Certificate in Mortgage Advice &
Practice (CeMAP)
Paper 2 Full Syllabus Test
100 Questions
The ifs is the official brand of The Chartered Institute of Bankers, a registered charity
CeMAP 2 Full Syllabus Test (July 2002)
1 . If a customer's complaint about a mortgage lender is upheld by The Mortgage Code Arbitration
Scheme,
then:
a. The customer would automatically be entitled to compensation.
b. It might influence any decision by the Financial Ombudsman Service.
c. The lender would automatically incur a fine.
d. The lender would be deemed to have breached a legally binding obligation.
2 . Which of the following is correct in relation to second mortgages?
a. Second mortgages carry lower risk to the lender because the loan amounts are usually less than
that of first mortgages.
b. In cases of repossession and subsequent sale of a property by the first lender, the second lender
is not entitled to receive any surplus monies.
c. A second mortgage is usually offered at a lower rate of interest than the first mortgage in order to
encourage take-up.
d. Title deeds remain with the first lender and the second lender will notify the first that it has taken a
subsequent charge.
3 . Which of the following is true of a legal mortgage?
a. Borrowers who fail to make a payment on time lose their right to redeem a mortgage.
b. Borrowers are not entitled to surplus monies if the lender sells the property.
c. It is usually effected nowadays as a mortgage by demise.
d. It is defined as using a property as security for money borrowed.
4 . Norman has taken out a second mortgage with Orchard Bank plc following his endowment mortgage
with the Loyal Building Society. Who will hold the title deeds of the property?
a. Norman's solicitor.
b. Loyal Building Society.
c. The endowment provider.
d. Orchard Bank plc.
5 . Which of the following would be classed as realty?
a. Land.
b. Chattels.
c. Rights in personam.
d. Incorporeal hereditaments.
CeMAP 2 Full Syllabus Test (July 2002)
6 . Joint tenancy means that:
a. Each owner has an identifiable share of the property and, should one owner die, their share
passes to his or her next of kin.
b. A property is owned jointly and should one of the owners die, the remaining owner automatically
takes sole possession.
c. The owners each own half the property.
d. Any mortgage is held in joint names but the property can be owned by anyone.
7 . Annabel and Hugh owned their property jointly. When Annabel died recently, the property passed
automatically into Hugh's sole name. On what tenancy basis was the property purchased?
a. Shared.
b. Common.
c. Joint.
d. Assured.
8 . Steve and Gemma are unmarried and purchased their house as joint tenants with the help of a
mortgage from Downtown Building Society. In which of the following circumstances would Steve's
share of the property automatically pass to Gemma?
a. If Steve was declared bankrupt.
b. If Steve defaulted on his share of the mortgage repayment.
c. On Steve's death.
d. On their marriage.
9 . Which of the following would NOT be an obligation of a freeholder?
a. To observe any restrictive convenants.
b. To adhere to local authority planning legislation.
c. To maintain boundaries.
d. To pay ground rent.
10 . When a lease on a property expires:
a. The leaseholder is left with the reversionary interest.
b. The property must be sold.
c. A new lease must be arranged immediately.
d. The land and property revert to the freeholder.
CeMAP 2 Full Syllabus Test (July 2002)
11 . Which of the following statements is correct in respect of a leasehold property?
a. Its value is likely to increase substantially as the expiry date of the lease approaches.
b. Any ground rent is paid by the freeholder to the leaseholder.
c. The leaseholder is automatically entitled to purchase the freehold interest.
d. A lender would always insist that the term of the lease extends beyond the agreed redemption
date of any mortgage granted.
12 . Steven and Mary own a flat situated in a purpose built block comprising 12 identical properties. They
are keen to purchase the freehold interest, but for this to be possible leasehold reform legislation
requires that
a.
The entire block must be only for residential use.
b.
The lease must have at least 21 years to run.
c.
All other qualifying leaseholders in the block must be party to the transaction.
d.
The lease must have originally been granted for a term exceeding 21 years.
13 . How can a non-owning spouse's interest in unregistered land be protected?
a. By entering the appropriate details in the Charges Register at HM Land Registry.
b. By registration at the Land Charges Registry.
c. By lodging the relevant details with the title deeds.
d. By registration at the Local Land Charges Registry.
