Qualified Financial Adviser (QFA) Loans Exam 1 Practice Test

These questions are part of the practice quiz. Start practicing

• Under CP Code, which scenario would trigger affordability stress testing?
• What factors influence a loan's pricing beyond the nominal rate?
• Why is a property valuation essential in the loan approval process?
• How do changes in central bank policy affect loan pricing for borrowers?
• What does LVR stand for and what does it indicate?
• Which statement describes MARP resolutions during a mortgage arrears discussion?
• What is a guarantor in mortgage lending and what risks does this pose to the guarantor?
• Title documents refer to:
• The Irish Credit Bureau typically holds a borrower's payment history and profile going back over how many months?
• Which statement correctly differentiates the annual percentage rate (APR) from the nominal rate quoted on a loan?
• The Competition and Consumer Protection Commission has responsibility for authorising which of the following?
• Which of the following is NOT a non-judicial debt resolution process under the Personal Insolvency Act, 2012?
• Central Bank loan to value (LTV) regulations do not apply to which of the following types of loans?
• How does a fixed-rate 'lock' period differ from simply having a fixed-rate loan?
• Guarantor release occurs when:
• Compared with standard residential loans, vacant land loans typically require:
• A MARP booklet outlines:
• Gift tax exemption applies to a limit per calendar year.
• Which statement about the Rule of 72 is correct?
• Which of the following individuals must be authorised as a mortgage intermediary to introduce clients to a housing loan for a fee?
• Following Beta Bank's discovery that the creditworthiness assessment was incorrectly completed on Doireann, which action should the bank take?
• The CCMA provides protection to which groups?
• If total projected repayments are €320,000 and the amount borrowed is €240,000, what is the cost of credit?
• Tax relief on allowable mortgage interest is provided to the borrower as
• When a redemption fee is charged, which of the following is not required to be provided to the borrower?
• Which of the following factors need to be considered when comparing competing loans, in order to recommend an appropriate housing loan? (i) Affordability. (ii) Flexibility. (iii) Investment risks.
• In the context of fixed versus variable mortgage rates, fixing the rate for five years when subsequent rates rise typically results in what outcome for the borrower?
• Which document explains the consumer rights and the process for obtaining credit?
• In the FSPO scenario, within how many days must Delta Bank file an appeal to the High Court?
• If Tony omits a relevant piece of information on a mortgage application, who is legally responsible?
• Why is a fixed-rate mortgage often considered most suitable for first-time buyers?
• To avoid an insurer checking the validity or adequacy of the sum insured every time they take on a new property insurance risk, the insurance company will limit their own liability by applying a condition to the policy known as:
• Capital Gains Tax is best described as the tax on the profit from selling an asset, calculated as the difference between the sale price and the purchase price (plus/minus allowable costs).
• Compound Interest is where interest charged on a loan is described as:
• Debt Relief Notice qualifying debt for individuals is:
• If loan interest exactly offsets rental income for the year, the tax liability on the rental income will be:
• In the early years of a capital-and-interest housing loan, which portion of the monthly payment is typically the largest?
• Ruth's mortgage lender will stress test her housing loan repayments to determine if she could make the repayments if:
• To reflect unequal financial contributions, which ownership arrangement is appropriate?
• Under the European Communities Regulations 2010, early repayment should what?
• Stamp Duty is a tax payable:
• What does the National Consumer Credit Protection Act regulate in Australia?
• Which of the following describes what a lender can do during a MABS engagement?
• Under the Consumer Protection Code, when assessing Edward's ability to repay, the lender is required to stress test his future affordability of the loan at what rate?
• Which statement accurately describes Principal and Interest (P&I) repayments compared with Interest-Only (IO) repayments?
• In a sale of a property with multiple lenders, which factor determines who is paid first?
• What is collateral in the context of a loan?
• Which of the following factors does a lender look at when assessing the MAXIMUM loan it is prepared to offer an individual borrower? (i) Profit the loan will generate. (ii) Borrower's loan to income limit. (iii) Loan to Value ratio.
• Under Ship Bank plc's group mortgage protection policy, which person would NOT be legally required to be insured?
• Why does a lender generally charge a lower interest rate on a housing loan?
• Which characteristic distinguishes a line of credit loan from a fixed-term amortising loan?
• Under CCMA, which groups are protected?
• What is mortgage priority and why is it important when multiple lenders are involved?
• How do extra repayments and redraw facilities affect interest savings?
