MRT1: 50 practice questions

Mock format: 50 questions, 60 minutes, pass 35/50 (70%). Answer key on the last page. From cemapexam.co.uk · independent study aid, not an official test. Contains public sector information licensed under the Open Government Licence v3.0. FCA Handbook material is quoted for reference and remains © Financial Conduct Authority.

1. 1. Victor is a high net worth mortgage customer with evidence of his status. He wants a remortgage, mainly to consolidate debts, on an execution-only basis. May the firm proceed?

   1. A. No, unless he first takes advice and then rejects it
   2. B. Yes, because the debt consolidation ban does not apply to high net worth customers
   3. C. Yes, but only if the remortgage is with his existing lender
   4. D. No, because debt consolidation can never be arranged on an execution-only basis

2. 2. Why do eligible counterparties receive less regulatory protection than retail customers?

   1. A. They are only ever borrowers, never lenders, in financial transactions
   2. B. They always borrow only from overseas lenders outside the FCA's remit
   3. C. They are institutions treated as able to look after their own interests
   4. D. They have opted out of all regulation by signing a written waiver

3. 3. A firm's staff tell customers that taking advice will 'slow things down' and suggest they go execution-only. Which MCOB rule does this breach?

   1. A. MCOB 4.8A.5R, which bans encouraging customers to opt out of advice
   2. B. MCOB 11.6.24R, which requires an annual review of the lending policy
   3. C. MCOB 6A.3.4R, which sets the minimum length of the reflection period
   4. D. MCOB 7.5.1R, which requires an annual statement to be sent

4. 4. Mia has a £100,000 interest-only mortgage at 4%. She extends the term from 20 to 30 years at the same rate. What happens?

   1. A. The monthly payment rises, because the interest is spread over more years
   2. B. The monthly payment falls, because the capital is spread over more years
   3. C. The monthly payment stays at £333.33, but she pays interest for ten more years
   4. D. The monthly payment stays the same, and the total interest falls

5. 5. A lender is weighing two flats of equal value. Flat A is in a low-rise block with a long lease. Flat B has a 55-year lease. Why does the lender prefer Flat A?

   1. A. Flat B's shorter lease makes it a weaker, declining security
   2. B. Flat A will automatically become freehold after ten years
   3. C. Flat B cannot be insured because of its lease length
   4. D. Flat A attracts a lower rate of stamp duty

6. 6. Under the Consumer Rights Act 2015, what standard must a surveyor meet when providing a RICS Home Survey to a consumer?

   1. A. The surveyor must guarantee the property has no defects
   2. B. The service must be performed with reasonable care and skill
   3. C. The survey must be completed within seven days
   4. D. The surveyor must match the lender's valuation

7. 7. Kai wins an unconditional auction, but his mortgage lender cannot complete within the 20 business days allowed. Which type of finance is commonly used to complete on time?

   1. A. A personal loan secured on his car for the balance
   2. B. A credit card cash advance for the full purchase price
   3. C. A short-term bridging loan, later refinanced by a mortgage
   4. D. A lifetime mortgage on the auction property itself

8. 8. Bank Rate is 3.75%. Josie has a £200,000 interest-only tracker mortgage at Bank Rate plus 1%. What is her monthly interest payment?

   1. A. £9,500.00
   2. B. £791.67
   3. C. £625.00
   4. D. £166.67

9. 9. A lender has no previous relationship with Ella, who says she has net assets of £4 million. What must it obtain before treating her as a high net worth mortgage customer?

   1. A. A signed declaration from Ella herself confirming that her net assets exceed £3 million
   2. B. A signed statement from the lender's in-house accountant confirming her net assets
   3. C. A valuation report showing that the property she is buying is worth over £3 million
   4. D. A signed statement from her own qualified professional adviser confirming her status for a stated period

10. 10. A lender takes an assignment of Ravi's life assurance policy as additional security for his interest-only mortgage. What does the lender gain?

    1. A. Ownership of the property free of Ravi's interest
    2. B. The right to increase the premiums without Ravi's consent
    3. C. The right to change the life assured on the policy
    4. D. The right to receive the policy proceeds to repay the loan

11. 11. Where must a lender set out its arrangement, booking and valuation fees so that a customer can compare deals before committing?

    1. A. In the ESIS
    2. B. In the energy performance certificate
    3. C. In the local authority search
    4. D. In the title register

12. 12. The owner of a house on clay soil removed a large mature oak close to the building. A year later the floors are lifting. What is the most likely cause?