14 . In relation to registered land, 'possessory title' means that:
a. There is some defect in the title.
b. Some or all of the deeds are lost.
c. It is not possible to confirm freehold title.
d. Clear title is established.
15 . In relation to registered land, 'qualified title' means that:
a. It is not possible to confirm freehold title.
b. Some or all of the deeds are lost.
c. Clear title is established.
d. There is some defect in the title.
CeMAP 2 Full Syllabus Test (July 2002)
16 . Which of the following would be recorded in the charges register at the Land Registry?
a. Details of the land and its title number.
b. Name and address of the estate and owner.
c. Adverse easements.
d. Class of the title.
17 . Which of the following pieces of information about a property would be found in the Proprietorship
Register held at H.M. Land Registry?
a. A plan of the property.
b. Any easements affecting the property.
c. The class of title.
d. The title number of the land.
18 . A property sold with a full title guarantee is confirmation that it is:
a. Situated on registered land.
b. Free from encumbrances.
c. Unaffected by easements, unless it is regarded as the servient.
d. Freehold with absolute title.
19 . Dawn made an offer to purchase a property or £256,000. However, the survey report highlighted
some essential repairs and the vendor agreed a new purchase price of £225,000. How much did
Dawn save in stamp duty upon completion of the sale?
a. £5,430.
b. £2,250.
c. £930.
d. £310.
20 . One of the main purposes of a report on title is to confirm that the:
a. Property is registered at H.M. Land Registry.
b. Land certificate dates back at least 15 years.
c. Purchaser is legally entitled to make the purchase.
d. Seller is the legal owner.
21 . Which one of the following is true?
a. An equitable interest is an ownership of land that can be transferred by law.
b. All residents living in a mortgaged property possess equitable rights.
c. An example of an equitable interest is a mortgagor's equity of redemption.
d. An equitable right is the same as a legal right.
CeMAP 2 Full Syllabus Test (July 2002)
22 . What is the minimum age at which an individual can acquire an overriding interest?
a. 16
b. 17
c. 18
d. 21
23 . Which of the following is correct in relation to the role of estate agents?
a. They must always accompany prospective purchasers during the viewing of a property.
b. There are no restrictions on giving advice to both the buyer and the seller.
c. Their charges are usually based on a flat fee basis or a percentage of the purchase price.
d. They act as agents to both the buyer and the seller.
24 . Which of the following statements in respect of the role of the estate agent is true?
a. The estate agent acts as an agent of the vendor and the purchaser.
b. The estate agent acts as an agent of the vendor but not the purchaser.
c. Many estate agents charge more commission if they are the sole agent.
d. An estate agent is not permitted to charge a fee if a sale is not completed.
25 . Specialised mortgage houses generally
a. Issue loans on a fixed rate basis.
b. Lend on a decentralised basis.
c. Provide loans solely for corporate clients.
d. Rely on funds from the wholesale market.
26 . A purchaser wishing to withdraw from a house purchase must do so before which stage of the house
buying process?
a. Investigation of title.
b. Land Registry searches.
c. Appointing a solicitor.
d. Exchange of contracts.
27 . In the property buying process, what step may the vendor take if the purchaser withdraws after
exchange of contracts?
a. Insist that the purchaser's deposit is paid as compensation.
b. Insist that the purchase proceeds on the terms agreed.
c. Sue the purchaser for breach of contract.
d. Sue the purchaser's solicitor for professional negligence.
CeMAP 2 Full Syllabus Test (July 2002)
28 . New government proposals have been put forward to help speed up the house buying process,
including the introduction of a 'seller's pack'. Which additional information will this pack need to
contain in relation to leasehold properties?
a. Building regulations and planning consent approvals.
b. Title documentation.
c. A draft contract.
d. Details of the building insurance policy.
29 . Denise is buying a property from Karen, and Denise's lender is about to release the advance cheque.
To whom will the cheque be released?
a. Karen.
b. Denise.
c. Karen's solicitor.
d. Denise's solicitor.
30 . Which one of the following is true in relation to the house buying process?
a. The purchase price offered is not binding until exchange of contracts has taken place.
b. It is usual to instruct solicitors to carry out the necessary searches before an offer of advance has
been made by a lender.
c. All legal formalities must always be carried out by a registered solicitor.
d. When the property market is 'flat' an estate agent should recommend a purchaser to increase the
advertised price.
