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The Mortgage Application Process Flashcards

7 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 7 The Mortgage Application Process flashcards as text

  1. What is a 'Decision in Principle' (DIP) search most likely to leave on a credit file?

    Answer: A soft footprint that is not visible to other lenders, or a hard search depending on the lender

    Some lenders conduct a soft search for a DIP (not visible to other lenders), while others perform a hard search that leaves a footprint; the approach varies by lender.

  2. A property is valued at £300,000 and the borrower has a deposit of £45,000. What is the Loan-to-Value (LTV) ratio?

    Answer: 85%

    The loan required is £255,000 (£300,000 minus £45,000 deposit), giving an LTV of 255,000 ÷ 300,000 = 85%.

  3. Under MCOB, which of the following is a lender's obligation when a mortgage application is declined?

    Answer: Inform the applicant of the decline and, where a credit reference agency was used, tell the applicant which agency

    MCOB requires lenders to tell declined applicants that a credit reference agency was consulted and to name that agency, allowing applicants to check their file.

  4. What does 'conveyancing' refer to in the mortgage process?

    Answer: The legal transfer of property ownership from seller to buyer

    Conveyancing is the legal process carried out by solicitors or licensed conveyancers to transfer legal ownership of a property from one party to another.

  5. Which type of mortgage interest rate remains the same for the entire term of the mortgage?

    Answer: Full-term fixed rate

    A full-term fixed rate mortgage fixes the interest rate for the entire mortgage term, providing certainty of payment throughout the life of the loan.

  6. What is the role of a mortgage underwriter in the application process?

    Answer: To assess the borrower's creditworthiness and decide whether to approve the application

    An underwriter is the lender's specialist who evaluates the risk of the application by reviewing income, credit history, and property details before approving or declining.

  7. A borrower is applying for a 'Help to Buy: Equity Loan' in England. What percentage of the property price does the government lend under this scheme (outside London)?

    Answer: 20%

    Under the Help to Buy: Equity Loan scheme in England (outside London), the government lends up to 20% of the property purchase price, enabling buyers to access better mortgage rates.