    1. A. Subsidence caused by the clay drying out
    2. B. Rising damp from a failed damp-proof course
    3. C. Heave, as the clay reabsorbs moisture and swells
    4. D. Settlement of new foundations

13. 13. Lisa moves in with her partner and lets out the flat she used to live in. She owns no other let property. How is a new mortgage on the flat most likely to be classified?

    1. A. As a business buy-to-let, because every let property is a business
    2. B. As a commercial mortgage, because the tenant will pay rent
    3. C. As a consumer buy-to-let mortgage contract, as she is not treated as acting for business
    4. D. As a regulated mortgage contract, because she once lived there

14. 14. Chloe wants to buy a flat directly above a hot-food takeaway. Why might she struggle to obtain a mortgage on it?

    1. A. Flats above shops are always classed as commercial property
    2. B. Stamp duty is charged at the non-residential rates
    3. C. The flat cannot be insured against any risks
    4. D. Some lenders restrict lending because of fire, smell and noise risks

15. 15. What is the main risk for a borrower with an interest-only mortgage?

    1. A. The capital may not be repaid at the end of the term if the strategy falls short
    2. B. The lender can demand the capital back at any time during the term
    3. C. Interest is charged at double the rate of an equivalent repayment loan
    4. D. The monthly payments include more capital than a repayment mortgage would

16. 16. Why would a conveyancer order a coal mining report for a house in a former coalfield?

    1. A. To value mineral rights beneath the garden
    2. B. To confirm the seller paid council tax
    3. C. To check for past mining that could cause ground movement
    4. D. To find out whether coal fires are allowed

17. 17. Which RICS Home Survey suits a conventional property in reasonable condition, simple in layout, and adds advice on future repairs and maintenance?

    1. A. Level 3
    2. B. An EWS1 assessment
    3. C. Level 2
    4. D. Level 1

18. 18. Kim's main reason for remortgaging is to consolidate £25,000 of unsecured debts. Beyond the normal factors, what must the adviser take into account under MCOB 4.7A.15R?

    1. A. Only whether the new mortgage rate is lower than the rates on the unsecured debts
    2. B. Only whether Kim's credit score will improve once the debts have been cleared
    3. C. Only whether the lender will pay the creditors directly on completion
    4. D. The cost of a longer repayment period and whether securing the debt is appropriate

19. 19. Following repossession, Leanne's house sells for £18,000 less than her mortgage debt. The lender's higher lending charge policy pays the lender £12,000. What is Leanne's position on the shortfall?

    1. A. She owes nothing, because the insurance has settled the claim
    2. B. She owes only the £6,000 not covered by the insurer
    3. C. She is liable only if she agreed to a personal guarantee
    4. D. The insurer may pursue her for the £12,000 it paid out

20. 20. Two lenders offer equally suitable products. An adviser recommends one only because it pays the firm a higher procuration fee. Which MCOB principle is this most likely to breach?

    1. A. Providing an ESIS before the application under MCOB 5A.4.1R
    2. B. Acting in the customer's best interests under MCOB 2.5A.1R
    3. C. Sending an annual statement under MCOB 7.5.1R
    4. D. Giving a reflection period under MCOB 6A.3.4R

21. 21. Why does the Financial Policy Committee limit the share of mortgages lent at high loan-to-income ratios?

    1. A. To protect lenders from competition by restricting new entrants
    2. B. To keep house prices at a level set each year by the Government
    3. C. To guard against a build-up of household debt that could threaten financial stability
    4. D. To make sure every borrower can afford their mortgage at the current rate

22. 22. On auction day the auctioneer publishes an addendum for a lot Leon intends to bid on. Why must Leon read it before bidding?

    1. A. It confirms the reserve price, which must be disclosed to bidders
    2. B. It lists the other bidders and their maximum proxy bids
    3. C. It sets out the lender's conditions for any mortgage he takes out
    4. D. It updates the particulars and legal pack, and the sale is made subject to it

23. 23. Two years into her daughter's mortgage, Gill wants to withdraw as guarantor because she plans to retire. What is the usual position?

    1. A. She remains liable unless the lender agrees to release her
    2. B. She can withdraw by giving the lender one month's written notice
    3. C. Her liability ends automatically when she reaches state pension age
    4. D. She is released once the borrower has made 24 monthly payments

24. 24. Following the FCA's mortgage rule changes of 22 July 2025, which statement about execution-only mortgage sales is correct?

