MRT1 Mock Paper 1 — all 50 questions and answers

Regulation & MCOB

1. Under the FCA's rules, which of the following is NOT a requirement for a loan to be a regulated mortgage contract?

1. AThe contract must be secured on land in the United Kingdom
2. BThe lender must take a first legal charge over the property
3. CAt least 40% of the land must be used as a dwelling by the borrower or an immediate family member
4. DThe borrower must be an individual or a trustee

Mortgage law

2. Karen is asked to agree to a second charge over the jointly owned family home to secure her husband's business borrowing, from which she gains no direct benefit. Following Royal Bank of Scotland v Etridge, what should the lender do?

1. AProceed once her husband confirms in writing that she consents
2. BDecline the application outright, because a spouse who receives no direct benefit is barred by statute from standing surety for business borrowing
3. CProceed only if Karen owns less than 50% of the property
4. DEnsure Karen takes independent legal advice and obtain written confirmation from her solicitor that the transaction was explained

House-buying practice

3. Tom buys a flat at a traditional public auction. Which statement is correct?

1. AHe pays a reservation fee on the day but is not yet legally committed
2. BHe has a 14-day cooling-off period after the hammer falls
3. CA binding contract is formed on the fall of the hammer, so survey, legal checks and mortgage finance must be in place beforehand
4. DContracts are exchanged around 28 days after the auction, so the buyer has time to arrange a mortgage and commission a survey before any binding commitment arises

Tax & schemes

4. In July 2026, Sana — a home mover with no other properties — buys a house in England for £400,000. How much SDLT does she pay?

1. A£20,000
2. B£10,000
3. C£7,500
4. D£12,500

Mortgage law

5. Jamie, aged 17, inherits a house in England. Which statement is correct?

1. AJamie cannot hold a legal estate in land; it must be held on trust for him until he is 18
2. BJamie can hold the legal title provided a court approves
3. CJamie can hold the legal title but cannot grant a mortgage over it
4. DJamie holds the legal title jointly with a parent or guardian automatically, because statute creates a co-ownership trust for minors who inherit land

Market & economics

6. CPI inflation moves more than one percentage point away from the 2% target. What must happen?

1. AThe Monetary Policy Committee must change Bank Rate at its next meeting, since its remit obliges it to return inflation to target within twelve months
2. BThe Chancellor must hold an emergency Budget
3. CThe Governor of the Bank of England must write an open letter to the Chancellor explaining the deviation and the planned response
4. DThe inflation target is automatically rebased

House-buying practice

7. Contracts are exchanged on a house purchase in England with completion set for four weeks later. When should the buyer's buildings insurance commence?

1. AFrom exchange of contracts, because risk generally passes to the buyer at that point
2. BFrom completion, when the buyer gets the keys
3. CFrom legal completion, but backdated to exchange, since the seller's own policy legally covers the buyer's interest until the keys are handed over
4. DFrom the date the mortgage offer is issued

Regulation & MCOB

8. Priya inherits her late mother's house and, unable to sell it, lets it out and remortgages it onto a buy-to-let deal. She did not buy the property to let it and owns no other rental property. How is the loan classified?

1. AA regulated mortgage contract, because any letting by an individual who did not purchase to let is automatically brought within MCOB
2. BAn exempt investment buy-to-let, outside any FCA regime
3. CAn unregulated commercial loan
4. DA consumer buy-to-let (CBTL) under the MCD Order 2015, subject to FCA registration and conduct standards

Mortgage law

9. Five friends buy a house together in England. How is legal ownership structured?

1. AAll five hold the legal title as tenants in common, since the four-owner limit applies only to joint tenancies
2. BThe first four named adult buyers hold the legal title as joint tenants, on trust for all five
3. CThe eldest holds legal title as nominee for the others
4. DAll five hold the legal title as joint tenants

2025/26 updates

10. A landlord client asks how the Renters' Rights Act 2025 affects his English buy-to-let portfolio. Which is correct?

1. AThe Act applies only to social-sector tenancies
2. BSection 21 remains available to landlords, but from 1 May 2026 the minimum notice period doubles to four months and must be served with a prescribed form
3. CFixed-term ASTs of at least 12 months become compulsory
4. DSection 21 'no-fault' evictions were abolished from 1 May 2026, and assured shorthold tenancies are replaced by periodic assured tenancies

