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CEMAP-1 Actual Questions
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Certificate in Mortgage Advice and Practice Module 1: UK Financial Regulation - 2025
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ch of the following is an example of a repayment mortgage?
nterest-only mortgage. uy-to-let mortgage. ifetime mortgage.
apital and interest mortgage. wer: D
anation: A repayment mortgage, also known as a capital and interest gage, requires the borrower to make regular payments that cover both est on the loan and a portion of the principal amount. Over time, as th ower makes these payments, the outstanding balance of the mortgage ually decreases until it is fully repaid at the end of the mortgage term.
most common type of mortgage and ensures that the borrower will o roperty outright once the mortgage is paid off.
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B
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C
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What is the purpose of a mortgage valuation survey?
To assess the borrower's creditworthiness
To determine the market value of the property
To calculate the borrower's affordability
To verify the borrower's employment history Answer: B
ch of the following insurance policies is typically required by lenders w ing a mortgage?
uildings insurance ife insurance ontents insurance ravel insurance
wer: A
anation: When granting a mortgage, lenders typically require the borr ve buildings insurance. Buildings insurance provides coverage for da structure of the property, including walls, roof, floors, and fixtures,
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caused by events such as fire, flood, or subsidence. It helps protect the lender's investment in the property. While life insurance may be recommended to provide financial protection for the borrower's family in the event of their death, it is not typically a requirement for obtaining a mortgage.
Mortgage Payment Protection Insurance (MPPI):
Provides coverage for the property against damage or loss
Insures the borrower against the risk of being unable to make mortgage payments due to illness, accident, or unemployment
epresents additional payments made toward the mortgage principal to ce the overall interest costs
wer: B
anation: Mortgage Payment Protection Insurance (MPPI) is a type of ance that insures the borrower against the risk of being unable to mak gage payments due to illness, accident, or unemployment. It idesfinancial protection and helps ensure that mortgage payments can ade during difficult circumstances.
is the purpose of a mortgage illustration? summarize the borrower's income and expenses
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To provide an overview of the mortgage lender's financial performance
To outline the terms and conditions of the mortgage loan
To estimate the property's market value Answer: C
Explanation: The purpose of a mortgage illustration is to outline the terms and
conditions of the mortgage loan. It provides detailed information about the interest rate, repayment schedule, fees, and other important aspects of the mortgage agreement.
is the purpose of the Key Facts Illustration (KFI) in mortgage lendin one answer.
provide a summary of the key terms and costs of the mortgage evaluate the borrower's creditworthiness
assess the value of the property for mortgage purposes calculate the monthly mortgage payments
wer: A
anation: The purpose of the Key Facts Illustration (KFI) in mortgage ng is to provide a summary of the key terms and costs of the mortgag borrowers understand the details of the mortgage, including interest and repayment terms.
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Which of the following factors can affect a borrower's eligibility for a mortgage?
The borrower's age and ethnicity.
The borrower's employment status and income.
The borrower's political affiliation.
The borrower's educational background. Answer: B
gage payments and that the borrower's income is sufficient to cover ot cial commitments. Factors such as age, ethnicity, political affiliation, ational background are generally not relevant to mortgage eligibility.
is the purpose of a mortgage offer?
provide legal advice on property transactions outline the terms and conditions of the mortgage assess the borrower's creditworthiness
transfer ownership of the property wer: B
anation: The purpose of a mortgage offer is to outline the terms and
finan and
educ
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To
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Ans Expl
conditions of the mortgage. It is a formal document issued by the lender, stating their willingness to lend the agreed-upon mortgage amount to the borrower. The mortgage offer contains important details such as the loan amount, interest rate, repayment terms, and any specific conditions or requirements. The borrower must review and accept the mortgage offer before proceeding with the mortgage transaction.
What is the purpose of the Financial Conduct Authority (FCA) in relation to mortgage advice and practice?
regulate and supervise mortgage lenders provide mortgage advice to consumers set interest rates for mortgages
issue mortgage licenses to brokers wer: A
anation: The Financial Conduct Authority (FCA) is responsible for ating and supervising mortgage lenders to ensure that they operate in ransparent manner. Option B is incorrect as providing mortgage advic umers is not the primary role of the FCA. Option C is incorrect as sett est rates for mortgages is the responsibility of the Bank of England. O ncorrect as issuing mortgage licenses to brokers is typically done by stry-specific regulatory bodies.
To To To To Ans Expl regul a fair and t e to cons ing inter ption D is i indu Standard Variable Rate (SVR): Refers to the initial interest rate offered on a mortgage Is the interest rate charged by the Bank of England Is a fixed interest rate that remains constant throughout the mortgage term Represents the interest rate charged by the lender after any initial discounted or fixed-rate period ends Answer: D ch of the following is a type of mortgage interest rate that is directly li Bank of England's base rate? tandard variable rate (SVR) xed-rate racker rate iscount rate wer: C anation: A tracker rate is a type of mortgage interest rate that is direct d to the Bank of England's base rate. The interest rate on a tracker gage is set at a certain percentage above or below the base rate. As th Whi nked to the S Fi T D Ans Expl ly linke mort e base rate changes, the interest rate on the tracker mortgage adjusts accordingly. Which of the following mortgage types typically offers the lowest interest rate? Fixed-rate mortgage Tracker mortgage Discount mortgage anation: A fixed-rate mortgage offers a consistent interest rate over a fied period, providing stability and predictability for borrowers. This ortgage is often preferred by individuals seeking the lowest interest ra use it protects them from potential rate increases during the fixed peri ch of the following is a factor that may affect a borrower's affordabilit rtgage? he color of the borrower's car he borrower's previous employment history he number of bedrooms in the property he borrower's preferred vacation destination wer: B Expl speci type of m te beca od. Whi y for a mo T T T T Ans Explanation: The borrower's previous employment history. When assessing a borrower's affordability for a mortgage, lenders typically consider factors such as income, employment stability, credit history, and financial commitments. The borrower's previous employment history can provide insights into their income stability and ability to meet mortgage repayments, which is an important consideration for lenders. Which of the following actions is an example of subrogation in mortgage lending? he lender repossessing the property due to mortgage default he borrower making additional principal payments on the mortgage he lender transferring the mortgage to another financial institution he borrower obtaining mortgage insurance to protect against default wer: C anation: Subrogation in mortgage lending refers to the transfer of a gage from one lender to another financial institution. This can occur w riginal lender sells the mortgage to another party or when the borrowe ances the mortgage with a different lender. The new lender assumes t and obligations of the mortgage, including the right to receive yments and enforce the terms of the loan.Que
stion: 468
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