CPSP: Certified Practitioner in Specialist Property Finance

• Unit 01

  CPSP: Specialist Property Finance

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  1,028 questions · 16 topics

A few questions from this module, with the answer and a full explanation. The complete bank is available when you start practising.

1. A borrower's 9-month bridging loan has 10 weeks remaining. The stated exit is refinance onto a buy-to-let mortgage. The file shows a formal mortgage offer from a term lender, issued eight months ago, with a validity period of six months that expired two months ago. How should the underwriter treat this evidence?

   • A
     As equivalent to a current formal offer, because the original underwriting decision remains valid indefinitely once issued
   • B
     As irrelevant, because only the existence of a term lender relationship matters for exit assessment
   • C
     As sufficient, provided the borrower confirms verbally that the term lender will still proceed
   • D
     As materially weaker than a current formal offer, since it no longer reflects a current commitment from the term lender
     Correct answer
   Explanation

   A formal mortgage offer is only strong evidence while it remains valid; once it lapses, the term lender's commitment can no longer be relied upon without reconfirmation, since circumstances may have changed. Key takeaway: check the validity period of a mortgage offer before treating it as current, reliable evidence.

2. A second charge lender checks the register and finds the first charge is noted as an obligatory further advances facility up to £400,000, with £280,000 currently drawn. What risk does this create for the second charge lender's priority?

   • A
     The second charge lender gains a formal right to object to further drawdowns
   • B
     The second charge becomes void once the facility is noted
   • C
     The obligatory facility converts the loan into a floating charge
   • D
     Further drawdowns up to £400,000 could tack ahead of the second charge
     Correct answer
   Explanation

   Because the facility is noted as obligatory, further drawdowns up to the stated £400,000 maximum can tack ahead of the second charge under s94 LPA 1925, regardless of when the second charge was registered. This is a live priority risk the second charge lender must price into its decision. Key takeaway: an obligatory advances facility creates an ongoing tacking risk up to its full stated ceiling, not just up to the amount currently drawn.

3. How does stretched senior finance differ structurally from a conventional senior facility combined with a separate mezzanine loan?

   • A
     Stretched senior is only available for schemes that are already income-producing
   • B
     Stretched senior is provided directly by the developer, rather than by an external lender
   • C
     A single lender extends further up the stack, rather than two lenders each holding a separate facility
     Correct answer
   • D
     Stretched senior ranks behind mezzanine finance for repayment, reversing the usual priority
   Explanation

   Stretched senior is a single lender providing a larger slice of the capital stack than a conventional senior facility alone would allow, combining what would otherwise be separate senior and mezzanine tranches into one facility, one lender relationship and one set of security arrangements. Key takeaway: stretched senior consolidates senior and mezzanine-equivalent funding into a single lender, not a change in repayment priority.

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