    1. A. They are now available only to high net worth customers and mortgage professionals
    2. B. They are allowed for any customer, with no conditions or disclosures required
    3. C. Advice must be given whenever there is any spoken or written interaction with the customer
    4. D. They are barred only in specified cases, such as right to buy, debt consolidation and shared equity

25. 25. Omar's fixed rate is ending. He wants a new fixed rate with his existing lender, with no extra borrowing and no other change to his mortgage. Must the lender carry out a full affordability assessment?

    1. A. Yes, because every new product with an existing lender needs a full assessment
    2. B. No, provided there is no additional borrowing and no change material to affordability
    3. C. No, but only if Omar has never missed a payment since the mortgage began
    4. D. Yes, unless Omar is willing to sign a declaration that he can afford it

26. 26. Which form of report gives the buyer repair options and an indication of timescales for dealing with defects?

    1. A. Energy performance certificate
    2. B. Mortgage valuation
    3. C. RICS Level 3 survey
    4. D. RICS Level 1 survey

27. 27. Fay, who is credit-impaired, takes a first charge remortgage partly to consolidate debts. Without clearing those debts the loan would be unaffordable. What must the lender take reasonable steps to do?

    1. A. Ensure that the debts are actually repaid on completion
    2. B. Lend only on an interest-only basis
    3. C. Limit the loan to 50% of the property value
    4. D. Obtain her written promise to repay the debts

28. 28. Which party normally instructs the valuer for a mortgage valuation, and who usually pays the fee?

    1. A. The solicitor instructs the valuer and the borrower pays
    2. B. The estate agent instructs the valuer and the lender pays
    3. C. The lender instructs the valuer and the borrower usually pays
    4. D. The buyer instructs the valuer and the seller pays

29. 29. Why does a lender's valuer report a reinstatement cost as well as the market value?

    1. A. To calculate the stamp duty land tax due
    2. B. To fix the amount of the higher lending charge
    3. C. To set the minimum price the seller may accept
    4. D. To show the level of buildings insurance needed

30. 30. Ruby earns £4,000 a month gross. Her income tax is £550 and her national insurance is £300 a month. Which monthly income figure must the lender take full account of?

    1. A. £2,100, her net pay less the proposed £1,050 mortgage payment
    2. B. £3,450, her gross pay less income tax only
    3. C. £4,000, her gross pay before any deductions
    4. D. £3,150, her income after income tax and national insurance

31. 31. How often does the Monetary Policy Committee meet to decide Bank Rate?

    1. A. Eight times a year
    2. B. Four times a year
    3. C. Twelve times a year
    4. D. Twice a year

32. 32. In a conditional auction, what does the successful bidder obtain at the fall of the hammer?

    1. A. Legal title to the property, transferred to them immediately
    2. B. A binding contract that must be completed within 20 business days
    3. C. An option to exchange contracts at the hammer price within a set period
    4. D. A right to renegotiate the price after their survey is complete

33. 33. When giving advice on suitability, what must an adviser explain to the customer under MCOB 4.7A.19R?

    1. A. That the customer can ignore the advice without any effect on their protections
    2. B. That the recommended mortgage will remain suitable for the whole of the mortgage term
    3. C. That the lender has already approved the mortgage on the basis of the advice given
    4. D. That the assessment is based only on current circumstances and reasonably foreseeable changes

34. 34. Fraser buys his next main home in Scotland for £300,000. He is not a first-time buyer and owns no other property. What LBTT is payable (2026/27)?

    1. A. £4,600
    2. B. £15,000
    3. C. £2,100
    4. D. £5,000

35. 35. Apart from the deposit and the balance of the price, which cost might a successful auction buyer have to pay that is set out in the special conditions of sale?

    1. A. The auctioneer's annual registration fee with RICS
    2. B. The seller's estate agency commission on the sale
    3. C. A buyer's premium or a contribution to the seller's costs
    4. D. The seller's outstanding mortgage early repayment charge

36. 36. Which of the following best describes a mortgage in legal terms?

    1. A. A transfer of full ownership of the property to the lender until the final payment is made
    2. B. An insurance contract that guarantees the lender will be repaid if the borrower dies
    3. C. A lease granted by the lender allowing the borrower to live in the property
    4. D. A charge over property given as security for a debt and released when the debt is repaid

37. 37. Ivan owns his home outright, worth £600,000, but has no income. He wants a £100,000 capital-and-interest mortgage over 20 years. Why should a lender refuse?

