Unit 2: Financial Capability for the Medium and Long Term - Unit 3

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An example of a product designed for long-term borrowing is:
While overdrafts and credit cards can be used long term, they are designed to be shorter-term solutions. A mortgage, on the other hand, is usually designed to last for 25 years or more. The correct answer is: a mortgage.
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The process that lenders use to assess the likelihood of a borrower not repaying a mortgage is designed to:
Lenders check the creditworthiness of potential borrowers to assess the likelihood of their being able to afford a mortgage in the long term. The correct answer is: check their creditworthiness.
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The most commonly used type of mortgage nowadays is a:
Whereas interest-only mortgages were very common in the 1980s and 1990s, repayment mortgages are now the most commonly used. The correct answer is: repayment mortgage.
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If you want to know how much the repayments on your loan will be every month, you need to choose a:
With fixed rate mortgages you know exactly what your interest will be each month. The correct answer is: fixed rate of interest
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The loan to value (LTV) ratio compares the size of the loan to the value of the property.
Since the property is being held as security for the bank, it is important for the bank to make sure that there is a margin (ie difference) between the amount it lends and the value of the property if it has to be sold. The correct answer is 'True'.
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If you take out a loan with a variable rate of interest, you could find that your repayments each month get bigger if:
If interest rates go up, so will the size of your monthly repayment. The correct answer is: interest rates go up.
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Sharia law forbids:
Sharia law forbids the payment or receipt of interest. The correct answer is: payment of interest.
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Mortgages are available to adults of any age.
Mortgages are typically only available while the borrower is of working age. The correct answer is 'False'.
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A buy-to-let mortgage is:
A buy-to-let mortgage is a long-term secured loan taken out by a person who is buying a property with the intention of letting it to tenants. In effect, the owner of the property becomes a landlord and they are actually running a small business. The
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If a hire-purchase customer can no longer afford repayments they must:
If the purchaser finds that they cannot afford the payments or they no longer need the goods, they can terminate a hire purchase agreement in writing and return the goods at any time. The correct answer is: return the goods they have purchased.
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Tuition fee loans are paid to:
Tuition fee loans are paid directly to the university on behalf of the student. The correct answer is: the university.
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Shared ownership schemes are provided through housing associations.
Shared ownership schemes are provided through housing associations. The borrower buys a share of their home (between 25% and 75%), for which they take out a mortgage, and pay rent on the remaining share. The correct answer is 'True'.
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When purchasing a family home, what type of insurance is usually recommended so that the mortgage can be paid off in the event of the death of the borrower before the end of the term?
If the insured person dies during the mortgage term, the life policy pays out a lump sum which covers the amount of the outstanding debt. The family of the deceased are then free of the debt and own the property outright. The correct answer is: life
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Other cards in this set

Card 2

Front

The process that lenders use to assess the likelihood of a borrower not repaying a mortgage is designed to:

Back

Lenders check the creditworthiness of potential borrowers to assess the likelihood of their being able to afford a mortgage in the long term. The correct answer is: check their creditworthiness.

Card 3

Front

The most commonly used type of mortgage nowadays is a:

Back

Preview of the front of card 3

Card 4

Front

If you want to know how much the repayments on your loan will be every month, you need to choose a:

Back

Preview of the front of card 4

Card 5

Front

The loan to value (LTV) ratio compares the size of the loan to the value of the property.

Back

Preview of the front of card 5
View more cards

Comments

jenniferdehner9

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