).
What key factors must an adviser establish to provide ethical advice?
The customer’s needs, objectives, attitude to risk, and circumstances.