House-buying practice

11. A buyer negotiates to pay only a 5% deposit at exchange, then fails to complete. Which statement is correct?

1. AHe forfeits the 5% deposit paid, and because the contract fixed the deposit at that figure his liability to the seller ends there
2. BHe is liable only for the seller's conveyancing fees
3. CThe seller can generally forfeit the 5% paid and sue for the balance up to the customary 10%, plus any further losses
4. DThe deposit must be returned less the seller's costs

Mortgage law

12. In Scotland, at what point do buyer and seller become legally bound to the transaction?

1. AOn registration of the title in the Land Register
2. BOn delivery of the disposition at settlement
3. COn conclusion of missives
4. DWhen the seller verbally accepts the offer

Tax & schemes

13. Amira, a genuine first-time buyer, purchases a flat in England for £510,000 in 2026. What SDLT is payable?

1. A£15,500 — she loses first-time buyer relief entirely because the price exceeds £500,000
2. BNil, as first-time buyers are exempt
3. C£10,500, applying first-time buyer relief to the whole of the excess above the £300,000 nil-rate threshold for eligible buyers
4. D£13,000

Mortgage law

14. Amir and Ben own a flat as joint tenants. Amir's will leaves 'my share of the flat' to his sister. On Amir's death, what happens?

1. AHis sister inherits his half share under the will, because a specific gift of land overrides the survivorship rule
2. BThe share is split equally between Ben and the sister
3. CThe property passes automatically to Ben by survivorship; the gift in the will is ineffective
4. DThe share passes under the intestacy rules

Regulation & MCOB

15. Under the Financial Policy Committee's loan-to-income flow limit as it applies in 2026, which statement is most accurate?

1. AMortgages above 4.5× LTI are restricted to 15% of new residential lending — and following the FPC's 2025 recommendation, individual lenders may exceed 15% provided the aggregate market flow stays within the limit
2. BThe limit caps loans at 15% above regional average incomes
3. CThe limit applies only to buy-to-let lending
4. DNo lender may ever grant a mortgage above 4.5× income

House-buying practice

16. A large oak tree close to a house on clay soil is removed. Months later, cracking appears and the ground seems to be swelling. This is most likely:

1. ALandslip
2. BSubsidence
3. CSettlement, the normal bedding-down of foundations that follows the removal of any mature tree
4. DHeave, as the clay rehydrates and expands after the tree's removal

Mortgage law

17. For registered land in England and Wales, a legal mortgage can now be created only by:

1. AAn equitable assignment of the beneficial interest
2. BA charge by deed expressed to be by way of legal mortgage
3. CA mortgage by demise, under which the lender takes a long lease of the property until redemption
4. DDeposit of the title deeds with the lender

Tax & schemes

18. Marcus already owns his home and buys an additional buy-to-let in England for £300,000. What is his total SDLT bill?

1. A£20,000
2. B£5,000
3. C£12,500
4. D£15,000

House-buying practice

19. Which statement about a standard mortgage valuation is correct?

1. AIt is a condensed survey carried out for the buyer's benefit, which is why the lender's valuer owes the buyer a contractual duty to report all visible defects in the property
2. BIt is prepared for the lender, but under Smith v Bush the valuer may owe the buyer a duty of care where reliance is reasonable, despite a disclaimer
3. CIt must always involve an internal physical inspection
4. DIt guarantees the property is free from defects

Regulation & MCOB

20. Under MCOB 11.6.18 (the interest-rate 'stress test'), which statement is correct following the FCA's March 2025 clarification?

1. ALenders must consider likely rate rises over the first five years, assuming at least a 1 percentage point increase — but the test does not apply where the rate is fixed for five years or more, and the FCA reminded firms they have flexibility rather than needing excessive buffers
2. BLenders must always test affordability at Bank Rate plus 3 percentage points
3. CThe test applies only to first-time buyers
4. DThe stress test was abolished in 2025

Mortgage law

21. Lender A's charge was created (signed) first, but Lender B's charge over the same registered property was registered at the Land Registry first. Whose charge ranks first?