    1. A. It cannot show the loan is affordable and must not rely on the equity in the property
    2. B. MCOB bans all lending to customers who already own their home outright
    3. C. The loan is too small for a regulated mortgage contract to be offered
    4. D. Lenders may not lend more than 10% of a property's value to anyone without income

38. 38. What does the reinstatement cost of a house represent?

    1. A. The amount still owed on the mortgage
    2. B. The price it would fetch on the open market
    3. C. The cost of rebuilding it, including demolition and fees
    4. D. The value of the land on which it stands

39. 39. Which RICS Home Survey is designed for conventional, newer homes in good condition, built from common materials?

    1. A. A mortgage valuation
    2. B. Level 1
    3. C. Level 3
    4. D. Level 2

40. 40. Which of the following is a per se eligible counterparty under the FCA's client categorisation rules?

    1. A. A small company with a turnover of £800,000
    2. B. A credit institution such as a UK bank
    3. C. A landlord with five buy-to-let properties
    4. D. A high net worth individual home buyer

41. 41. On what date did statutory regulation of first charge mortgage sales under MCOB begin, known as 'M-Day'?

    1. A. 26 April 2014
    2. B. 31 October 2004
    3. C. 21 March 2016
    4. D. 1 December 2001

42. 42. A specialist treats Japanese knotweed by excavating it from a garden. How must the contaminated soil normally be handled?

    1. A. Sold to a neighbour for use as topsoil
    2. B. Removed as controlled waste by a registered carrier
    3. C. Spread across the rest of the garden to dry out
    4. D. Burnt on a bonfire at the end of the garden

43. 43. Which condition must be met for a lender to use the MCOB 11.9 modified affordability assessment?

    1. A. The customer has been with the existing lender for at least ten years
    2. B. The new mortgage is secured on a different, cheaper property
    3. C. No payment shortfall when applying, nor in the previous 12 months
    4. D. The new loan is for a larger amount to cover home improvements

44. 44. Mark guaranteed his nephew's mortgage. Mark has died and the nephew is now in serious arrears. What can the lender normally do under the guarantee?

    1. A. Claim against Mark's estate under the terms of the guarantee
    2. B. Transfer the property into the name of Mark's beneficiaries
    3. C. Require Mark's executors to take over the mortgage payments personally
    4. D. Nothing, because a guarantee always ends when the guarantor dies

45. 45. When advising Ravi, whose CCJ was satisfied a year ago, which MCOB 4.7A.6R factor directly requires the adviser to take his credit history into account?

    1. A. Whether he should pay any fees up front rather than adding them to the loan
    2. B. Whether the contract is appropriate based on the information he has given about his credit history
    3. C. Whether he should make early repayments to reduce the balance faster
    4. D. Whether he should have stability in the amount of his payments in the future

46. 46. Why can the deposit for an unconditional auction purchase not normally come from the buyer's main mortgage advance?

    1. A. The deposit is paid to the lender, who cannot fund it at the same time
    2. B. The deposit is due on exchange at the fall of the hammer, before the mortgage completes
    3. C. Lenders are banned by MCOB from lending to buyers at property auctions
    4. D. Auction deposits must always be paid in cash notes on the day of sale

47. 47. Why might a buyer's conveyancer charge a fee for an electronic money transfer on the day of completion?

    1. A. To send the purchase money to the seller's side the same day
    2. B. To pay the estate agent's sale commission
    3. C. To arrange the buyer's buildings insurance cover
    4. D. To register the buyer at HM Land Registry

48. 48. Oscar has a £180,000 interest-only tracker mortgage. If Bank Rate rises by 0.5%, by how much will his monthly payment increase?

    1. A. £7.50
    2. B. £75.00
    3. C. £150.00
    4. D. £900.00

49. 49. Pete remortgages to a new lender for £180,000 on his whole registered title, with the charge registered through the portal. On what is the HM Land Registry fee for the new charge based?

    1. A. The original purchase price
    2. B. The previous mortgage balance
    3. C. The amount of the new charge
    4. D. The current market value of the property

50. 50. Jade is offered a deal with a £999 arrangement fee that can be paid up front or added to the loan. What is the main downside of adding it?

    1. A. The lender can change the interest rate immediately
    2. B. The fee is added to her SDLT liability
    3. C. She pays interest on the fee for as long as it stays on the loan
    4. D. The fee becomes non-refundable only if added