31 . Ray and Barbara are selling their house but wish to take the garden shed and gazebo to their new
property. Which of the following statements is correct?
a. The items can be removed but only if this was stated in the sales particulars.
b. The items can be removed if the intention to do so was specifically included in the contract for
sale.
c. The items can be removed without giving any reason or stated intention.
d. The items form part of the land being sold and cannot be removed.
32 . Marion is regarded as a non-UK resident as she has worked in France for several years. She expects
to return to the UK permanently within the next two years but wishes to purchase a property in
England now in readiness for her return. How might a lender deal with this situation?
a. The loan might be considered but only if Marion can provide some substantial additional security.
b. If a loan is approved, it is likely to have specific conditions attached.
c. In the same way as an UK resident.
d. Her application can only be accepted when she resumes UK residency.
CeMAP 2 Full Syllabus Test (July 2002)
33 . Ben is completing a mortgage application form and notices that he must disclose that he is subject to
an individual voluntary arrangement (IVA). How might this affect his application?
a. He is legally prevented from borrowing until the IVA has expired.
b. The lender might consider granting a mortgage, but he may be regarded as a poor risk.
c. He will need to obtain agreement from all his creditors before he can take out a mortgage.
d. He is legally prevented from borrowing unless the appointed insolvency practitioner agrees.
34 . When undertaking an income assessment for a personal applicant wishing to take out a mortgage,
which one of the following lists the information that a lender would find most useful?
a. Banker's reference; the applicant's P60; employer's reference.
b. Landlord's reference; employer's reference; the applicant's P60.
c. The applicant's P60; employer's reference; bank statements.
d. Employer's reference; bank statements; landlord's reference.
35 . Under the provisions of the 1968 Theft Act, a lender can prosecute an applicant who attempts to
obtain a mortgage by deception:
a. Irrespective of whether a mortgage is actually completed.
b. Only if any mortgage granted falls into arrears.
c. Only if a mortgage is completed.
d. If a loss is incurred on sale of the property following possession by the lender.
36 . Which one of the following lists the information that a lender would find most useful when assessing
the borrowing capacity of a self-employed mortgage applicant?
a. Banker's reference; cash flow forecast; order book.
b. Previous employers' references; business plan; cash flow forecast.
c. Self-assessments tax calculation; P60s from previous employment; bank statements.
d. Business plan, existing lender's reference; previous employer's reference.
CeMAP 2 Full Syllabus Test (July 2002)
37 . Which of the following is correct in relation to assessing a mortgage applicant from a limited
company?
a. The loan cannot be made to the company itself because it is not legal entity.
b. A lender will often seek personal guarantees from the directors as security for the loan.
c. The loan is made to the directors and shareholders.
d. A lender can always accept a personal guarantee supported by tangible security without the
consent of director's spouse.
38 . Which of the following statements in respect of a basic valuation is correct?
a. The report will usually only highlight any necessary repairs if the loan-to-value ratio is high.
b. The report will confirm whether or not the agreed purchase price is reasonable.
c. The valuation must be carried out by a valuer independent of the lender.
d. The valuation is carried out on behalf of the lender, but the applicant usually meets the cost.
39 . Gill made an offer of £85,000 to purchase a leasehold flat in a small purpose-built block but her
mortgage application has been declined. Which of the following is the MOST likely reason for this?
a. The lease on the flat has 38 years to run.
b. The block was built more than 50 years ago.
c. The flat is in urgent need of internal redecoration.
d. The lease makes no provision for payment of ground rent.
40 . Which of the following is true in relation to local authority and town planning consents?
a. It is possible for a local authority to overrule building regulation requirements.
b. Consent is never required if an owner wishes to re-paint their house in a different colour.
c. Under town planning regulations, changes cannot be made to listed buildings.
d. Internal modifications to private residential properties do not require planning permission.
41 . A guarantee will be rendered invalid in which of the following circumstances?
a. If the guarantor can prove that he/she is not able to meet a substantial liability.
b. When undue influence or misrepresentation can be proven.
c. Where a borrower can show that a proposed new guarantor would be more suitable.
d. In cases where the term of a mortgage loan is to be extended.
42 . If the guidelines produced by the ABI were strictly applied, how much of a mortgage indemnity claim
for 30,000 is likely to be paid?
a. £18,000.
b. £21,000.
c. £24,000.
d. £30,000.
