Mortgage Products and Repayments Flashcards

What is a current account mortgage (CAM)?

Answer: A mortgage that combines the mortgage, current account, and sometimes savings into one account where all money offsets the mortgage balance

A current account mortgage merges the mortgage, current account, and often savings into a single account — all funds automatically offset the mortgage balance.

What is negative amortisation and when can it occur?

Answer: When monthly payments are insufficient to cover the interest due, causing the outstanding balance to increase

Negative amortisation occurs when the mortgage payment does not cover the full interest charge, so the unpaid interest is added to the capital balance.

What is the purpose of a mortgage packager?

Answer: To prepare and package mortgage applications on behalf of brokers for submission to lenders

A mortgage packager acts as an intermediary, preparing complete mortgage application packages on behalf of smaller brokers for submission to lenders.

How does a shared ownership mortgage work?

Answer: The buyer purchases a share of the property (25-75%) and pays rent on the remaining share owned by a housing association

Shared ownership allows buyers to purchase a share (typically 25-75%) with a mortgage and pay subsidised rent on the remainder owned by a housing association.

What is the difference between a portable and a transferable mortgage?

Answer: A portable mortgage can be moved to a new property by the same borrower; a transferable mortgage can be taken over by a new borrower

Portability allows a borrower to move their mortgage to a different property, while transferability allows the mortgage obligations to pass to a different person.

What factors determine the monthly payment on a repayment mortgage?

Answer: The loan amount, interest rate, and mortgage term together determine the monthly payment

Monthly repayment is calculated from three factors: the total amount borrowed, the interest rate applied, and the length of the mortgage term.