CeMAP - Certificate in Mortgage Advice and Practice Equity Release and Later Life Lending Flashcards
6 cards from real CEMAP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CeMAP - Certificate in Mortgage Advice and Practice Equity Release and Later Life Lending flashcards as text
Why might equity release be considered unsuitable for a client who wishes to leave the maximum possible inheritance?
Answer: The compound roll-up interest erodes the equity in the property over time, reducing the value of the estate
The compounding nature of roll-up interest means that over time a significant portion of the property's equity is consumed by the growing loan balance, leaving less for beneficiaries.
What is a 'protected equity guarantee' as a feature of some equity release plans?
Answer: A feature that ring-fences a defined percentage of the property's value specifically for inheritance, regardless of how the loan grows
A protected equity guarantee allows the borrower to reserve a set percentage of the property's eventual sale value for their beneficiaries.
Who should ideally be involved in the equity release advice process alongside the main applicant?
Answer: Any family members or beneficiaries who may be materially affected by the decision
Good equity release advice practice includes encouraging the involvement of family members or potential beneficiaries, as the plan will directly affect their inheritance.
Which statement about equity release and means-tested state benefits is TRUE?
Answer: A lump sum received from equity release could be treated as capital and affect eligibility for means-tested benefits
A lump sum from equity release may count as capital, which could push the client above the capital threshold and reduce or eliminate entitlement to means-tested benefits.
What is a fundamental regulatory requirement that must be met before a customer can proceed with equity release?
Answer: The customer must receive specialist, independent financial advice from a qualified adviser regulated to advise on equity release
FCA rules require that equity release customers receive specialist regulated advice before proceeding, ensuring suitability is properly assessed.
What triggers the repayment of a lifetime mortgage?
Answer: The property is sold and the outstanding loan plus accrued interest is repaid when the last borrower dies or moves permanently into long-term care
A lifetime mortgage becomes repayable on the death of the last surviving borrower or when they move permanently into long-term care, typically through the sale of the property.