CeMAP 2 Full Syllabus Test (July 2002)
43 . In relation to Mortgage Indemnity Guarantees (MIGs), the 'right of subrogation' is best defined by
which of the following?
a. The lender's right to choose whether or not to charge a MIG premium.
b. The borrower's right to sue the lender for negligence in handling a mortgage application
c. The insurance company's right to sue the borrower for the amount it has paid out under a claim.
d. The mortgage adviser's right to recommend a higher loan-to-value ratio to borrower who agrees
to take out a MIG policy.
44 . Which of the following is true in relation to a collateral deposit?
a. It must take the form of money deposited with the lender, who then freezes the funds until the
dept is repaid.
b. It can be any form of additional security that is deposited by an individual other than the borrower.
c. It can be used to cover any increases in mortgage repayments that occur when interest rates rise.
d. It is always necessary for a lender to refer to the surety before it is able to gain recourse to the
collateral.
45 . Mortgage lender usually attach a standard condition to offers of advance stating that they reserve the
right to withdraw an offer in certain circumstances. In which of the following cases would a lender be
LEAST likely to exercise this right?
a. If the solicitor indicated in the report on title that the property had been registers with a
possessory title.
b. If an applicant had changed job since the offer if advance was made.
c. If the borrower's financial circumstance had materially changed.
d. If it was subsequently discovered that the applicant had given inaccurate information on the
application form.
46 . Which of the following is a special condition that may be included in a mortgage offer of advance?
a. Notification of any additional security required.
b. That the offer is subject to a satisfactory report on title.
c. The lender's right to inspect the property for work done.
d. A statement that the lender can withdraw the offer.
47 . Which of the following is a typical condition with which mortgage lenders undertake to comply?
a. Meet conditions imposed by statue, local authority and title.
b. To comply with the conditions of any lease.
c. Not to let, or demise, the property without prior consent.
d. To permit access and inspection.
CeMAP 2 Full Syllabus Test (July 2002)
48 . Which of the following is a typical condition with which a mortgagor undertakes to comply?
a. To let the property only if the borrower is away for a short period.
b. Not to let the property without prior consent.
c. Inform the lender of all occupants of the property upon request.
d. Notify the lender when children over the age of 18 leave the parental home.
49 . The process of investigating title has become much simpler due to the introduction of:
a. Defective title insurance.
b. Freehold and leasehold reform legislation.
c. Compulsory land registration.
d. Various statements and codes of practice.
50 . A lending bank can exercise a right to consolidate if:
a. It has reserved this power in the mortgage offer of advance.
b. The legal date of redemption is due soon.
c. Both mortgages are held in the same names.
d. It believes the borrower will find it easier to meet repayments.
51 . What is the most likely reason for the lender requiring a new valuation when a borrower applies for a
further advance?
a. The original loan-to-value figure was high.
b. The original loan-to-value figure was low.
c. The unexpired mortgage term is less than 20 years.
d. The original mortgage was subject to a retention for essential repairs.
52 . Which of the following is correct in relation to a request for further advance?
a. In accordance with Building Societies Act, the property on which the advance is to be secured
must be revalued.
b. A new valuation will always be required if the original loan-to-value amount was low.
c. Lenders encourage borrowers to use further advances for home improvements because the
property value will increase beyond the amount borrowed.
d. Building societies are able to assess a further advance request based on the original property
valuation if it is not too old.
53 . The key factor for a lender considering an application for further advance is the:
a. Overall loan-to-value ratio.
b. Purpose of the loan.
c. Enhanced value of the property.
d. Location and neighbourhood.
CeMAP 2 Full Syllabus Test (July 2002)
54 . A deed of postponement might be necessary when:
a. A second party is to be added to a mortgage.
b. The order of priority of charges against a property is to be changed.
c. An existing mortgage is to be redeemed and replaced with a new charge.
d. Arrears on a mortgage account are to be capitalised.
55 . Which of the following describes a 'puisne' mortgage?
a. A subsequent mortgage loan that has been arranged by the process of tracking
b. A mortgage where the original mortgage deed obliges the lender to make subsequent loans.
c. A legal mortgage where the title deeds are not held by the lender.
d. An equitable charge that ranks behind a prior legal mortgage.
