Kate and Phil are considering buying one of a number of leasehold flats they have seen. Kate in a first$-$time buyer, while Phil owned his own house with his ex$-$wife until his divorce eight years ago. They are discussing their mortgage requirements with an adviser at Marsh Bank, and they want as much help and advice as they can get. The proposed purchase price is $270,000$ and they wish to borrow $230,000.$

Kate and Phil require some certainty that their loan will be fully repaid by the end of the mortgage term and wish to keep monthly payments to a minimum for at least the next three years. They also want protection in the event of illness, unemployment or death by putting in place the cheapest possible products.

Phil's annual basic salary is $30,000$ and Kate earns a guaranteed $34,000$ per annum as an account executive They have free disposable income of $1,600$ per month. They have accumulated savings of $50,000,$ of which they intend to use $40,000$ as a deposit and the balance to meet any purchase costs.

Marsh Bank's affordability criteria require mortgage payments to be no more than $85\%$ of free disposable income, taking into account committed expenditure, basic essential expenditure and basic quality$-$of$-$life expenditure. The standard variable rate is $5\%.$

$1.$What is the position with stamp duty land tax $($SDLT$)$ on the couple's proposed purchase?

A$.$ Phil's status means the SDLT first$-$time buyer exemption would not apply to the purchase.

B$.$ Only Kate will qualify for the SDLT first$-$time buyer exemption on her half of the purchase.

C$.$ The SDLT first$-$time buyer exemption does not apply to leasehold purchases.

D$.$ The SDLT first$-$time buyer exemption will apply as Kate is a first$-$time buyer.

$2.$Kate and Phil wish to protect their proposed mortgage liability should either of them die during the mortgage term.

Which of the following products would be most appropriate and require the lowest regular premiums?

A$.$ A critical illness policy.

B$.$ A mortgage protection assurance policy.

C$.$ A whole$-$of$-$life assurance policy.

D$.$ An endowment assurance policy.

$3.$The latest point at which the Marsh Bank adviser must provide Kate and Phil with a European Standardised Information Sheet $($ESIS$),$ is:

A$.$ after the first monthly repayment.

B$.$ at the start of the initial meeting.

C$.$ before the application is made.

D$.$ before the offer is received.

$4.$What are the procedures for the payment of stamp duty land tax $($SDLT$)$ on Kate and Phil's proposed property?

A$.$ Kate and Phil will make the SDLT payment directly to HMRC on completion.

B$.$ Kate and Phil will make the SDLT payment directly to HMRC on exchange of contracts.

C$.$ Kate and Phil's solicitor will pay the SDLT to HMRC and claim the payment back from them as a disbursement

D$.$ SDLT will become due on exchange of contracts and will be included in the deposit monies.

$5.$Based on their free disposable income and Marsh Bank's affordability criteria, what will Kate and Phil's maximum annual mortgage payments total?

A$.15,360.$

B$.16,320.$

C$.19,200.$

D$.38,400.$

$6.$Which of the following products offered by Marsh Bank would be most suitable for Kate and Phil?

A$.$ Discounted at $1\mathrm{.}0\%$ below the bank's standard variable rate for three years.

Early repayment charge $-$ appropriate discount to be repaid during discounted period.

Maximum loan$-$to$-$value ratio $-90\%.$

Interest calculated daily.

B$.$ Fixed rate of $3\mathrm{.}5\%$ for three years.

Early repayment charge $-5\%$ of amount redeemed within the first three years.

Maximum loan$-$to$-$value ratio $-90\%.$

Interest calculated annually.

C$.$ Fixed rate of $5\mathrm{.}25\%$ for four years.

Maximum loan$-$to$-$value ratio $-85\%.$

Early repayment charge $-4\%$ of amount redeemed within the first five years.

Interest calculated annually.

$7.$Which of the following statements is true in respect of the most appropriate method of repayment for Kate and Phi?

A$.$ Built$-$in life cover is not included.

B$.$ In the event of financial difficulty, it would not be possible to extend the mortgage term to reduce the monthly payment.

C$.$ The capital is repaid as a lump sum at the end of the mortgage term.

D$.$ The monthly payment consists mainly of capital in the early years and mainly of interest in the later

$8.$Which form of additional security is Marsh Bank most likely to require if Kate and Phil are successful in applying for the maximum loan that their incomes will allow?

A$.$ A collateral deposit.

B$.$ A higher lending charge.

C$.$ A personal guarantee.

D$.$ Assignment of a level term assurance policy.

$9.$If Kate and Phil decided to proceed with the purchase of one of the proposed flats, the lender:

A$.$ could decline their application if the remaining period on the lease is too short.

B$.$ could insist on putting in place its own buildings insurance cover.

C$.$ will collect ground rent and service charge and pass it to an appropirate company

D$.$ will insist that there are no restrictive covenants affecting their occupation of the property.