CeMAP Mortgage Law and Practice 2

Question 1

What is the legal difference between a mortgage and a charge in English property law?

Accepted Answer

A mortgage transfers ownership while a charge creates a security interest without transfer

Answer

There is no legal difference

Answer

A charge is only used for commercial properties

Answer

A mortgage can only be created by deed while a charge can be verbal

Question 2

Under the Consumer Credit Act 1974, what rights does a borrower have regarding early repayment of a regulated mortgage?

Accepted Answer

The right to make early repayment at any time, with the lender limited in the charges they can apply

Answer

No right to early repayment exists

Answer

Early repayment is only permitted after 5 years

Answer

The borrower must pay a penalty equal to 6 months' interest

Question 3

What is the significance of the Land Registration Act 2002 for mortgage lenders?

Accepted Answer

It established that legal charges over registered land must be registered at the Land Registry to take effect

Answer

It abolished the requirement to register mortgages

Answer

It only applies to commercial property mortgages

Answer

It removed the lender's right to repossess property

Question 4

What duty does the mortgagee (lender) owe when exercising their power of sale?

Accepted Answer

A duty to obtain the best price reasonably obtainable at the time of sale

Answer

No duty — they can sell at any price

Answer

A duty to achieve at least 90% of the market value

Answer

A duty to wait at least 12 months before selling

Question 5

What is an equity of redemption in mortgage law?

Accepted Answer

The borrower's right to redeem (pay off) the mortgage and recover full ownership free from the charge

Answer

The interest rate charged on the mortgage

Answer

The amount of equity built up through repayments

Answer

The lender's right to receive repayment

Question 6

What are the legal requirements for a valid mortgage deed in England and Wales?

Accepted Answer

It must be a deed — signed, witnessed, and delivered — and must comply with the Law of Property (Miscellaneous Provisions) Act 1989

Answer

It only needs to be signed by the borrower

Answer

It can be an informal written agreement

Answer

It must be signed in the presence of a solicitor only