Mortgages Test Questions

1. What proportion of the purchase price of a £25,000 property might a borrower hope to borrow from a building society?

2. In what way does the size of your income set a limit to the amount you can borrow from a building society?

3. Is the building society mortgage interest fixed or variable?

4. What limitations are there on the tax relief available on the interest paid on home loans?

5. Distinguish between a repayment mortgage and an endowment-linked mortgage

6. In the case of a repayment mortgage, tax relief is high in the early years, falling continuously year by year. Why is this?

7. In times of high interest rates some building society borrowers find that their debt is increasing instead of decreasing. Why is this? What can be done to rectify the situation?

8. What is an option mortgage?

9. What is a top-up mortgage and under what circumstances can such a facility be of use?

10. For what purpose other than buying a house may a building society be willing to lend money?

11. Describe the government-sponsored 'home loan' scheme.

12. Describe, without quantifying, the main `one-off initial costs that must be met when buying a house with the aid of a building society mortgage.

House Buying Example

Mr George Jamieson has to move house and agrees to purchase a three-year old property on registered land for £305,000 on which the builder's 10-year guarantee is still current. A mortgage of £15,000 is arranged with a building society. In addition to his own removal expenses, and the commission he will pay to the estate agent for the selling of his old home, what will be the approximate initial costs of making the move?


Survey not necessary

Building society valuation 49

Own solicitor probably about 350

Land registry fee 86House Buying Example

Personal And Business Finance 2018

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