Mortgages Test Questions

1. What proportion of the purchase price of a £25,000 property might a borrower hope to borrow from a building society?

2. In what way does the size of your income set a limit to the amount you can borrow from a building society?

3. Is the building society mortgage interest fixed or variable?

4. What limitations are there on the tax relief available on the interest paid on home loans?

5. Distinguish between a repayment mortgage and an endowment-linked mortgage

6. In the case of a repayment mortgage, tax relief is high in the early years, falling continuously year by year. Why is this?

7. In times of high interest rates some building society borrowers find that their debt is increasing instead of decreasing. Why is this? What can be done to rectify the situation?

8. What is an option mortgage?

9. What is a top-up mortgage and under what circumstances can such a facility be of use?

10. For what purpose other than buying a house may a building society be willing to lend money?

11. Describe the government-sponsored 'home loan' scheme.

12. Describe, without quantifying, the main `one-off initial costs that must be met when buying a house with the aid of a building society mortgage.

• House Buying Example
• Indirect Tax Test Questions