The minimum interest rate increase when applying a stress test is 1% True/false
True
In what circumstances can sole traders file a ‘short tax return’
Sole traders with turnover below the threshold for making a VAT return do not have to provide detailed accounts for self-assessment tax purposes – they can complete a ‘short’ tax return
Paying off a credit card is an example of a
Committed expenditure
Paying for food, heating, utilities, insurance is an example of what kind of expenditure?
Basic essential expenditure
Clothing, household and personal items, basic recreation, childcare, etc is an example of what kind of expenditure.
Basic quality of life
What did the mortgage market review uncover?
It figured that too many people were arranging interest only mortgages to cut monthly expenses without having a suitable investment vehicle in place.
How many year of accounts will lenders need to see from sole traders?
Lenders will usually take the businesses net profit, and require 2-3 years of accounts.
What is the definition for gross profit.
Gross profit - Business’s gross turnover less the cost of any raw materials necessary to carry out the main trade or goods bought to sell for the business
If a mortgage applicant has been with their current employer for less than three years, a lender will usually require details of previous employment. True/False
True
Stress Tests - The test is not required for fixed-rate mortgages with a term of five years or more, or for mortgages with a term of less than five years. True/False
True
Documents that evidence the rationale for decisions should be retained in either hard copy or electronic format for the length of the mortgage contract. True/False
True docs should be kept for the length of the mortgage contract.
What is meant by Participant or participator
Broadly any individual who holds an ownership stake in a close company, either as a shareholder, director or investor. It can include those with rights to acquire shares, anyone who has provided loans to the company that are still outstanding (but not trade creditors) or anyone who has rights to, or the right to acquire, distributions from the company. Family of a participator are also regarded as participators.
What is MCOB 11
Responsible lending
What is a credit‑impaired customer?
within the last two years has owed the equivalent of three months’ payments on a mortgage or other loan, unless late payment was the result of errors by a bank or other third party
; or
within the last three years has had one or more county court judgments, totalling more than £500;
or
has had an individual voluntary arrangement or bankruptcy order in force within the last three years.
What is meant by free disposable income?
the amount left each month after tax, National Insurance and normal expenses.
A lender can carry out a modified affordability assessment if an existing borrower wishes to vary the terms of or replace an existing mortgage, provided that there is no increase to the level of borrowing, other than to cover product fees. True/False?
True.