• During a hire purchase agreement, which statements are true?
• Why is affordability a critical consideration in loan suitability?
• What are the possible consequences of loan default?
• What is the cost of credit in relation to a loan?
• Margaret's home loan with Barrow Bank approved subject to suitable life cover. What is the main disadvantage of arranging her own life policy?
• What does recourse mean in mortgage lending and how does it compare to non-recourse?
• A borrower offers a guarantor to a lender as additional security for a mortgage. This is referred to as what type of security?
• Which document is commonly used to verify annual income for tax filers?
• Which option is NOT a determinant of a variable mortgage rate?
• How is self-employed income typically verified for loan purposes?
• How do loan considerations differ for investment loans versus owner-occupier loans?
• Doireann's housing loan was approved by Beta Bank. Following the drawdown of the loan it was discovered that Beta Bank had not completed a creditworthiness assessment correctly on Doireann. Beta Bank should:
• If a lender terminates an agency appointment with a mortgage credit intermediary, what action must the lender take?
• A wayleave is best described as the right to do what?
• Which statement best distinguishes foreclosure from a short sale?
• A pre- arrears situation on a housing loan indicates what?
• Differentiate recourse and non-recourse lending.
• Arthur rents a room in his sole residence and will receive €14,500 in rent. What amount of Arthur's rental income is liable to income tax?
• Which document outlines loan features, risks, and costs?
• Janice has a loan of €3,000 on a variable interest rate from Sofas-R-Us. Janice decides to repay her outstanding obligations early under this credit agreement. As a result Sofas-R-Us should :
• A pre-arrears scenario is best defined as:
• Name several common loan features a Qualified Financial Adviser should explain to clients.
• What is the purpose of a loan pre-approval and what must be verified to move to formal approval?
• In the complaint-handling example, which party sought to appeal the FSPO decision?
• Under CCMA, a borrower would be deemed not co-operating if which of the following is true?
• How can valuation risk affect loan approval?
• Reinstatement value: which statement describes it?
• Which document informs how personal information will be used?
• What is the intended benefit of choosing a fixed-rate mortgage for a first-time buyer?
• Which statement correctly defines LVR and its impact?
• David and Margaret own on a 60:40 basis as tenants in common with a mortgage of €500,000 outstanding. If David dies, Margaret is legally liable for which proportion?
• Which body must authorise and regulate certain insolvency-related professionals in Ireland?
• The Consumer Credit Act states that any insurance which a mortgage lender may require a borrower to take out and keep on a property:
• Which statement best describes refinancing and loan restructuring?
• John, who has a number of investment properties, receives total rental income of €60,000. In 2019, John also pays loan interest of €60,000 on all his investment property loans. On how much of this rental income will John be taxed?
• How do lenders verify income for self-employed borrowers?
• Under unsolicited personal visits, a representative from Ergo is allowed to visit Peter if:
• How much, in monetary value, is an individual allowed to receive by way of a gift, in any one calendar year, before becoming potentially liable for gift tax?
• If the loan amount is 420,000 and the property value is 500,000, what is the LVR?
• In the example where Alice borrowed €250,000, the outstanding balance is €225,000 and the market value is €175,000. What is her negative equity?
• Philip, a single non-first time buyer, took out a loan of €200,000 in January 2012 to purchase an investment property. This year, he will pay €12,500 in interest. How much of this interest is allowable for mortgage interest relief?
• What does the average clause in a property insurance policy do?
• Which of the following fees is commonly charged when applying for a home loan?
• Which of the following documents typically underpins a loan agreement?
• Which document sets the legal terms of the loan agreement?
• Under the Consumer Protection Code a lender is NOT required to stress test a home loan application for affordability if
• Which statement about non-recourse lending is true?
• In the Enda scenario, fixing the rate for five years would most likely result in which outcome when rates rise afterwards?
• Under the term 'Independent', which action must a housing loan lender take?
• In a lifetime mortgage of €100,000 at 5.5% with no payments, how many years would it take for the loan outstanding to double?
• The leaseholder's rights are best described as
• A variable-rate mortgage: by what timeframe must the lender notify the borrower of a rate change?
• What is the purpose of Lenders Mortgage Insurance (LMI)?
• What is a vacant land loan and what risk considerations does it present?
• Which of the following is NOT listed as a Credit Information Provider for the Central Credit Register?
• In the context of linked services, which scenario best describes linking services?
• What documents are typically required as proof of identity and income during a loan application?
