Which scenario would most likely mean a mortgage is not regulated?

Which scenario would most likely mean a mortgage is not regulated?

• A. The property was purchased as an investment to be rented out.
• B. The borrower intends to use the property as their main home.
• C. The mortgage is interest-only.
• D. The borrower is over 60.

Answer: (A)

Regulation depends on the purpose of the loan and the property it’s securing. A mortgage is regulated when the property will be the borrower’s own home, because it is a consumer loan tied to a dwelling the person intends to occupy. If the property is bought as an investment to rent out, the loan is not regulated, since it’s tied to a rental/investment purpose rather than a personal residence. The repayment type (interest-only) and the borrower’s age don’t determine regulation on their own, though they may influence lender criteria. So the scenario where the property is purchased to be rented out would most likely be unregulated.

Regulation depends on the purpose of the loan and the property it’s securing. A mortgage is regulated when the property will be the borrower’s own home, because it is a consumer loan tied to a dwelling the person intends to occupy. If the property is bought as an investment to rent out, the loan is not regulated, since it’s tied to a rental/investment purpose rather than a personal residence. The repayment type (interest-only) and the borrower’s age don’t determine regulation on their own, though they may influence lender criteria. So the scenario where the property is purchased to be rented out would most likely be unregulated.