56 . A mortgage deed that obliges the lender to make further advances:
a. Will result in other lenders being unable to take a charge over the property.
b. Will require a subsequent mortgagee to execute a deed of postponement.
c. Means that borrowers can only apply to their original lender for an advance.D)
d. Means that the further advances will take priority over other lenders' charges.
57 . Juliette completed the purchase of her house 18 month ago, having paid £87,000 for the property at
an auction, assisted by an endowment mortgage of £78,000. The lender's surveyor valued the house
at £92,000 and, as her lender requires a MIG where loan-to-value ratios exceed 85%, no premium
was payable. The property has now been valued at £105,000 and Juliette has requested a further
advance of £10,000 to build a conservatory. How much of Juliette’s new total loan will be covered by
MIG?
a. None.
b. £1,500.
c. £10,000.
d. £13,000.
58 . Ian and Sandie have seen a plot of land on which they would like to build their own property with the
help of a builder friend. Which of the following matters would be of LEAST immediate concern to any
lender with whom Ian and Sandie discuss the possibility of being granted a mortgage?
a. The proposed method of construction.
b. Whether the land is freehold or leasehold.
c. The anticipated total cost of construction.
d. Whether funds would be required to complete the purchase of the land.
CeMAP 2 Full Syllabus Test (July 2002)
59 . Kerry and Dominic wish to buy a small plot of land and build their own property with the help of
Kerry's brother, Matthew. Which of the following would be of most concern to a lender agreeing to a
mortgage application from Kelly and Dominic?
a. The timescale for completion.
b. Carrying our intermediate and final inspections.
c. Whether Matthew is a member of the NHBC Buildmark Scheme.
d. That they are intending to construct the house in brick.
60 . Which of the following would NOT be regarded as a standard peril in respect of the cover provided by
most building insurance policies?
a. Theft.
b. Malicious damage and vandalism.
c. Riot and civil commotion.
d. Civil war or insurrection.
61 . Hannah is arranging a mortgage and enquires about the Office of Fair Trading (OFT) guidelines
relating to panel provision of property insurance cover. Which of the following is correct?
a. All insurance premiums must be pre-paid annually.
b. Premiums must be debited to the mortgage account to ensure that the insurance cover does not
lapse.
c. Hannah should be offered a choice of at least three insurers.
d. The OFT regulations state that the cost of buildings cover cannot be included in APR calculations.
62 . At which stage of a property purchase transaction must the purchaser arrange for the property to be
insured?
a. On exchange of contracts.
b. When the offer has been accepted in writing by the seller.
c. From the date of registration of change of ownership.
d. On the date the purchase is completed.
63 . Which of the following is true in relation to buildings insurance?
a. Insurance premium tax is waived when a borrower arranges insurance with a company that
belongs to the lender's panel.
b. A solicitor can be deemed negligent if he does not advise his client of the need to take out
buildings insurance prior to exchange of contracts.
c. It is not necessary for a purchaser to arrange buildings insurance until completion date.
d. Buildings insurance arranged under a lender's block policy arrangements is not eligible for a
refund of premiums if a sale falls through.
CeMAP 2 Full Syllabus Test (July 2002)
64 . In relation to buildings insurance, if a property is covered from exchange of contracts but the
purchase falls through:
a. Only the lender has an insurable interest in the property.
b. Only the borrower has an insurable interest in the property.
c. Both the lender and the borrower have an insurable interest in the property.
d. Neither the lender or borrower has an insurable interest in the property.
65 . John has just taken out a 20-year capital and interest repayment mortgage for £75,000 on an annual
rest basis. If the interest rate was to remain constant at 6% for the first 12 months and the monthly
repayments are calculated at the rate of £5.98 per £1000 borrowed, how much capital will he repay in
the first year?
a. £720.00.
b. £780.00.
c. £854.00.
d. £882.00.
66 . Your customer, Jean, takes out a 25-year capital and interest repayment mortgage for £60,000 on an
annual rest basis, and the interest rate for the first 12 months stays constant at 4.75%. If the monthly
repayments are calculated at the rate of £46.10 per £10,000 borrowed, how much capital will she
repay in the first year?
a. £469.20.
b. £495.30.
c. £522.80.
d. £561.20.
67 . Which of the following might be considered as a disadvantage of an interest-only mortgage?
a. Less interest is paid compared to a capital and interest mortgage.
b. The outstanding capital remains constant throughout the mortgage term.
c. The mortgage cannot be arranged on a monthly or daily rest basis.
d. The mortgage term cannot be longer than the term of repayment vehicles.