• Which option correctly identifies the types of loans that are exempt from Central Bank LTV regulations?
• How does a punctual loan repayment history affect a borrower's credit profile?
• Which statement correctly describes Shell Insurance Services Ltd's status under the mortgage intermediary rules?
• Negative equity occurs when
• Before approving a loan, what does responsible lending require?
• Which obligations do lenders have when collecting client information?
• In a mortgage secured by real estate, which describes non-recourse lending?
• What is Debt-to-Income (DTI) ratio and how do lenders use it?
• What is the main purpose of the documentation checklist in loan applications?
• Which factor is commonly considered by lenders when pricing a loan in addition to the amount borrowed?
• Which year was the Personal Insolvency Act enacted?
• Under the policy, a fact find must be completed in all circumstances for which scenarios?
• What is a redraw facility and how can it benefit a borrower?
• Which factors determine how a mortgage lender calculates variable interest rates?
• Under the CCMA, which groups are protected?
• If a loan amount is €100,000 and the per thousand rate is €6.00, monthly repayment is which amount?
• Alex is a non-first time buyer who purchased his home to live in, back in January 2006. In 2019, mortgage interest relief is at what percentage?
• A debt consolidation housing loan is normally provided over a longer term than a personal loan.
• In relation to consumer credit, the Consumer Credit Regulations, 2010 apply to credit agreements in excess of:
• To be eligible for a Rebuilding Ireland Home Loan, a combined salary for John and Mary must not exceed which amount?
• Which document is specifically used for self-employed income verification?
• In the context of vacant land loans, which statement best reflects LVR implications?
• What does good faith and fiduciary duty require of loan advisers?
• Which of the following must be authorised and regulated by the Insolvency Service of Ireland?
• Who legally owns Mary's group mortgage protection cover in the arrangement with Nore Bank and Shannon Insurance Company?
• Under the CCMA, a regulated entity can impose further charges on arrears arising on a mortgage account when:
• Which statement about leaseholders is true?
• In the group scenario, which regulator is responsible for authorising mortgage intermediaries according to the material?
• In describing a housing loan, the term 'nominal rate' refers to:
• Which statement NOT normally describes the purpose of a debt consolidation loan?
• What is guarantor release and under what conditions might it occur?
• Under the Consumer Protection Code, 2012, if a lender intends to impose a charge in respect of arranging a loan to a consumer, when must the lender inform the individual of any such charge?
• In the given group mortgage protection scenario, which applicants are not necessarily required to be covered by the policy?
• Which statement describes a wayleave?
• Which statement best defines settlement in mortgage lending?
• What best describes a split loan?
• What is the role of the RBA cash rate in determining variable home loan rates?
• If Ruth makes a claim on the household insurance for flood damage and Grand Bank's interest is noted on the policy, to whom will the settlement cheque be payable?
• Providing collateral security against a housing loan most likely involves which arrangement?
• Anna has been classified by Barrow Bank as a not co-operating borrower. The MOST likely reason for this is because Anna has:
• Individuals who wish to provide advisory services, in relation to credit transactions, must be authorised as what?
• What is a 'comparison rate' and why is it important when choosing a loan?
• Who MUST be authorised as a mortgage intermediary?
• How does 'security' work in a mortgage loan?
• Which consumer group is not covered by the Consumer Protection Code 2012?
• Under MARP, when do mortgage arrears arise?
• Which document is commonly used as identity documentation?
• In a line of credit loan, interest is charged on which amount?
• Which document confirms the lender's first legal charge on a property?
• The PRIMARY use of the APRC in relation to housing loans is to:
• Why is professional indemnity insurance relevant for loan advisers?
• In credit assessment, what are the three core elements often summarized as Capacity, Character and Collateral?
• Which term describes changing loan terms with the same lender?
• Which of the following is not normally considered an element of a valid contract?
• Under a Personal Payment Plan, when does Finn become the legal owner of the car?
• Which statement about freehold ownership is accurate?
• If a lender cancels an agency appointment with a mortgage credit intermediary, within what timeframe must the Central Bank be notified?
• Unsolicited Telephone Communication. During the visit, which MUST take place?
• Which of the following describes collateral security in a mortgage context?
• Alex is borrowing €250,000 from Barrow Bank. The bank's standard variable interest rate is 3.9%, which they advertise will be €6.67 per thousand borrowed on a capital and interest mortgage. Calculate Alex's likely monthly mortgage repayment.
