QFA LOANS - SAMPLE PAPER 1
QUESTIONS WITH COMPLETE
ANSWERS
A jjlender jjgenerally jjcharges jja jjlower jjinterest jjrate jjon jja jjhousing jjloan jjbecause:
A jjthe jjloan jjis jjsecured jjagainst jjthe jjproperty.
B jjthey jjare jjrequired jjto jjdo jjso jjby jjthe jjConsumer
Credit jjAct, jj1995.
C jjthe jjloan jjis jjunsecured.
D jjthey jjare jjrequired jjto jjdo jjso jjby jjthe jjConsumer jjProtection jjCode. jj- jjAnswerA
1.2 jj- jjIndividual jjLoan jjNeeds
Finn jjbuys jja jjcar jjby jjtaking jjout jja jjPersonal jjPayment jjPlan jj(PPP). jjWhen jjwill jjFinn jjbe
jjthe jjlegal jjowner jjof jjthe jjcar?
A jjAs jjsoon jjas jjthe jjcontract jjis jjsigned.
B jjAfter jjhe jjpays jjan jjinitial jjdeposit.
C jjWhen jjthe jjfinal jjpayment jjhas jjbeen jjmade.
D jjWhen jj50% jjof jjall jjpayments jjhave jjbeen jjmade. jj- jjAnswerC
1.2.1 jjDifferent jjforms jjof jjLoans
To jjwhich jjof jjthe jjfollowing jjconsumers jjdo jjthe jjprovisions jjof jjthe jjConsumer jjProtection
jjCode, jj2012 jjNOT jjapply?
A jjJanet, jjwho jjhas jjborrowed jj€10,000 jjas jja jjpersonal jjloan jjfrom jjClear jjBank.
B jjJennifer, jjwho jjhas jjengaged jjthe jjservices jjof jja jjDebt jjManagement jjfirm jjto jjact jjon
jjher jjbehalf jjwith jjher jjcreditors.
C jjRoss, jjwho jjhas jjtaken jjout jja jjlife jjassurance jjpolicy jjwith jjhis jjlocal jjCredit jjUnion.
D jjJames, jjwho jjhas jjreceived jjfinance jjunder jja jjhire-purchase jjagreement. jj- jjAnswerD
1.6.2 jjConsumer jjProtection jjCode, jj2012
Mary jjreferred jja jjcomplaint jjshe jjhad jjmade jjabout jjDelta jjBank jjto jjthe jjFinancial
jjServices jjand jjPensions jjOmbudsman jj(FSPO) jjas jjshe jjwas jjunhappy jjwith jjtheir jjfinal
jjresponse. jjThe jjFSPO jjupheld jjMary's jjcomplaint jjand jjawarded jjher jjcompensation jjof
jj€50,000. jjDelta jjBank jjwish jjto jjappeal jjthe jjFSPO's jjdecision.
Within jjhow jjmany jjdays jjof jjthe jjFSPO's jjdecision jjmust jjDelta jjBank jjsubmit jjtheir
jjappeal jjto jjthe jjHigh jjCourt?
,A jj15 jjdays
B jj20 jjdays
C jj30 jjdays
D jj35 jjdays jj- jjAnswerD
1.5.3.1 jjFinancial jjServices jjand jjPensions jjComplaints jjProcess
Which jjof jjthe jjfollowing jjis jjnot jjan jjelement jjof jja jjvalid jjcontract?
A jjConsideration
B jjAcceptance
C jjVerification
D jjCapacity jj- jjAnswerC
1.7.1 jjEssential jjElements jjof jja jjValid jjContract
Philip jjagrees jjto jjoffer jjWest jjBank jjcollateral jjsecurity jjagainst jja jjhousing jjloan. jjThis
jjmost jjlikely jjmeans jjthat jjPhilip jjis jjproviding:
A jja jjthird jjparty, jjwho jjwill jjagree jjto jjmake jjthe jjloan jjrepayments jjif jjhe jjdefaults jjon jjhis
jjloan.
B jja jjlegal jjmortgage jjover jjthe jjfreehold jjproperty.
C jja jjpersonal jjcovenant jjto jjrepay jjthe jjloan.
D jjan jjassignment jjof jja jjhome jjcontents jjinsurance jjpolicy. jj- jjAnswerA
2.4 jj- jjSecurity jjfor jjHousing jjLoans
In jjthe jjearly jjyears jjof jja jjloan jjwhich jjis jjarranged jjon jja jjcapital jjand jjinterest jjbasis, jjthe:
A jjlargest jjpart jjof jjthe jjmonthly jjpayment jjis jjused jjto jjpay jjthe jjinterest jjcharge.
B jjcapital jjportion jjreduces jjquickly.