68 . Which of the following pieces of information given to Janis by a mortgage adviser concerning any
interest-only mortgage is correct?
a. The amount outstanding remains constant throughout the term.
b. The loan is guaranteed to be repaid at the end of the term.
c. Overall, it will always be more expensive than a capital and interest mortgage.
d. Extending the term will result in a reduced payment.
CeMAP 2 Full Syllabus Test (July 2002)
69 . John and Mary have a low-cost endowment mortgage and have received notification from their
assurance company that their policy is unlikely to provide enough money to repay their loan on
maturity. Which of the following options is LEAST likely to be recommended by their lender to help
remedy the situation?
a. Switch to repayment mortgage and retain the low-cost endowment.
b. Cash in or surrender the policy.
c. Top up the premiums to increase the policy value.
d. Take out an additional investment vehicle.
70 . Megan has an interest-only mortgage and her endowment policy is assigned to the lender. This
means that:
a. She can redeem her mortgage early only if the policy performs well.
b. The len7der can refuse to allow the property to be remortgaged.
c. She must increase the sum assured if the account falls into arrears.
d. In certain circumstances the lender has the right to surrender the policy.
71 . Eric is arranging an endowment mortgage and has been advised that the endowment policy may be
required to be assigned to the lender. Which of the following statements about assignment is
INCORRECT?
a. The lender can surrender the policy should it need to.
b. The lender acquires certain legal rights over the policy proceeds.
c. The lender acquires an equitable charge over the policy.
d. The lender gains the right to be notified if the policy lapses.
72 . Why might a mortgage lender wish to take an assignment of an endowment policy that is being used
as the repayment vehicle for an interest-only mortgage?
a. To insure any commission earned on the sale of the policy.
b. To ensure that the policy documents are not lost by the borrower.
c. To ensure that they are made aware if the policy is in danger of lapsing.
d. To monitor the performance of the policy by receiving regular bonus statements from the
assurance company.
73 . Which of the following would be regarded as a benefit of using a full with-profits endowment policy as
the repayment vehicle for an interest-only mortgage?
a. The death benefit increases each year in line with the Retail Price Index.
b. The basic sum assured is less than the mortgage, resulting in cheaper premiums.
c. All bonuses are guaranteed to be paid.
d. The mortgage is guaranteed to be repaid in full on maturity.
CeMAP 2 Full Syllabus Test (July 2002)
74 . Graham and Susan have applied to the West End Building Society for an interest-only mortgage of
£52,000. Which of the following statements made by the mortgage adviser is correct?
a. A unit-linked policy is guaranteed to pay off the mortgage on death or maturity.
b. A full with-profits endowment policy is guaranteed to pay off the mortgage on death or maturity.
c. A low-start endowment policy is guaranteed to pay off the mortgage on death or maturity.
d. A personal pension term assurance plan is guaranteed to pay off the mortgage on death or
maturity.
75 . Which of the following might be the reason why Sally has decided against arranging a unit-linked
endowment policy to repay her planned interest-only mortgage?
a. She wants a guarantee that her loan will be repaid at the end of term.
b. She hopes there will be a surplus after she has repaid her loan at maturity.
c. She hopes that there will be the opportunity to repay the loan early from the value of the policy.
d. She wants a guarantee that the will be paid in full if she dies before the end of the term.
76 . What is the maximum amount that can be contributed to the stocks and shares element of a Maxi ISA?
a. £7,000.
b. £5,000.
c. £3,000.
d. £1,000.
77 . Which of the following statements about a personal pension plan is correct?
a. At retirement the pension provides an income, free of income tax under current legislation.
b. A maximum of 20% of the fund value can be taken as a tax-free lump sum on retirement.
c. Full tax relief can be claimed on the pension plan premiums.
d. The lump sum and pension benefit can be taken at any time as long as 10 years' premiums have
been paid.
78 . Which of the following products is an example of a low-start mortgage?
a. An equity share mortgage.
b. A deferred interest mortgage.
c. A capped rate mortgage.
d. A discount rate mortgage.
