MRT1 — Mortgage Law, Practice & Application

What MRT1 covers

• •Freehold, leasehold and how property is legally owned
• •Joint tenants vs tenants in common — and why it matters on death
• •The buying process: offer, conveyancing, searches, exchange, completion
• •Borrower types: self-employed, contractors, adverse credit, guarantors
• •Schemes: shared ownership, Right to Buy, Lifetime ISA
• •Applications: decision in principle, credit checks, income verification
• •Affordability and stress testing under MCOB 11
• •Valuations and surveys — mortgage valuation vs Level 2 and 3 reports
• •SDLT: the banded method and first-time buyer relief

3 free MRT1 practice questions

Straight from Mock Paper 1, in the real exam style — no sign-up, no paywall.

1. Q1.Under the FCA's rules, which of the following is NOT a requirement for a loan to be a regulated mortgage contract?

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

   B is correct. Since the Mortgage Credit Directive took effect on 21 March 2016, the 'first charge' requirement was removed — second-charge loans on a home are now regulated mortgage contracts too. The other three conditions all still apply.

2. Q2.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. CEnsure Karen takes independent legal advice and obtain written confirmation from her solicitor that the transaction was explained
   4. DProceed only if Karen owns less than 50% of the property
   Reveal the answer

   C is correct. Etridge (2001) established that where one party stands surety for another's debts, the lender is put on notice of possible undue influence. It must insist the surety takes independent legal advice and receive the solicitor's confirmation — otherwise the charge risks being set aside.

3. Q3.Tom buys a flat at a traditional public auction. Which statement is correct?

   1. AA binding contract is formed on the fall of the hammer, so survey, legal checks and mortgage finance must be in place beforehand
   2. BHe has a 14-day cooling-off period after the hammer falls
   3. CContracts 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
   4. DHe pays a reservation fee on the day but is not yet legally committed
   Reveal the answer

   A is correct. At a traditional auction, exchange of contracts effectively happens on the fall of the hammer: the buyer normally pays a 10% deposit immediately and must complete within about 28 days. All due diligence and finance must therefore be in place beforehand. (Option D describes the 'modern method' of auction.)

How to pass MRT1

• ✓Exchange vs completion — who is bound, when deposits are at risk, when keys change hands.
• ✓Practise the calculations until automatic: LTV, income multiples, SDLT bands, deposits.
• ✓50 questions in 60 minutes is the real challenge — sit timed papers, not casual ones.

MRT1 exam — common questions