C jjinterest jjportion jjis jjsuspended.
D jjlargest jjpart jjof jjthe jjmonthly jjpayment jjis jjused jjto jjpay jjoff jjthe jjcapital jjsum
jjborrowed. jj- jjAnswerA
2.10.1 jj- jjCapital jjand jjinterest
Rita jjholds jja jjvariable jjrate jjmortgage jjwith jjBeta jjBank. jjBeta jjBank jjmust jjprovide jjRita
jjwith jja jjnotification jjadvising jjher jjof jjany jjchange jjin jjthe jjinterest jjrate:
A jjas jjsoon jjas jjthe jjbank jjbecomes jjaware jjthat jjthey jjare jjchanging jjthe jjinterest jjrate.
B jjno jjlater jjthan jj10 jjbusiness jjdays jjfollowing jja jjchange jjin jjthe jjECB jjrefi jjrate.
C jjat jjleast jj20 jjbusiness jjdays jjin jjadvance jjof jjany jjinterest jjrate jjchange.
D jjat jjleast jj30 jjdays jjin jjadvance jjof jjany jjinterest jjrate jjchange. jj- jjAnswerD
2.12 jjHousing jjLoan jjInterest jjRates
What jjfactor(s) jjdetermine jjhow jja jjmortgage jjlender jjcalculates jjtheir jjvariable jjmortgage
jjinterest jjrates?
(i) jjCost jjof jjfunds.(ii) jjCompetition jjin jjthe jjmarket jjplace. jj(iii) jjProfit jjmargin.
, A jj(i) jjonly.
B jj(i) jjand jj(ii) jjonly.
C jj(i) jjand jj(iii) jjonly.
D jj(i), jj(ii) jjand jj(iii) jj- jjAnswerD
2.11.1 jj- jjStandard jjVariable jjRate
Why jjmight jja jjfixed jjrate jjmortgage jjbe jjthe jjMOST jjsuitable jjmortgage jjfor jja jjfirst jjtime
jjbuyer?
A jjLenders jjoffer jjhigher jjLoans jjto jjValue jj(LTV) jjfor jjfixed jjrate jjmortgages jjthan jjfor
jjvariable jjrate jjmortgages.
B jjFixed jjrate jjborrowers jjare jjnot jjusually jjrequired jjto jjtake jjout jjmortgage jjprotection
jjcover.
C jjThe jjborrower jjcan jjget jja jjhigher jjrate jjof jjmortgage jjinterest jjtax jjrelief.
D jjThe jjrepayments jjare jjguaranteed jjnot jjto jjincrease jjduring jjthe jjfix jjperiod, jjoffering
jjthe jjborrower jjstability. jj- jjAnswerD
2.11.3 jj- jjFixed jjRate
Where jja jjlender jjintends jjto jjcharge jja jjredemption jjfee, jjit jjis jjrequired jjto jjprovide jjto
jjthe jjborrower jjwith:
(i) jja jjcopy jjof jjthe jjloan jjoffer.
(ii) jja jjworked jjexample jjof jjthe jjredemption jjcharge jjspecific jjto jjtheir jjcircumstances.
(iii) jjdetails jjon jjhow jjthe jjcharge jjis jjcalculated.
A jj(i) jjonly.
B jj(i) jjand jj(ii) jjonly.
C jj(ii) jjand jj(iii) jjonly.
D jj(i), jj(ii) jjand jj(iii). jj- jjAnswerC
2.11.3 jj- jjFixed jjRate
A jjwayleave jjis:
A jja jjcovenant jjprohibiting jja jjbusiness jjto jjbe jjcarried jjout jjwithin jja jjpremises.
B jjhunting jjand jjfishing jjrights jjon jjthe jjland jjof jjanother.
C jja jjright jjof jjway jjacross jjland jjto jjcarry jjin jjgas jjpipes jjand jjlay jjcables.
D jja jjright jjof jjway jjenjoyed jjby jja jjproperty jjowner jjover jjthe jjlands jjof jjanother. jj-
jjAnswerC
2.5.3 jj- jjRights jjand jjInterests jjover jjLand
David jjand jjMargaret jjown jjan jjinvestment jjproperty jjon jja jj60:40 jjbasis jjas jjtenants jjin
jjcommon jjand jjhave jja jjmortgage jjof jj€500,000 jjoutstanding jjon jjthe jjproperty. jjThey jjdo
jjnot jjhave jjany jjmortgage jjprotection jjcover.
If jjDavid jjdies, jjMargaret jjis jjlegally jjliable jjfor:
A jjnone jjof jjthe jjoutstanding jjmortgage jjas jjthe jjbank jjwill jjautomatically jjwrite-off jjthe
jjbalance.