CeMAP 2 Full Syllabus Test (July 2002)
79 . Which of the following statements in respect of a low-start mortgage is correct?
a. They are only available on an interest-only basis for the initial period.
b. Additional forms of security are usually required.
c. The borrower may be allowed to select an initial rate of interest within certain limits.
d. The outstanding debt at the end of the low-start period will always be more than the original loan.
80 . Nigel has taken out a new mortgage that requires him to pay monthly rent as well as mortgage
payments. What type of mortgage does he have?
a. Deferred interest.
b. Shared ownership.
c. Equity share.
d. LIBOR.
81 . Which of the following is one of the most common causes of mortgage arrears, according to the
Council of Mortgage Lenders' statistics?
a. Economic recession.
b. Matrimonial dispute.
c. High interest rates.
d. Excessive borrowing.
82 . According to the Council of Mortgage Lenders, which one of the following is not a known cause of
arrears?
a. Imprisonment.
b. Inability to find an alternative property.
c. Abolition of MIRAS.
d. High increase in interest rates.
83 . Stuart has an interest-only mortgage supported by a low-cost with-profits endowment policy. As a
result of being unemployed the account is now three months in arrears. If Stuart is about to start a
new job, which of the following options would be most appropriate?
a. A suspension of the repayment of capital for an agreed period.
b. A temporary extension of the mortgage term.
c. An increase in monthly payment for an agreed period, subject to affordability.
d. Capitalisation of the arrears.
CeMAP 2 Full Syllabus Test (July 2002)
84 . June and Tim have a capital repayment mortgage. They have built up a significant sum of arrears on
this mortgage owing to an illness sustained by Tim, a self-employed builder. Their lender has agreed
to allow them to reschedule the arrears now that Tim is back in regular employment. What would be
the effect on their mortgage of this rescheduling?
a. They will pay an increased rate of interest on their loan for an agreed term.
b. They will pay a lower rate of interest on their loan for an agreed term.
c. The term of the mortgage account will be extended to enable them to reduce their monthly
repayment.
d. It would increase their monthly repayment for an agreed period of time while they clear the
arrears.
85 . Ian has been unemployed since he was made redundant last month and he has made a claim for
Income Support to cover his mortgage interest payments. His low-cost endowment mortgage was
completed in October 1996. Which of the following statements is correct?
a. Benefit covering all his mortgage interest will be payable from the ninth week after the date of his
claim.
b. No benefit will be payable for the first eight weeks following the claim, with 50% of the mortgage
interest being covered from the ninth week.
c. No benefit will be payable in respect of his endowment premiums and any further advances
included in the current outstanding balance.
d. Benefit covering his full entitlement up to 100% of the mortgage interest will be payable from the
40th week after the date of his claim.
86 . Which one of the following is NOT a key feature of the Income Support - Mortgage Interest (ISMI)
scheme?
a. Borrowers who first took out their loan after 1 October 1995 do not receive income support during
the first 39 weeks of a claim.
b. Payments of income support are made directly to the borrowers' lender.
c. Borrowers who first took out their loan before 2 October 1995 do not receive income support
during the first 18 weeks of their loan.
d. Income support is payable on loans used to carry out work to maintain the property's fitness for
occupation, as long as the loan is considered to concern 'existing housing costs'.
87 . Which of the following is true in relation to a lender appointing a receiver?
a. The receiver acts on behalf of the lender but is an agent of the borrower.
b. This remedy can be used only if the borrower has been declared bankrupt.
c. The receiver must not be an employee of the lender.
d. The receiver acts on behalf of the borrower but is an agent of the lender.
CeMAP 2 Full Syllabus Test (July 2002)
88 . Joanne's property has recently been taken into possession by her mortgage lender. What are the
implications for Joanne?
a. If the lender sells the property for more than the original loan taken out by Joanne, then any
difference between the original purchase price and the sale price must be immediately passed to
Joanne.
b. Joanne can take the property out of the lender's possession by redeeming her loan, in full before
the property is sold.
c. Joanne can only stop the lender selling the property by clearing the outstanding arrears.
d. The lender must delay the sale of the property until the sale price covers Joanne's original loan.
89 . Which of the following statements in respect of the Possessions Register held by the Council of
Mortgage Lenders (CML) is correct?
a. It contains the names of all individuals who have had a property taken into possession in the past.
b. It can be searched only if a lender suspects that a fraudulent mortgage application has been
received.
c. It can be accessed only by CML members.
d. It replaces the need for any other credit search to be undertaken.