1. AThe court decides based on the loan sizes
2. BLender B — for registered land, priority between registered charges follows the order of registration
3. CThey rank equally and share pro rata
4. DLender A — for registered land, priority between competing charges always follows the date on which each deed was executed

Tax & schemes

22. Which statement about property transaction taxes across the UK is correct?

1. ASDLT applies UK-wide with regional bands
2. BWales charges LBTT and Scotland charges LTT
3. CFirst-time buyer relief operates identically in England, Wales and Scotland, because the devolved administrations agreed a common nil-rate threshold for first purchases
4. DScotland charges LBTT with first-time buyer relief up to £175,000, while Wales charges LTT which has no first-time buyer relief

House-buying practice

23. A surveyor discovers Japanese knotweed within the garden of a property a client wants to mortgage. Under the current RICS approach, the most accurate statement is:

1. AKnotweed only matters if it is within 3 metres of the boundary
2. BThe seller must remove the knotweed before exchange by law
3. CNo mainstream lender will lend where knotweed is present
4. DLending is usually possible where a professional management/treatment plan with an insurance-backed guarantee is in place; RICS's 2022 guidance moved away from the rigid 7-metre rule to a management-based assessment

Mortgage law

24. Dev and Sam split up; both names remain on the mortgage. Sam stops contributing. What can the lender do?

1. ANothing until both borrowers consent
2. BTake action only against Sam, who caused the arrears
3. CPursue Dev alone for the entire debt, because liability is joint and several
4. DPursue each borrower for 50% of the arrears only, since a joint mortgage divides liability equally between the co-borrowers

2025/26 updates

25. Following the Leasehold and Freehold Reform Act 2024, which change was in force by 2026?

1. ALeaseholders no longer need to have owned the property for two years before claiming a lease extension or freehold enfranchisement
2. BCommonhold became compulsory for new flats
3. CAll ground rents on existing residential leases were abolished outright, so leaseholders now pay only a peppercorn from the Act's commencement
4. DLease extensions are capped at 90 additional years

Market & economics

26. Which statement correctly distinguishes securitisation from covered bonds as mortgage funding methods?

1. ASecuritisation is only used by building societies
2. BBoth involve selling mortgage assets off the lender's balance sheet
3. CIn securitisation, mortgages are sold to a special purpose vehicle which issues mortgage-backed securities to investors; with covered bonds, the mortgage pool stays on the lender's balance sheet and bondholders have recourse to both the lender and the pool
4. DCovered bonds are issued by the Bank of England

Mortgage law

27. A buyer's solicitor finds the seller of an unregistered house cannot produce a 'good root of title'. What is required?

1. AA Land Registry title information document
2. BTitle deeds going back at least 30 years, since the statutory minimum period for proving unregistered title was extended when compulsory first registration was introduced nationally
3. CA document at least 15 years old dealing with the whole legal and beneficial interest, from which an unbroken chain of ownership can be shown
4. DA statutory declaration from the seller only

House-buying practice

28. An interest-only retirement (RIO) mortgage is taken by a couple aged 68 and 66. Which affordability point is critical?

1. AThe loan must be repaid by a fixed term of 25 years
2. BBecause the capital is repaid on death or entry into long-term care, affordability of the interest payments must be demonstrated on the survivor's income alone if either dies
3. CAffordability must be assessed on their joint income only
4. DNo affordability assessment is needed as the loan is repaid from sale

Mortgage law

29. Nina is declared bankrupt. Her main asset is her half-share of the family home. Which statement is correct?

1. AHer interest vests in the trustee in bankruptcy, who broadly has three years to deal with it ('use it or lose it') before it revests in Nina
2. BOnly unsecured creditors can force a sale
3. CThe home can never be touched, because a bankrupt's only or main residence is expressly excluded from the estate available to the trustee in bankruptcy
4. DThe home must be sold within six months in every case

Regulation & MCOB

30. In July 2025 the FCA published PS25/11 amending its mortgage rules. Which best summarises the changes?

1. AAll affordability assessments were abolished
2. BAdvice became compulsory for every mortgage sale, including execution-only
3. CExecution-only sales were banned
4. DIt became easier for borrowers to remortgage to a new lender, reduce their term, and transact without full advice — the 'interaction trigger' that forced most sales into advice was removed

