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• What is the purpose of payment protection insurance (PPI) for borrowers?

  To cover mortgage repayments for a specified period
• Why is it now a regulatory requirement for buyers to understand the terms and conditions of PPI?

  Due to the mis-selling scandal
• What must sellers of PPI ensure during the sale?

  That the sale is at arm's length from the borrower
• What is required regarding the application and agreement to the terms of PPI?

  It must be made and agreed upon in a transaction
• How long after the sale of the mortgage must a quotation for PPI be provided?

  At least seven days
• What must a borrower consider if they do not take out an investment vehicle with built-in life insurance?

  They need to cover the debt with suitable term insurance
• What is the lowest cost option for a capital repayment mortgage?

  A mortgage protection policy offering decreasing term insurance
• What type of policy is usually more suitable for interest-only mortgages?

  A level term policy
• What may some lenders require regarding the life policy used to protect the debt?

  That it is assigned to the lender
• What must the solicitor do if the life policy is assigned?

  Execute a deed of assignment before completion
• When does the mortgage take legal effect?

  From the completion date
• What happens on the completion date of a mortgage?

  • The legal charge is executed
  • Rights of the lender and duties of the borrower come into effect
  • All deeds of assignments become effective
  • The property is legally transferred to the new owner
  • The solicitor engrosses the transaction
  • The solicitor issues a completion statement to the borrower
• What is the alternative term for completion used in Scotland?

  Settlement
• What does the solicitor do during the engrossing of the transaction?

  Brings together all monies received and due
• What must occur at the appropriate entry time on the completion date?

  The borrowers can gain access to the property
• What should happen if the mortgage is supported by a guarantor?

  The guarantee contract should come into force at the same time as the mortgage
• What is the risk if the seller’s solicitor permits entry to the property before completion?

  It may require a court order to remove the purchaser
• What does the solicitor nearly always require before completion?

  That cleared funds be in place
• What system is used for large-scale movements of funds at short notice?

  CHAPS system
• What is a recent risk related to mortgage completions?

  Push-payment fraud
• How do criminals typically perpetrate push-payment fraud?

  By requesting funds be sent to a destination account managed by them
• What can be the consequences of failing to complete on the contracted date?

  Serious financial consequences
• What can the party suffering loss due to failure to complete sue for?

  Expenditure incurred, such as hotel accommodation costs
• What are liquidated damages in the context of a contract of sale?

  Damages payable on a daily basis as set out in the contract
• When does a mortgage take legal effect?

  From the date of completion