90 . In which of the following circumstances would the Council of Mortgage Lender's (CML) Possessions
Register not be accessed?
a. When a CML lender is processing a mortgage application for a loan of less than £10,000.
b. When a non CML lender is processing a mortgage application of £25,000 or more.
c. When a CML lender is processing an application for a borrower who has held a mortgage with
them in the past.
d. If the lender has checked the application through a credit-referencing agency instead.
91 . Which organisation maintains a register of individuals who have had their properties taken into
possession?
a. The Financial Services Authority.
b. The British Bankers Association.
c. The Office of Fair Trading.
d. The Council of Mortgage Lenders.
92 . Lenny's property has been taken into possession and sold by his lender at a price of £18,000 less
than the outstanding mortgage debt. If the lender claimed on a mortgage indemnity insurance and
received £10,000 in full settlement, which of the following statements is correct?
a. The insurer can sue Lenny for the recovery of £18,000.
b. The insurer can sue Lenny for the recovery of £8,000 only.
c. The insurer and the lender can jointly sue Lenny for the recovery of £10,000 only.
d. The lender can sue Lenny for the recovery of £8,000.
CeMAP 2 Full Syllabus Test (July 2002)
93 . Which of the following matters would be of MOST concern to a lender when it is discovered that a
borrower has let his property without consent?
a. That a receiver is appointed to collect rent from the tenant.
b. That the whereabouts of the borrower are confirmed.
c. That no action is taken which formally acknowledges the tenancy.
d. That the rent received is greater than the monthly mortgage payment.
94 . Tina will be working abroad in the coming year and would like to let her property for the duration of
her stay. Which of the following matters would be of LEAST concern to her lender?
a. The type of tendency agreement she wishes to create.
b. The rent to be charged.
c. The current market value of her property.
d. The right the tenant will have to occupy the property.
95 . While Julie is working abroad she wants to let her property. How can Julie's lender insure that the
tenant does not acquire a right to permanent occupancy? By insisting that the:
a. Tenant signs a consent-to-mortgage form.
b. Tenant becomes a joint mortgagee for the duration of the tenancy.
c. Rent continues to be paid via the borrower rather than directly by the tenant.
d. Tenant becomes a joint mortgagor for the duration of the tendency.
96 . Leah and Tony wish to sell part of their land attached to their property to a property developer. Which
of the following is correct in relation to the lender? It will:
a. Ask Leah and Tony to use to use the sale proceeds to make a part or full repayment of their
mortgage.
b. Stand to lose some of the security for their mortgage loan.
c. Be required to check that the company providing the mortgage indemnity guarantee agrees to the
sale.
d. Ask to see the property developer's planning permission before consenting on the sale.
97 . Peter has recently died. Atlas Bank plc has now received a cheque from Peter drawn on a bank
account in his sole name, as payment to the mortgage account which he held jointly with Rose.
Which of the following is correct?
a. The cheque can be presented for payment but only with Rose's express agreement.
b. Provided that the cheque was received before Peter's death, it can be presented for payment.
c. Because the cheque was written, but not cleared, before Peter's death it cannot be presented for
payment.
d. As the mortgage was in joint names, the cheque can be presented for payment.
CeMAP 2 Full Syllabus Test (July 2002)
98 . Which of the following statements in relation to bridging finance is true?
a. Closed bridging finance carries greater risk than open bridging finance.
b. Closed bridging finance is likely to be less expensive than open bridging finance.
c. Open bridging finance is no more risky than closed bridging finance.
d. Open bridging finance is only appropriate if a client has exchanged contracts on his existing
property.
99 . In which of the following circumstances would open bridging finance be appropriate?
a. For Mark, who has exchanged contracts on the sale of his property but wishes to complete his
purchase before his sale.
b. For Louise, who wishes to purchase a property before a buyer has been found for her sale.
c. For Mary, who wishes to purchase a plot of land on which she wants to build her own home.
d. For John, who has exchanged contracts on the sale of part of the land adjoining his property.
100 . A lender CANNOT pass information about a borrower's debts to a credit reference agency where the
borrower is an arrears and:
a. The amount owed is not in dispute.
b. Has been given 40 days notice that the lender intends to disclose the information.
c. The amount owed is in dispute.
d. Has been given 28 days notice that the lender intends to disclose the information