Gemma, $32,$ and lan, $36,$ purchased a two$-$bedroom flat two years ago on a joint tenancy basis. Due to their failing relationship, they are now considering separating.

The flat had a purchase price of $170,000$ and Gemma put up the $10\%$ deposit thanks to a gift from her parents, making it possible to secure a loan on the couple's joint income. While their income has not increased to a significant degree over the past two years, both have stayed in work and they initially managed to maintain mortgage repayments, albeit with little in reserve.

For the first $18$ months, lan paid for the three$-$year, fixed$-$rate, interest$-$only mortgage payments. However, he has failed to do this for the last six months, and he did not initially tell Gemma. A regular bill to the freeholder, Arran Holdings, is also outstanding. In addition, neither has managed to maintain the planned payments to individual ISAs intended to repay the capital.

Gemma has insisted that they face the issues around possibly splitting up$,$ and they are consulting a mortgage adviser. The adviser says that if they were to stay together, the lender would probably offer them a period of time to pay their arrears.

lan has heard of the Support for Mortgage Interest $($SMI$)$ loan scheme and wonders whether it could help with the arrears.

Gemma's brother has recently divorced, and he is considering moving into the flat with her if she and lan separate.

$1.$ A transfer of equity will occur if:

a$.$ Gemma's brother decides to act as guarantor.

b$.$ Gemma's brother decides to replace lan as a co$-$owner.

c$.$ lan permanently leaves the property.

d$.$ lan repays Gemma's parents the deposit they funded

$2.$ The bill from Arran Holdings is most likely to relate to:

a$.$ ground rent.

b$.$ indemnity insurance.

c$.$ legal fees.

d$.$ surety charges.

$3.$ Why is the help with arrears, mentioned by lan, inappropriate for them?

a$.$ The waiting period is too long for their situation.

b$.$ Their employment status has not changed.

c$.$ Their mortgage amount is too high.

d$.$ Their mortgage interest rate has not changed

$4.$ Apart from their payment record, what factor is most likely to prevent both Gemma and lan from each securing an individual mortgage of a similar amount to the existing mortgage, on a different property?

a$.$ The length of their mortgage.

b$.$ Their ages.

c$.$ Their level of income.

d$.$ Their loan to value

$5.$ Under the MCOB rules, with regard to Gemma and lan's arrears, the lender must:

a$.$ allow Gemma and lan a reasonable period to repay the arrears.

b$.$ capitalise the arrears if they are unable to repay within $12$ months.

c$.$ ensure the arrears are repaid within a maximum of $24$ months

d$.$ offer to reschedule the arrears over the remaining mortgage term

$6.$ Given their current situation, under what circumstances, if any, might an extension to the mortgage term assist Gemma and lan in rectifying the arrears?

a$.$ None.

b$.$ Only if the loan was for $25$ years or less at the outset.

c$.$ Only if the present mortgage finishes before their anticipated retirement.

d$.$ Only if their lender's affordability calculation is reassessed

$7.$ If a transfer of equity does occur, the method used will be by:

a$.$ codicil.

b$.$ deed.

c$.$ registration.

d$.$ Remortgage

$8.$ With regard to their existing mortgage, if Gemma and lan sell the property within the next six months, they should

a$.$ a joint tenancy severance fee.

b$.$ a lease closure fee.

c$.$ an early repayment charge.

d$.$ an ISA early closure fee

$9.$ Regarding the Support for Mortgage Interest $($SMI$)$ scheme, payments from the scheme are:

a$.$ A based on the claimant's mortgage interest rate.

b$.$ made directly to the claimant via bank transfer.

c$.$ not repayable by the claimant.

d$.$ paid indefinitely until the claimant no longer qualifies

$10.$ On the basis of the information provided, the property was originally owned:

a$.10\%$ by Gemma and $90\%$ by lan.

b$.50\%$ by Gemma and $50\%$ by lan.

c$.90\%$ by Gemma and $10\%$ by lan.

d$.100\%$ by both Gemma and lan jointly