House-buying practice

31. A client is buying a 1920s solid-wall house that has been substantially altered and extended. The most appropriate RICS product is:

1. ARICS Home Survey Level 1
2. BA mortgage valuation only
3. CRICS Home Survey Level 2 (Survey and Valuation)
4. DRICS Home Survey Level 3 (Building Survey)

Mortgage law

32. Where would a lender's registered charge appear on a Land Registry title?

1. AThe Deeds Register
2. BThe Proprietorship Register
3. CThe Charges Register
4. DThe Property Register

Tax & schemes

33. Which statement about Support for Mortgage Interest (SMI) is correct?

1. AIt is a non-repayable state benefit covering full mortgage payments
2. BIt pays capital and interest for up to two years
3. CIt is a repayable loan, secured by a charge on the property and accruing interest, paying a standard rate of interest on up to £200,000 of the loan, normally after a three-month wait for Universal Credit claimants
4. DIt is available only to pensioners

Mortgage law

34. A developer sold houses subject to a covenant 'not to use the property for any trade or business', and a separate covenant 'to maintain the boundary fence'. A later buyer of one house opens a hairdressing business and lets the fence collapse. Which is correct?

1. ANeither covenant binds the new buyer
2. BBoth covenants bind the new buyer
3. CThe restrictive covenant (no business use) can bind successors in title, but the positive covenant (maintain the fence) generally cannot
4. DOnly positive covenants run with freehold land, because the burden of a negative covenant is personal to the original covenantor and cannot bind buyers

2025/26 updates

35. Under the Building Safety Act 2022, the leaseholder cost protections for historical cladding/fire-safety defects apply to qualifying leaseholders in buildings:

1. AAt least 11 metres tall or five storeys
2. BAt least 18 metres tall or seven storeys
3. COnly those built after 2000
4. DOf any height

House-buying practice

36. A parent joins a child's mortgage under a joint borrower, sole proprietor (JBSP) arrangement. Which statement is correct?

1. AThe parent guarantees the loan but has no liability until default
2. BJBSP arrangements are unregulated
3. CThe parent is a party to the mortgage covenant but not the registered owner — boosting affordability without normally triggering the additional-property SDLT surcharge, though the parent is fully liable for the debt
4. DThe parent goes on both the mortgage and the title deeds

Regulation & MCOB

37. Under the Mortgage Credit Directive rules as applied in MCOB, once a lender issues a binding offer the customer must be given:

1. AA 14-day cancellation right after completion
2. BNothing — mortgage offers carry no reflection rights
3. CA reflection period of at least 7 days during which the offer is binding on the lender but the customer may accept at any time
4. DA 30-day cooling-off period before contracts can be exchanged, during which the lender may withdraw the offer but the customer may not accept it

Mortgage law

38. Under which class of registered title would the Land Registry most likely register an owner who has lost the title deeds, or who claims through adverse possession?

1. AQualified title
2. BPossessory title
3. CAbsolute title
4. DGood leasehold title

Tax & schemes

39. Under the current (post-2021) model of shared ownership, which statement is correct?

1. AThe minimum initial share is 10%, buyers can staircase in 1% instalments annually, and new leases run for 990 years
2. BShared owners pay no rent on the unpurchased share
3. CStaircasing above 80% is prohibited
4. DThe minimum initial share is 25%, and staircasing must be in 10% tranches with a fresh valuation and legal fees payable each time

House-buying practice

40. A survey reveals spray foam insulation applied to the underside of the roof of a 1970s bungalow. Why might this concern a mortgage lender?

1. AIt invalidates the EPC
2. BIt can trap moisture and prevent inspection of roof timbers, so many lenders will decline or require specialist reports/removal — and it can make the property difficult to sell or remortgage
3. CSpray foam is a serious fire hazard banned since 2023
4. DIt always indicates the roof structure has failed

Mortgage law

41. Meera's husband is sole registered owner of the family home and is remortgaging without telling her. Meera has no legal ownership but lives there. What protection can she register?