QUESTIONS WITH COMPLETE
ANSWERS
A jjlender jjgenerally jjcharges jja jjlower jjinterest jjrate jjon jja jjhousing jjloan jjbecause:
A jjthe jjloan jjis jjsecured jjagainst jjthe jjproperty.
B jjthey jjare jjrequired jjto jjdo jjso jjby jjthe jjConsumer
Credit jjAct, jj1995.
C jjthe jjloan jjis jjunsecured.
D jjthey jjare jjrequired jjto jjdo jjso jjby jjthe jjConsumer jjProtection jjCode. jj- jjAnswerA
1.2 jj- jjIndividual jjLoan jjNeeds
Finn jjbuys jja jjcar jjby jjtaking jjout jja jjPersonal jjPayment jjPlan jj(PPP). jjWhen jjwill jjFinn jjbe
jjthe jjlegal jjowner jjof jjthe jjcar?
A jjAs jjsoon jjas jjthe jjcontract jjis jjsigned.
B jjAfter jjhe jjpays jjan jjinitial jjdeposit.
C jjWhen jjthe jjfinal jjpayment jjhas jjbeen jjmade.
D jjWhen jj50% jjof jjall jjpayments jjhave jjbeen jjmade. jj- jjAnswerC
1.2.1 jjDifferent jjforms jjof jjLoans
To jjwhich jjof jjthe jjfollowing jjconsumers jjdo jjthe jjprovisions jjof jjthe jjConsumer jjProtection
jjCode, jj2012 jjNOT jjapply?
A jjJanet, jjwho jjhas jjborrowed jj€10,000 jjas jja jjpersonal jjloan jjfrom jjClear jjBank.
B jjJennifer, jjwho jjhas jjengaged jjthe jjservices jjof jja jjDebt jjManagement jjfirm jjto jjact jjon
jjher jjbehalf jjwith jjher jjcreditors.
C jjRoss, jjwho jjhas jjtaken jjout jja jjlife jjassurance jjpolicy jjwith jjhis jjlocal jjCredit jjUnion.
D jjJames, jjwho jjhas jjreceived jjfinance jjunder jja jjhire-purchase jjagreement. jj- jjAnswerD
1.6.2 jjConsumer jjProtection jjCode, jj2012
Mary jjreferred jja jjcomplaint jjshe jjhad jjmade jjabout jjDelta jjBank jjto jjthe jjFinancial
jjServices jjand jjPensions jjOmbudsman jj(FSPO) jjas jjshe jjwas jjunhappy jjwith jjtheir jjfinal
jjresponse. jjThe jjFSPO jjupheld jjMary's jjcomplaint jjand jjawarded jjher jjcompensation jjof
jj€50,000. jjDelta jjBank jjwish jjto jjappeal jjthe jjFSPO's jjdecision.
Within jjhow jjmany jjdays jjof jjthe jjFSPO's jjdecision jjmust jjDelta jjBank jjsubmit jjtheir
jjappeal jjto jjthe jjHigh jjCourt?
,A jj15 jjdays
B jj20 jjdays
C jj30 jjdays
D jj35 jjdays jj- jjAnswerD
1.5.3.1 jjFinancial jjServices jjand jjPensions jjComplaints jjProcess
Which jjof jjthe jjfollowing jjis jjnot jjan jjelement jjof jja jjvalid jjcontract?
A jjConsideration
B jjAcceptance
C jjVerification
D jjCapacity jj- jjAnswerC
1.7.1 jjEssential jjElements jjof jja jjValid jjContract
Philip jjagrees jjto jjoffer jjWest jjBank jjcollateral jjsecurity jjagainst jja jjhousing jjloan. jjThis
jjmost jjlikely jjmeans jjthat jjPhilip jjis jjproviding:
A jja jjthird jjparty, jjwho jjwill jjagree jjto jjmake jjthe jjloan jjrepayments jjif jjhe jjdefaults jjon jjhis
jjloan.
B jja jjlegal jjmortgage jjover jjthe jjfreehold jjproperty.
C jja jjpersonal jjcovenant jjto jjrepay jjthe jjloan.
D jjan jjassignment jjof jja jjhome jjcontents jjinsurance jjpolicy. jj- jjAnswerA
2.4 jj- jjSecurity jjfor jjHousing jjLoans
In jjthe jjearly jjyears jjof jja jjloan jjwhich jjis jjarranged jjon jja jjcapital jjand jjinterest jjbasis, jjthe:
A jjlargest jjpart jjof jjthe jjmonthly jjpayment jjis jjused jjto jjpay jjthe jjinterest jjcharge.
B jjcapital jjportion jjreduces jjquickly.
