Qualified Financial Adviser (QFA) Loans Exam 1 Practice Test

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