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CEMAP-1 : Certificate in Mortgage Advice and Practice Module 1: UK Financial Regulation - 2025 Exam

Financial CEMAP-1 Questions & Answers

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CEMAP-1


Certificate in Mortgage Advice and Practice Module 1: UK Financial Regulation - 2025


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Question: 458


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.

Whi


  1. I

  2. B

  3. L

  4. C

Ans Expl

mort the

inter e

borr

grad This

is the wn

the p


Question: 459


What is the purpose of a mortgage valuation survey?


  1. To assess the borrower's creditworthiness

  2. To determine the market value of the property

  3. To calculate the borrower's affordability

  4. To verify the borrower's employment history Answer: B


stion: 460


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,

Explanation: The purpose of a mortgage valuation survey is to determine the market value of the property. It helps the mortgage lender assess the property's worth and make informed decisions regarding the loan amount and terms.


Que


Whi hen

grant


  1. B

  2. L

  3. C

  4. T


Ans


Expl ower

to ha mage

to the

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.

Question: 461


Mortgage Payment Protection Insurance (MPPI):


  1. Provides coverage for the property against damage or loss

  2. 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.


    stion: 462

    is the purpose of a mortgage illustration? summarize the borrower's income and expenses

    Covers the costs of property repairs and maintenance

  3. R

redu Ans

Expl

insur e

mort

prov still

be m


Que


What


  1. To

  2. To provide an overview of the mortgage lender's financial performance

  3. To outline the terms and conditions of the mortgage loan

  4. 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.


Question: 463


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.

What g?

Mark


  1. To

  2. To

  3. To

  4. To

Ans Expl

lendi e. It

helps rates,

fees,


Question: 464


Which of the following factors can affect a borrower's eligibility for a mortgage?


  1. The borrower's age and ethnicity.

  2. The borrower's employment status and income.

  3. The borrower's political affiliation.

  4. 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.


stion: 465


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

Explanation: A borrower's employment status and income are significant factors that lenders consider when assessing eligibility for a mortgage. Lenders need assurance that the borrower has a stable source of income to meet the mort her

finan and

educ


Que


What


  1. To

  2. To

  3. To

  4. To

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.


Question: 466


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.


stion: 467

  • To

  • To

  • To

  • To

    • Ans Expl

    regul a fair

    and t e to

    cons ing

    inter ption

    D is i indu


    Que


    Standard Variable Rate (SVR):


    1. Refers to the initial interest rate offered on a mortgage

    2. Is the interest rate charged by the Bank of England

    3. Is a fixed interest rate that remains constant throughout the mortgage term

    4. Represents the interest rate charged by the lender after any initial discounted

    or fixed-rate period ends Answer: D


    stion: 468


    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

    Explanation: The Standard Variable Rate (SVR) represents the interest rate charged by the lender after any initial discounted or fixed-rate period ends. It is the lender's default rate and can fluctuate in response to changes in market conditions.


    Que


    Whi nked

    to the


    1. S

    2. Fi

    3. T

    4. D


    Ans


    Expl ly

    linke

    mort e

    base rate changes, the interest rate on the tracker mortgage adjusts accordingly.


    Question: 469


    Which of the following mortgage types typically offers the lowest interest rate?

    1. Fixed-rate mortgage

    2. Tracker mortgage

    3. 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


      stion: 470


      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

      Offset mortgage Answer: A

    Expl

    speci type

    of m te

    beca od.


    Que


    Whi y for

    a mo


    1. T

    2. T

    3. T

    4. 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.


    Question: 471


    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.


    stion: 472

  • T

  • T

  • T

  • T

    • Ans Expl

    mort hen

    the o r

    refin he

    rights repa


    Que


    What is the purpose of the Financial Conduct Authority (FCA) in the context of mortgage regulation?


    1. To ensure fair competition among mortgage lenders

    2. To provide financial advice to mortgage consumers

    3. To regulate the conduct of firms offering mortgage advice and services

    4. To promote investment in the mortgage market

    Answer: C



    stion: 473

    ch of the following is an example of a "hard" credit search? hecking your own credit report

    lender conducting a credit check for a mortgage application soft inquiry by a credit card company for pre-approved offers landlord verifying your credit history for a rental application


    wer: B


    anation: The correct answer is B. A lender conducting a credit check f gage application is an example of a "hard" credit search. A hard credi h is a thorough inquiry into an individual's credit history and is typica ucted by lenders when considering a loan or credit application. It leav print on the individual's credit report and may temporarily impact their

    Explanation: The Financial Conduct Authority (FCA) is responsible for regulating the conduct of firms offering mortgage advice and services. Its role is to ensure that mortgage consumers are protected and that the mortgage market operates in a fair and transparent manner.


    Que


    Whi


    1. C

    2. A

    3. A

    4. A


    Ans


    Expl or a

    mort t

    searc lly

    cond es a

    foot

    credit score. Checking your own credit report, soft inquiries by credit card companies for pre-approved offers, and landlords verifying credit history for rental applications are examples of "soft" credit searches that do not have the same impact on credit scores.


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