CEFS Unit 2 Topic 3

An example of a product designed for long-term borrowing is:

• an overdraft.

• a mortgage.

• a credit card.

The process that lenders use to assess the likelihood of a borrower not repaying a mortgage is designed to:

• check their risk profile.

• check their application is accurate.

• check their creditworthiness.

The most commonly used type of mortgage nowadays is a:

• repayment mortgage.

• interest-only mortgage.

• combined repayment and interest-only mortgage.

If you want to know how much the repayments on your loan will be every month, you need to choose a:

• fixed rate of interest.

• variable rate of interest.

• standard rate of interest.

The loan-to-value (LTV) ratio compares the size of the loan to the value of the property.

• True

• False

If you take out a loan with a variable rate of interest, you could find that your repayments each month get bigger if:

• interest rates go up.

• interest rates go down.

• the term of your loan is extended for a longer period.

Sharia law forbids:

• 
  borrowing.

• payment of interest.

• mortgages.

Mortgages are available to adults of any age.

• True

• False

A buy-to-let mortgage is:

• where the bank lends the money for a mortgage and the borrower pays rent to the bank instead of interest.

• where the bank lends the money for a mortgage and the borrower rents out the property to make a profit.

• where a borrower rents a property from a bank, gradually buying a share in the property over time.

If a hire-purchase customer can no longer afford repayments they must:

• return the goods they have purchased.

• 
  sell the goods and give the lender the money.

• find the money or be taken to court.