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QFA Loans - Sample Paper 1 Questions
With Complete Solutions
A lender generally charges a lower interest rate on a housing loan because: A the loan is secured against the property. B they are required to do so by the Consumer Credit Act, 1995. C the loan is unsecured. D they are required to do so by the Consumer Protection Code. A 1.2 - Individual Loan Needs Finn buys a car by taking out a Personal Payment Plan (PPP). When will Finn be the legal owner of the car? A As soon as the contract is signed. B After he pays an initial deposit. C When the final payment has been made. D When 50% of all payments have been made. C
1.2.1 Different forms of Loans To which of the following consumers do the provisions of the Consumer Protection Code, 2012 NOT apply? A Janet, who has borrowed €10,000 as a personal loan from Clear Bank. B Jennifer, who has engaged the services of a Debt Management firm to act on her behalf with her creditors. C Ross, who has taken out a life assurance policy with his local Credit Union. D James, who has received finance under a hire-purchase agreement. D 1.6.2 Consumer Protection Code, 2012 Mary referred a complaint she had made about Delta Bank to the Financial Services and Pensions Ombudsman (FSPO) as she was unhappy with their final response. The FSPO upheld Mary's complaint and awarded her compensation of €50,000. Delta Bank wish to appeal the FSPO's decision. Within how many days of the FSPO's decision must Delta Bank submit their appeal to the High Court? A 15 days B 20 days C 30 days D 35 days
2.4 - Security for Housing Loans In the early years of a loan which is arranged on a capital and interest basis, the: A largest part of the monthly payment is used to pay the interest charge. B capital portion reduces quickly. C interest portion is suspended. D largest part of the monthly payment is used to pay off the capital sum borrowed. A 2.10.1 - Capital and interest Rita holds a variable rate mortgage with Beta Bank. Beta Bank must provide Rita with a notification advising her of any change in the interest rate: A as soon as the bank becomes aware that they are changing the interest rate. B no later than 10 business days following a change in the ECB refi rate. C at least 20 business days in advance of any interest rate change. D at least 30 days in advance of any interest rate change. D 2.12 Housing Loan Interest Rates
What factor(s) determine how a mortgage lender calculates their variable mortgage interest rates? (i) Cost of funds.(ii) Competition in the market place. (iii) Profit margin. A (i) only. B (i) and (ii) only. C (i) and (iii) only. D (i), (ii) and (iii) D 2.11.1 - Standard Variable Rate Why might a fixed rate mortgage be the MOST suitable mortgage for a first time buyer? A Lenders offer higher Loans to Value (LTV) for fixed rate mortgages than for variable rate mortgages. B Fixed rate borrowers are not usually required to take out mortgage protection cover. C The borrower can get a higher rate of mortgage interest tax relief. D The repayments are guaranteed not to increase during the fix period, offering the borrower stability. D 2.11.3 - Fixed Rate
David And Margaret Own An Investment Property On A 60:40 Basis As Tenants In Common And Have A Mortgage Of €500,000 Outstanding On The Property. They Do Not Have Any Mortgage Protection Cover. If David Dies, Margaret Is Legally Liable For: A None Of The Outstanding Mortgage As The Bank Will Automatically Write-Off The Balance. B 40% Of Mortgage Outstanding. C 60% Of Mortgage Outstanding. D 100% Of Mortgage Outstanding. D 2.7.3 - Tenants In Common Compound Interest Is Where Interest Charged: A Is Deducted From The Original Loan Amount On An Annual Basis. B Only Relates To Repayments On Outstanding Arrears. C Is Added To The Loan Amount And From Then On The New Loan Amount Equals The Original Capital And The Interest Charge. D Only Relates To The Additional Interest Charged To A Borrower On The Capital Borrowed If They Are In Arrears. C
2.13.2 - Compound Interest Enda Wanted Financial Security And Took Out A Repayment Mortgage With A 5- Year Fixed Rate Of 4.75%. When The Fixed Period Ended, The Variable Rate Was 5% But Had Been Over 5.5% For The Previous Four Years. Which Of The Following Statements Is Correct? A Enda Has Saved Money By Fixing The Rate For The First Five Years. B Enda Was Unwise To Fix The Rate For The First Five Years. C Enda Has Lost Money By Fixing The Rate For The First Five Years. D Enda Has Neither Gained Nor Lost As A Result Of Fixing The Rate. A 2.14 - Risks When Choosing A Mortgage Type To Be Eligible For A Rebuilding Ireland Home Loan John And Mary, Who Are Both First Time Buyers, Cannot Have A Combined Salary Greater Than: A €35, B €50, C €75, D €100, C
B
2.4 - Security For Housing Loans Under The Consumer Protection (Regulation Of Credit Servicing Firms) Act 2015, Which Of The Following Are Functions Of Credit Servicing Firms? (I) Notifiying Relevant Borrowers Of Changes In Interest Rates. (Ii) Taking Necessary Steps For The Purposes Of Collecting Or Recovering Arrears Due. (Iii) Managing And Administering Complaints. A (I) Only. B (Ii) Only. C (I) And (Ii) Only. D (I), (Ii) And (Iii). D 2.3.3 Credit Servicing Firms John Has Agreed To Be A Guarantor For Peter's Loan With Erne Bank. Erne Bank Change The Terms Of The Credit Agreement.
