CeMAP The Mortgage Application Process 4

Question 1

What is a 'Decision in Principle' (DIP) search most likely to leave on a credit file?

Accepted Answer

A soft footprint that is not visible to other lenders, or a hard search depending on the lender

Answer

Some lenders conduct a soft search for a DIP (not visible to other lenders), while others perform a hard search that leaves a footprint; the approach varies by lender.

Question 2

A property is valued at £300,000 and the borrower has a deposit of £45,000. What is the Loan-to-Value (LTV) ratio?

Accepted Answer

85%

Answer

The loan required is £255,000 (£300,000 minus £45,000 deposit), giving an LTV of 255,000 ÷ 300,000 = 85%.

Question 3

Under MCOB, which of the following is a lender's obligation when a mortgage application is declined?

Accepted Answer

Inform the applicant of the decline and, where a credit reference agency was used, tell the applicant which agency

Answer

MCOB requires lenders to tell declined applicants that a credit reference agency was consulted and to name that agency, allowing applicants to check their file.

Question 4

What does 'conveyancing' refer to in the mortgage process?

Accepted Answer

The legal transfer of property ownership from seller to buyer

Answer

Conveyancing is the legal process carried out by solicitors or licensed conveyancers to transfer legal ownership of a property from one party to another.

Question 5

Which type of mortgage interest rate remains the same for the entire term of the mortgage?

Accepted Answer

Full-term fixed rate

Answer

A full-term fixed rate mortgage fixes the interest rate for the entire mortgage term, providing certainty of payment throughout the life of the loan.

CeMAP - Certificate in Mortgage Advice and Practice Practice Test

CeMAP - Certificate in Mortgage Advice and Practice Practice Test

CeMAP The Mortgage Application Process 4