1. AA unilateral caution against first registration, which prevents the registered proprietor dealing with the title without her consent
2. BA home rights notice under the Family Law Act 1996 in the Charges Register
3. CAn inhibition order
4. DA Form A restriction

Tax & schemes

42. Leo has £20,000 (including bonuses) in his Lifetime ISA and wants to buy his first home for £475,000 in England. Which statement is correct?

1. AHe can use the funds penalty-free but forfeits future bonuses
2. BThe purchase exceeds the £450,000 LISA property cap, so withdrawing the funds triggers a 25% charge costing more than the bonuses received
3. CThe cap does not apply to new-build homes
4. DHe can use the LISA penalty-free because the property is under £500,000, the ceiling that applies to first-home purchases made anywhere outside Greater London

House-buying practice

43. Under the First Homes scheme in England, which statement is correct?

1. AThe scheme is open to any buyer under 40
2. BHomes are sold to first-time buyers at a discount of at least 30% (up to 50%) of market value, and the same percentage discount binds all future resales via a planning covenant
3. CThe discount applies only in London
4. DThe discount is repayable after five years

Mortgage law

44. A squatter has occupied a parcel of registered land for 11 years. Which statement reflects the position under the Land Registration Act 2002?

1. AHe must wait 12 years, after which title transfers automatically, because the Land Registration Act 2002 left the limitation period for squatters unchanged for all classes of registered land
2. BAdverse possession was abolished for all land in 2002
3. CHe automatically acquired title after 10 years
4. DHe may apply to be registered after 10 years' adverse possession, but the registered proprietor is notified and can usually defeat the application by objecting

Regulation & MCOB

45. Which loan is most likely to fall OUTSIDE FCA mortgage regulation entirely?

1. AA bridging loan secured on the borrower's current home while she buys her next residence, since short-term lending is excluded from MCOB by its duration
2. BA lifetime mortgage taken by a 75-year-old on her home
3. CA second-charge loan of £30,000 secured on the borrower's home for a kitchen extension
4. DA limited company's loan to buy a shop with a flat above where the company's director will live, secured on that mixed-use premises

Mortgage law

46. Following repossession, a lender sells a property but a £25,000 shortfall remains. Which statement is correct?

1. AThe lender may pursue the shortfall for an unlimited period
2. BThe debt dies with the repossession
3. CThe lender owed a duty to obtain the best price reasonably obtainable, and may pursue the shortfall — for up to 12 years for the capital (6 for interest), though UK Finance members agree to begin recovery within 6 years
4. DThe borrower's liability is capped at 10% of the sale price

House-buying practice

47. Which statement about Energy Performance Certificates is correct?

1. AAn EPC lasts 5 years and is needed only at completion
2. BAn EPC is valid for 10 years, must be commissioned before marketing, and privately rented homes currently require at least rating E — with government proposals to require C for rented homes by 2030
3. CEPCs are voluntary for properties built before 1950
4. DListed buildings always require rating C

Mortgage law

48. How does an Islamic home purchase plan using diminishing musharaka work, and how is it treated by the FCA?

1. AThe bank lends money at a disguised interest rate; it is unregulated
2. BThe bank and customer buy the property in partnership; the customer pays rent on the bank's share while buying additional shares over time until sole owner — regulated by the FCA as a home purchase plan
3. CIt can only be offered to Muslim customers
4. DThe bank buys the property and immediately resells it to the customer at a fixed mark-up — this is ijara

Regulation & MCOB

49. A client is offered a sterling mortgage but earns her salary in US dollars. Under MCOB's foreign-currency mortgage rules, the lender must:

1. ARefuse the application
2. BMonitor the exchange rate and warn the customer if it moves more than 20% against them, and offer safeguards such as a right to convert the loan into the currency of their income
3. CCap the loan at 50% LTV
4. DRequire payments to be made in dollars

House-buying practice

50. A lender repossesses under a power of sale. At what point did that power typically become exercisable?

1. AThe moment the mortgage deed was signed
2. BOnly after 12 months of arrears
3. COnly with the borrower's written consent
4. DOnce the legal date for redemption passed and a statutory trigger occurred — such as arrears of interest for two months, breach of a mortgage term, or failure to comply with a notice requiring repayment