Under The Consumer Protection Code, 2012 Erne Bank Are Required To Notify The Changes To: A Peter Only. B John Only. C Peter And John. D John But Only After Receiving Consent From Peter For Each Communication. C 2.4.2 - Personal Guarantee Where More Than One Person Enters Into A Mortgage Agreement Together, Their Liability Is Described As: A Tenants In Common. B Single And Joint. C Collective Liability. D Joint And Several. D 2.4.3 - Joint And Several Liability The Leaseholder:
Which One Of The Following Organisations Manages The System Which Records The Transfer Of Ownership In Property Related Transactions? A Property Registration Authority. B Department Of Housing, Planning And Local Government. C Local Authorities. D Department Of The Environment. A 2.6 - Registering The Ownership Of Property Peter And Mary Are Not Married And Have Bought A Property Together. They Want The Ownership Of The Property To Reflect The Amount Of Money They Have Each Contributed To The Purchase. To Accommodate This, The Ownership Should Be Arranged As: A Joint Tenants. B Tenants In Common. C Joint And Several. D Joint And Defined. B 2.7 - Property Ownership Rights
Arthur Is Renting Out A Room In His Sole Residence And Will Receive €14,500 In Rent And Ancillary Services In 2019. What Amount, If Any, Of Arthur's Rental Income Is Liable To Income Tax? A Nil. B € 500 C €14,500 Less Expenses D €14, D 3.6 - Rent A Room Relief John, Single, Purchased His First Home In January 2015. In 2019, His Interest Payments For The Year On His Loan Will Be €12,000. How Much Mortgage Interest Relief, If Any, Can John Claim? A Nil. B €3, C €6, D €10, A 3.2 Mortgage Interest Relief
3.2.1 Determine If A Loan Is A Qualifying Loan. Tax Relief On Allowable Mortgage Interest Is Provided To The Borrower As: A A Direct Monthly Payment From Revenue. B An Increased Tax Credit. C An Increased Standard Rate Tax Band. D A Reduction In Loan Repayments. D 3.2.4 - How Mortgage Interest Relief Is Provided. 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: A Nil. B €224, C €330, D €680, B 3.3 Capital Acquisitions Tax
Stamp Duty Is A Tax Payable: A When Selling A Property. B When Putting A Deposit Down To Purchase A Property. C When Sending The Title Deeds By Post To The Land Registry. D On The Documents Used To Transfer Property Ownership. D 3.7.3 Stamp Duty 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? A €1, B €3, C €32, D €320, B 3.3.1 Capital Acquisition Tax (Gift Tax) Rent A Room Relief Is Available To: (I) Owner Occupiers.
For The Purposes Of Capital Gains Tax, A Chargeable Gain Is The: A Allowable Deduction On A Chargeable Item. B Difference Between The Purchase Price And The Sale Price (Less Allowable Costs) Arising From The Sale Of An Asset. C Incidental Expenditure Arising For The Sale Of An Asset. D Difference Between The Expenditure Incurred When Selling An Asset And Purchasing A New Asset. B 3.7.1 - Capital Gains Tax Which Of The Following Incentives Does The Government Funded Help To Buy Scheme Provide To Eligible First-Time Buyers? A Refund Of Any Capital Gains Tax Paid. B Unlimited Threshold For Capital Acquisitions T Ax. C Refund Of Income Tax And Dirt. D Refund Of Stamp Duty. C 3.4 Help To Buy Scheme
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. A (I) And (Ii) Only. B (I) And (Iii) Only. C (Ii) And (Iii) Only. D (I), (Ii) And (Iii). C 4.1 Assessing A Loan Application 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. A (I) And (Ii) Only. B (I) And (Iii) Only. C (Ii) And (Iii) Only. D (I), (Ii) And (Iii).
