CeMAP Credit Assessment and Affordability

Question 1

What does a lender's affordability assessment primarily evaluate when considering a mortgage application?

Accepted Answer

Whether the borrower can sustain mortgage repayments over the term

Answer

The applicant's employment history only

Answer

The value of the property being purchased

Answer

The applicant's credit card limit

Question 2

Which of the following is considered a 'hard' credit search?

Accepted Answer

A lender performing a full credit check upon mortgage application

Answer

Checking your own credit report

Answer

A comparison site providing a pre-approval quote

Answer

An employer verifying identity

Question 3

What is the typical maximum loan-to-income (LTI) multiple most mainstream UK lenders apply?

Accepted Answer

4 to 4.5 times income

Answer

3 times income

Answer

6 times income

Answer

7.5 times income

Question 4

Which regulation requires lenders to conduct a 'stress test' on mortgage affordability?

Accepted Answer

The Mortgage Market Review (MMR) 2014

Answer

The Consumer Credit Act 1974

Answer

The Financial Services Act 2012

Answer

The Data Protection Act 2018

Question 5

Which income type is typically treated most cautiously by mortgage lenders when assessing affordability?

Accepted Answer

Self-employed profit averaged over two years

Answer

Basic employed salary

Answer

State pension income

Answer

Guaranteed overtime

Question 6

What does a credit utilisation ratio measure?

Accepted Answer

The percentage of available revolving credit currently in use

Answer

The number of credit applications made in a year

Answer

The total debt outstanding versus property value

Answer

The frequency of missed payments