Mortgage Products and Repayments Flashcards
6 cards from real CEMAP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Mortgage Products and Repayments flashcards as text
How does a tracker mortgage differ from a standard variable rate (SVR) mortgage?
Answer: A tracker follows the Bank of England base rate by a set margin, while SVR is set at the lender's discretion
A tracker mortgage moves in line with the Bank of England base rate plus a fixed margin, while SVR is set independently by the lender.
What is an offset mortgage and what advantage does it offer the borrower?
Answer: A mortgage linked to a savings account where savings reduce the balance on which interest is calculated
An offset mortgage links the borrower's savings to their mortgage — the savings balance is offset against the mortgage balance, reducing the interest charged.
What is a capped rate mortgage?
Answer: A variable rate mortgage with a ceiling above which the interest rate cannot rise during the capped period
A capped rate mortgage is a variable rate product with an upper limit (cap) — the rate can fall with market conditions but will not exceed the cap.
What is a repayment mortgage and how does it ensure the loan is fully repaid?
Answer: Monthly payments include both interest and capital, gradually reducing the balance to zero over the term
A repayment (capital and interest) mortgage splits each monthly payment between interest and capital repayment, ensuring the full loan is cleared by the end of the term.
What is a flexible mortgage and what features does it typically include?
Answer: A mortgage allowing overpayments, underpayments, payment holidays, and drawdown of overpayments
Flexible mortgages allow borrowers to vary their payments — making overpayments, underpayments, taking payment holidays, and sometimes borrowing back overpaid amounts.
What is the difference between a discounted rate mortgage and a fixed rate mortgage?
Answer: A discount is a set reduction from the lender's SVR (so the rate can move), while a fixed rate stays constant for the agreed period
A discounted rate is the lender's SVR minus a fixed amount — it moves when the SVR changes. A fixed rate remains the same regardless of market changes.