C jjinterest jjportion jjis jjsuspended.
D jjlargest jjpart jjof jjthe jjmonthly jjpayment jjis jjused jjto jjpay jjoff jjthe jjcapital jjsum
jjborrowed. jj- jjAnswerA
2.10.1 jj- jjCapital jjand jjinterest
Rita jjholds jja jjvariable jjrate jjmortgage jjwith jjBeta jjBank. jjBeta jjBank jjmust jjprovide jjRita
jjwith jja jjnotification jjadvising jjher jjof jjany jjchange jjin jjthe jjinterest jjrate:
A jjas jjsoon jjas jjthe jjbank jjbecomes jjaware jjthat jjthey jjare jjchanging jjthe jjinterest jjrate.
B jjno jjlater jjthan jj10 jjbusiness jjdays jjfollowing jja jjchange jjin jjthe jjECB jjrefi jjrate.
C jjat jjleast jj20 jjbusiness jjdays jjin jjadvance jjof jjany jjinterest jjrate jjchange.
D jjat jjleast jj30 jjdays jjin jjadvance jjof jjany jjinterest jjrate jjchange. jj- jjAnswerD
2.12 jjHousing jjLoan jjInterest jjRates
What jjfactor(s) jjdetermine jjhow jja jjmortgage jjlender jjcalculates jjtheir jjvariable jjmortgage
jjinterest jjrates?
(i) jjCost jjof jjfunds.(ii) jjCompetition jjin jjthe jjmarket jjplace. jj(iii) jjProfit jjmargin.
, A jj(i) jjonly.
B jj(i) jjand jj(ii) jjonly.
C jj(i) jjand jj(iii) jjonly.
D jj(i), jj(ii) jjand jj(iii) jj- jjAnswerD
2.11.1 jj- jjStandard jjVariable jjRate
Why jjmight jja jjfixed jjrate jjmortgage jjbe jjthe jjMOST jjsuitable jjmortgage jjfor jja jjfirst jjtime
jjbuyer?
A jjLenders jjoffer jjhigher jjLoans jjto jjValue jj(LTV) jjfor jjfixed jjrate jjmortgages jjthan jjfor
jjvariable jjrate jjmortgages.
B jjFixed jjrate jjborrowers jjare jjnot jjusually jjrequired jjto jjtake jjout jjmortgage jjprotection
jjcover.
C jjThe jjborrower jjcan jjget jja jjhigher jjrate jjof jjmortgage jjinterest jjtax jjrelief.
D jjThe jjrepayments jjare jjguaranteed jjnot jjto jjincrease jjduring jjthe jjfix jjperiod, jjoffering
jjthe jjborrower jjstability. jj- jjAnswerD
2.11.3 jj- jjFixed jjRate
Where jja jjlender jjintends jjto jjcharge jja jjredemption jjfee, jjit jjis jjrequired jjto jjprovide jjto
jjthe jjborrower jjwith:
(i) jja jjcopy jjof jjthe jjloan jjoffer.
(ii) jja jjworked jjexample jjof jjthe jjredemption jjcharge jjspecific jjto jjtheir jjcircumstances.
(iii) jjdetails jjon jjhow jjthe jjcharge jjis jjcalculated.
A jj(i) jjonly.
B jj(i) jjand jj(ii) jjonly.
C jj(ii) jjand jj(iii) jjonly.
D jj(i), jj(ii) jjand jj(iii). jj- jjAnswerC
2.11.3 jj- jjFixed jjRate
A jjwayleave jjis:
A jja jjcovenant jjprohibiting jja jjbusiness jjto jjbe jjcarried jjout jjwithin jja jjpremises.
B jjhunting jjand jjfishing jjrights jjon jjthe jjland jjof jjanother.
C jja jjright jjof jjway jjacross jjland jjto jjcarry jjin jjgas jjpipes jjand jjlay jjcables.
D jja jjright jjof jjway jjenjoyed jjby jja jjproperty jjowner jjover jjthe jjlands jjof jjanother. jj-
jjAnswerC
2.5.3 jj- jjRights jjand jjInterests jjover jjLand
David jjand jjMargaret jjown jjan jjinvestment jjproperty jjon jja jj60:40 jjbasis jjas jjtenants jjin
jjcommon jjand jjhave jja jjmortgage jjof jj€500,000 jjoutstanding jjon jjthe jjproperty. jjThey jjdo
jjnot jjhave jjany jjmortgage jjprotection jjcover.
If jjDavid jjdies, jjMargaret jjis jjlegally jjliable jjfor:
A jjnone jjof jjthe jjoutstanding jjmortgage jjas jjthe jjbank jjwill jjautomatically jjwrite-off jjthe
jjbalance.
