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Suitability Quiz

Comprehensive CEMAP quiz covering mortgage product suitability, repayment strategies, and regulatory requirements. Test your knowledge of APRC, LTV, mortgage types, and suitability assessments for different borrower profiles.

CEMAP Topics Covered: mortgage product types, interest-only vs repayment mortgages, fixed vs variable rates, LTV calculations, APRC, early repayment charges, mortgage illustrations, and suitability assessments.

This quiz is specifically designed for CEMAP students preparing for their exams and mortgage advisers maintaining their professional knowledge.

CEMAP quiz, Certificate in Mortgage Advice and Practice, mortgage suitability, APRC, LTV, mortgage types, repayment strategies, interest-only mortgages, fixed rate mortgages, variable rate mortgages

Suitability Quiz

1. What does APRC stand for in mortgage terms?

A) Annual Percentage Rate of Credit
B) Annual Percentage Rate of Charge
C) Annual Payment Rate of Credit
D) Annual Payment Rate of Charge

2. Which body regulates mortgage advice in the UK?

A) Bank of England
B) Prudential Regulation Authority
C) Financial Conduct Authority
D) HM Treasury

3. What is the main risk of an interest-only mortgage?

A) No capital is repaid during the term
B) Higher monthly payments
C) Early repayment charges
D) Limited product choice

4. Which is a typical feature of a fixed-rate mortgage?

A) Payments vary monthly
B) Interest rate follows the base rate
C) No early repayment charges
D) Interest rate stays the same for a set period

5. What does LTV stand for?

A) Loan to Variable
B) Loan to Value
C) Liability to Value
D) Liability to Variable

6. Which fee is paid to secure a mortgage product?

A) Valuation fee
B) Legal fee
C) Arrangement fee
D) Broker fee

7. What is the main benefit of overpaying a mortgage?

A) Reduces total interest paid
B) Increases LTV
C) Extends mortgage term
D) Avoids arrangement fees

8. Which is a common early repayment charge period?

A) 1 month
B) 3 months
C) 6 months
D) 2–5 years

9. What is a mortgage term?

A) The fixed-rate period
B) The total length of the loan
C) The time between payments
D) The lender’s offer validity

10. Which type of mortgage adjusts with the base rate?

A) Fixed-rate
B) Capped-rate
C) Tracker
D) Discounted

11. What is the purpose of a mortgage illustration?

A) To outline key features and costs
B) To confirm legal title
C) To arrange property insurance
D) To set the completion date

12. Which is a typical repayment strategy for interest-only?

A) Credit card balance
B) Personal loan
C) Overdraft
D) Investment plan

13. What is the main advantage of a capped-rate mortgage?

A) Payments always decrease
B) Interest rate won’t rise above a set level
C) No early repayment charges
D) Guaranteed lowest rate

14. What is the main drawback of a variable-rate mortgage?

A) Fixed payments
B) Limited product choice
C) Payments can increase
D) Higher arrangement fees

15. Which cost is typically paid on completion?

A) Legal fees
B) Booking fee
C) Valuation fee
D) Arrangement fee

16. What is the purpose of a mortgage valuation?

A) To check structural integrity
B) To provide a detailed survey
C) To set the completion date
D) To confirm the property value for the lender

17. Which mortgage type offers both capital and interest repayment?

A) Interest-only
B) Repayment
C) Offset
D) Bridging

18. What is a key feature of an offset mortgage?

A) Fixed interest rate
B) Linked to base rate
C) Savings offset mortgage balance
D) No overpayment facility

19. Which factor most affects LTV?

A) Property value
B) Mortgage term
C) Interest rate
D) Arrangement fee

20. What is the main benefit of a portability feature?

A) Lower interest rate
B) Reduced fees
C) Shorter term
D) Transfer mortgage to new property

21. Which scenario justifies a longer mortgage term?

A) Affordability constraints
B) Low LTV ratio
C) Young age
D) High-risk tolerance

22. What is excluded from a credible repayment strategy?

A) Regular savings
B) Speculative inheritance
C) Asset sales
D) Pension income

23. Which factor affects suitability for fixed-rate mortgages?

A) Seeking best possible deal
B) Borrower's affordability
C) Borrower's need for payment stability
D) Market trends

24. What is a lender's duty in an interest-only review?

A) Ensure investment performance
B) Adjust repayment terms unilaterally
C) Waive penalties if applicable
D) Discuss remedial actions if strategy fails

25. Which borrower profile suits part-and-part mortgages?

A) Balanced risk tolerance
B) Those wanting a mixture of fixed and variable rate
C) Cautious attitude
D) Adventurous investor

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