CeMAP Module 2 flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Regulated mortgage contract

A first-charge mortgage to an individual secured on UK land where at least 40% is used as or with a dwelling by the borrower or a related person.

MCOB

FCA Mortgage and Home Finance: Conduct of Business sourcebook; sets conduct rules for mortgage sales, disclosure, arrears and possessions.

Initial disclosure

Information a firm must give before mortgage advice, covering its regulatory status, scope of service and fees payable by the customer.

ESIS

European Standardised Information Sheet; mandatory mortgage illustration under MCD rules showing APRC, instalments, fees and total amount repayable.

FOS complaint time limit

Generally six months from the firm's final response and six years from the act or three years from knowledge, whichever is later.

Consumer Duty

FCA principle requiring firms to act to deliver good outcomes for retail customers across products, price, service and communications.

Money laundering CDD

Customer due diligence: identify customer, verify identity, establish source of funds and purpose of mortgage, with enhanced checks for PEPs.

Capital repayment mortgage

Each monthly payment covers interest and some capital, so the balance reduces and reaches zero at the end of the term if payments are maintained.

Interest-only mortgage

Payments cover only interest; the original loan must be repaid at term end from a specified repayment vehicle or sale of the property.

Tracker rate

A variable rate that follows a named reference rate, usually Bank Rate, plus a fixed margin for the agreed period.

Offset mortgage

Linked savings reduce the balance on which interest is charged; the borrower may access savings but the interest benefit falls.

Lifetime mortgage

Equity release loan secured on the home, usually with no required payments; interest rolls up and is repaid on death or sale.

Shared ownership

Borrower buys a share of the property and pays rent on the remaining share, with the option to buy further shares by staircasing.

Affordability assessment

Lender checks income, committed expenditure, basic essential expenditure and credit commitments to ensure the mortgage is affordable now and after rate rises.

Loan-to-value ratio

Loan amount divided by property value, multiplied by 100; higher LTV means more lender risk and often higher interest.

Decision in principle

An early lender indication that a mortgage may be acceptable, subject to valuation, full underwriting and satisfactory documents.

SA302

HMRC tax calculation used as income evidence for self-employed borrowers, often supported by a tax year overview and accounts.

Mortgage valuation

Lender's assessment of property value and suitability as security; it is not a structural survey for the borrower.

Mortgage offer

Formal lender document setting out loan amount, rate, term and conditions; funds are released only when conditions are met.

Committed expenditure

Existing credit commitments, childcare and other fixed outgoings that must be deducted when calculating affordable mortgage payments.

Freehold

Ownership of land and buildings indefinitely, subject to statutory controls and any rights or covenants affecting the title.

Leasehold

A right to occupy property for a fixed term under a lease, subject to ground rent, service charges and lease covenants.

Joint tenancy

Co-ownership with no distinct shares and right of survivorship, so the deceased owner's interest passes to the surviving owner.

Tenancy in common

Co-ownership in defined shares with no survivorship; each owner can leave their share by will.

First legal charge

Lender's registered charge over the property giving priority over later charges and the right to possession on default.

Residual valuation

Development appraisal that deducts build costs, fees and developer profit from completed value to estimate land value.

Forbearance

A lender's temporary or permanent concession, such as reduced payments or term extension, to help a borrower manage mortgage arrears.

Payment holiday

Agreed temporary suspension or reduction of mortgage payments; interest may still accrue and the balance or term may increase.

Arrears capitalisation

Adding missed payments to the outstanding mortgage balance and recalculating payments, usually after an affordability check.

Pre-action protocol

Court protocol requiring lenders to consider alternatives to possession and communicate with borrowers before starting mortgage possession proceedings.

Suspended possession order

Court order allowing lender possession but suspending enforcement provided the borrower meets agreed payments towards the arrears.

Support for Mortgage Interest

Government help paying mortgage interest for eligible benefit claimants, provided as a loan secured by a charge on the home.