CeMAP Applying Mortgage Advice Knowledge Questions and Answers

Question 1

A client discloses a satisfied County Court Judgement (CCJ) from two years ago for £800.
They are now applying for a mortgage.
What is the most likely implication of this disclosure on their mortgage application?

Accepted Answer

Their choice of lenders will be restricted, and they may face a higher interest rate.

Answer

The adviser must not proceed with the application under any circumstances.

Answer

The CCJ will be ignored by lenders as it has been satisfied.

Answer

They will be automatically declined by all mainstream lenders.

Question 2

A couple is buying a property for £300,000. They have saved a £20,000 deposit, and a parent is gifting them a further £25,000 towards the purchase. What is the correct Loan to Value (LTV) for their mortgage application?

Accepted Answer

85.0%

Answer

93.3%

Answer

91.7%

Answer

75.0%

Question 3

Which of the following is the primary factor used by lenders to assess affordability for a standard Buy-to-Let mortgage application?

Accepted Answer

The property's potential rental income relative to the mortgage interest payments.

Answer

The applicant's verified personal earned income.

Answer

The applicant's existing savings and investment portfolio.

Answer

The Energy Performance Certificate (EPC) rating of the property.

Question 4

A client has a portable fixed-rate mortgage and is planning to move to a more expensive property, requiring an additional loan amount. What is a significant consideration regarding the additional borrowing?

Accepted Answer

The client will need to undergo a full affordability and credit assessment for the entire new loan amount.

Answer

The additional borrowing must be taken on the same fixed rate as the original mortgage.

Answer

Porting is only possible if the new property is cheaper than the old one.

Answer

The lender is legally obligated to approve the porting request and additional funds.

Question 5

What is the primary purpose of a Mortgage Indemnity Guarantee (MIG) policy?

Accepted Answer

To protect the lender against financial loss if the property is repossessed and sold for less than the outstanding mortgage debt.

Answer

To protect the borrower against unemployment or sickness by covering their mortgage payments.

Answer

To guarantee the borrower that their mortgage offer will not be withdrawn before completion.

Answer

To provide a legal guarantee to the conveyancer that the property title is free from defects.

Question 6

An adviser is assessing a client who is employed full-time, earns rental income from one property, and has a freelance business that is 6 months old. When presenting this case to a mainstream lender, how are the different income streams most likely to be treated for affordability purposes?

Accepted Answer

They will use the full-time employment income and rental income but are likely to disregard the freelance income.

Answer

They will combine 100% of all three income streams into a single figure.

Answer

They will disregard the employment income and focus only on the business and property income.

Answer

They will only consider the employment income and ignore both the rental and freelance income.

A client discloses a satisfied County Court Judgement (CCJ) from two years ago for £800.They are now applying for a mortgage.What is the most likely implication of this disclosure on their mortgage application?

A client discloses a satisfied County Court Judgement (CCJ) from two years ago for £800.
They are now applying for a mortgage.
What is the most likely implication of this disclosure on their mortgage application?