Cemap 1

Section A Case Study 1 Hayley is a project manager, aged 34, and is employed by a well-known airline company where she has worked for 12 years. She earns a salary of £25,000 pa, plus an annual bonus, which has grown to £5,000 this year. Hayley wishes to buy a mature semi-detached house for £80,000. It is in good decorative order, with the exception of the bathroom, in which the suite is badly cracked and stained. The purchase price has been set to reflect this. Hayley has applied for a 95% interest-only mortgage from the Glade Building Society. The interest rate is discounted by 1% for the first two years. The Society's fixed rate product over the same period is currently 0.25% higher. The Society routinely carries out searches on prospective borrowers through FactLine. Hayley has asked why this is necessary. The Society has told Hayley that it requires her to take out a mortgage indemnity guarantee policy in respect of 20% of the £80,000 property value, and to provide additional security by way of a personal guarantee. Hayley's mother, Shelley has agreed to provide this. Hayley has had the property surveyed. She is intent on obtaining the best advice and wanted the report on the property's condition to be as comprehensive as possible. The survey, carried out by a surveyor approved by the Society, has highlighted serious wet rot in the kitchen area, and has recommended a retention. He has made the bathroom the subject of an undertaking. Question 1 Hayley's action in having the property surveyed independently is likely to result in the Society: A) B) C) D) requesting a further valuation. accepting the surveyor's conclusions. waiving its standard valuation fee. reviewing the surveyor's credentials.

Question 2 The implications for Hayley of the surveyor's recommendation regarding the wet rot are that: A) B) C) D) the insurance cover for the property will exclude wet rot. she will have three months to effect the repairs. the lender will offer a reduced mortgage