• Edward's loan includes a six-month discounted rate; after that the standard variable rate applies. What is the standard variable rate used in Edward's loan after the discount period?
• Which entity constrains the 90% LTV limit for first-time buyers?
• List a typical documentation checklist for a home loan application.
• The Code of Conduct on Mortgage Arrears requires that a regulated entity records all telephone calls made to or from a borrower when the:
• Which of the following incentives does the government funded Help to Buy Scheme provide to eligible first-time buyers?
• If more than one person enters into a mortgage agreement together, their liability is described as
• A freehold estate means the owner
• A lender is allowed to make an unsolicited telephone call to a potential customer if:
• When a lender intends to charge a redemption fee, which documents must be provided to the borrower?
• What does settlement mean in mortgage lending?
• Under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015, which are functions of Credit Servicing Firms?
• Under the Personal Insolvency Act, 2012, Philip has unsustainable debt of €250,000 secured against his private home. He is entitled to apply for which arrangement(s)?
• What does the duty of care principle require of financial advisers in relation to loans?
• John, a first-time homebuyer, in 2019 has mortgage interest payments of €12,000. How much mortgage interest relief can John claim?
• Which of the following agreements are NOT subject to certain provisions under the Consumer Protection Code, 2012?
• Sarah has taken out a household insurance policy. Her implied duty under the policy means:
• A Credit Information Provider (CIP) in relation to the Central Credit Register means which entities?
• In credit assessment, which element evaluates the borrower's credit history and reliability?
• Under the Consumer Protection Code, which statement is true about broker remuneration?
• Philip offers collateral security against a housing loan. This most likely refers to providing what?
• Under the Consumer Protection Code, 2012, Erne Bank must notify the changes to which parties when a guarantor and borrower are involved?
• For the purposes of Capital Gains Tax, a chargeable gain is the:
• Which of the following is a possible MARP resolution option?
• The estimated cost of rebuilding a property from scratch is often called the:
• Which feature directly allows borrowing beyond paid-off principal by drawing against equity?
• Which organisation manages the system that records the transfer of ownership in property related transactions?
• Explain equity release and how it enables additional borrowing using a property.
• What is the purpose of a protective certificate?
• Which statement best describes common interest rate types used on consumer loans?
• Lenders Mortgage Insurance (LMI) is typically required when LVR exceeds what percentage?
• In 2019, mortgage interest relief for a non-first-time buyer who buys to live in is at what percentage?
• Rent a room relief is available to: (i) owner occupiers. (ii) a parent renting to their child. (iii) an employee renting to their employer.
• ASU stands for which of the following?
• Before a mortgage can be drawn down, what must Regal Mortgage Brokers Ltd submit to Suir Bank under the Consumer Protection Code?
• In July 2019, Mary died and left an inheritance of €1m to her son, Bill, in her will. Assuming he has not previously received a gift or inheritance from any source, Bill's inheritance tax liability will be:
• Which document is most likely to be requested by a bank to support a housing loan application?
• Under the Consumer Protection Code, the term independent may be used only if which conditions apply? (i) The principal regulated activities of the intermediary are provided on the basis of a fair analysis of the market. (ii) The intermediary allows the consumer the option to pay in full for its services by means of a fee. (iii) The intermediary only charges trail commissions.
• Under the Consumer Protection Code 2012, which financing arrangement is NOT covered?
• Which item is not typically used to verify self-employed income for loan purposes?
• Which organisation records the transfer of ownership in property-related transactions?
• Gerry is a builder who introduces purchasers to Marley Mortgage Brokers and receives remuneration. Which statement is most accurate?
• Under the Consumer Protection Code, which requirement must Sarah satisfy when advertising mortgage broker services?
• Which of the following is NOT one of the non-judicial debt resolution processes under the Personal Insolvency Act, 2012?
• Which statement best describes tenancy in common?
• The MARP booklet includes details about which of the following?
• Housing loan lenders cannot NORMALLY lend more than 90% of the value of a property to first time buyers, because:
• If two people are not married and want ownership to reflect their contributions to the purchase, the ownership arrangement should be
• The Help to Buy Scheme provides which of the following incentives to eligible first-time buyers?
• Which of the following combinations lists entities that are explicitly included as Credit Information Providers for the Central Credit Register?
• Distinguish between 'serviceability assessment' and 'affordability assessment'.
• What action must a housing loan lender take regarding mortgage intermediaries?
• How does an offset account influence interest payable on a linked loan?
• What is a split loan and what are its typical uses?