Liam is $31$ and has just transferred back to the UK from the Far East due to his job role. This has an annual salary of $80,000.$ This position involves a significant amount of international travel. Liam has saved a deposit of $80,000$ and has additional funds to cover other costs. He also invested the maximum allowed in a cash ISA at the start of the current tax year.

Liam has a final$-$salary occupational pension scheme, with four x salary life cover, and will receive six months full pay in the event of sickness. He is anxious to plug any significant gaps in the protection of his mortgage payments on a long$-$term basis.

Liam has offered $320,000$ for a brand$-$new flat in a city centre location. Other similar flats in the complex have achieved rental income of around $1,500$ per month, and Liam has decided to rent out the flat and stay with his grandmother while in the UK$.$

He hopes to be able to upgrade to a larger property within the next five years or so$,$ when he expects to have achieved a further work promotion and then will be based mainly in the UK$.$

Liam is meeting an independent financial adviser to discuss his options. The adviser has identified the following mortgage products for Liam to consider:

Platinum Finance three$-$year discounted$-$rate buy$-$to$-$let mortgage at a current rate of $3\mathrm{.}75\%$ on loans up to $80\%$ of the property's value. Monthly rent must represent at least $145\%$ of the monthly mortgage payments.

Property Investors three$-$year fixed$-$rate buy$-$to$-$let mortgage at an interest rate of $4\mathrm{.}50\%,$ on loans up to $75\%$ of the property's value. Monthly rent must represent at least $150\%$ of the monthly mortgage payments.

Liam has not decided whether to choose interest$-$only or proceed on a repayment basis, so the adviser is explaining these to him, before making specific recommendations. If Liam selects interest$-$only, the adviser suggests that he would probably wish to make full use of his ISA allowances every year, before considering other investment options.

$1.$ If Liam's offer is accepted and he uses the whole of his intended deposit, what will his monthly payment be on the Property Investors scheme on an interest$-$only basis?

a$.2750,$

b$.900,$

c$.1,000.$

d$.1,200$

$2.$ Which of the following statements is correct in respect of the Platinum Finance discounted$-$rate product?

a$.$ Any early repayment charge must only reflect the discount Liam has received.

b$.$ The interest rate charged is variable during the discounted period.

c$.$ The interest rate charged will not rise above a predetermined level for the first three years.

d$.$ The interest shortfall is capitalised at the end of the third year.

$3.$ Both lenders will be particularly concerned that Liam:

a$.$ assesses the suitability of his tenants.

b$.$ makes regular ongoing capital reductions.

c$.$ retains full rights to possession.

d$.$ seeks their agreement before selling the property.

$4.$ If Liam chooses to buy the flat using an ISA to support part of the mortgage, which of the following statements is false?

a$.$ ISAs are only available on a single own name basis.

b$.$ Investment in all unit trust funds held in the ISA will be totally tax free.

c$.$ The annual investment limit for a cash ISA is higher than the limit for a stocks and shares ISA.

d$.$ D$.$ The ISA term is open$-$ended.

$5.$ Bearing in mind his future plans, the advantage to Liam of choosing a capital and interest repayment basis, rather than an interest$-$only basis, will be:

a$.$ a higher discount on the standard variable rate.

b$.$ guaranteed portability of the loan.

c$.$ higher potential equity in the future.

d$.$ the facility to make capital reductions.

$6.$ The package offered by Platinum Finance will:

a$.$ allow Liam to reduce his deposit if necessary.

b$.$ be unlikely to attract early repayment charges.

c$.$ cause the amount of capital that Liam owes to increase after three years

d$.$ not allow Liam to benefit from interest rate reductions.

$7.$ Should Liam decide to live in the property, instead of proceeding with the BTL options, the protection product that most appropriately plugs the gap in his current circumstances would be set up as:

a$.$ a level term assurance policy.

b$.$ a mortgage protection assurance policy.

c$.$ mortgage payment protection insurance.

d$.$ income protection insurance with a deferred period of $26$ weeks.

$8.$ The advisers$$ initial comments regarding the use of an ISA as a repayment vehicle should include a warning that:

a$.$ early withdrawal of funds will result in a capital gains tax liability.

b$.$ if Lam lived abroad for any length of time, his permitted investment limit would be halved.

c$.$ tax will be deducted at source from any dividends received.

d$.$ the fund performance cannot be guaranteed.