Task Using the information contained in the Scenario below, please complete the following 6 tasks. You must complete each task in order for your submission to be assessed. Omission of any one of these 6 tasks will be regarded as Not Yet Competent and you will then be required to resubmit this assessment in full. 1. Recommend a product for the clients and explain your reasons for recommendation 2. List the supporting documents that would be needed to support the loan 3. Complete a loan costing sheet 4. Complete a loan servicing calculation (NSR) 5. Download and complete the FHOG application form that is relevant to your state/territory, from the internet 6. Complete a loan application form (a blank Westpac loan application form has been provided for you which you should use) and complete all of the accompanying documents as provided for you. Your answer to this Task should be prepared as if you were submitting a real loan application to the lender. Please note: If there is information required on the application that is not supplied please improvise. The application should be completed as neatly as possible to ensure ease of review. It is to be submitted to NFI as if NFI is the lender and you were an accredited broker. If you do not submit in a professional manner, your assessment will not be marked. Scenario Clients: Lynette Mary Grimms DL No.: 417392 DOB: 16/02/70 Gordon George Grimms DL No.: 421814 DOB: 17/09/71 Current Address: 28 Elmslie Street, North Parramatta NSW 2151 Time at address 32 months (Rent $380 per week) Previous Address: 42 Grant Street, Tweed Heads NSW 2485 Time at address 2 years Children Two children aged 6 and 8 Credit Cards: ANZ credit card - $6,000 limit (balance $3,200) Scenario Continued overleaf .... FNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING – ASSESSMENT TASKS Page 2 © Copyright 2015, The National Finance Institute V.051115 ASSIGNMENT 2 Continued The clients are looking to purchase their first home which is a small, newly built 2 bedroom unit at 2/12 Garden Grove Bankstown NSW 2200, for $485,000. They have funds of $55,000 of which $35,000 were genuinely saved. The remaining $20,000 was a redundancy payment to Mr Grimms from his previous employer. Mr and Mrs Grimms are eligible to apply for the FHOG. They are aware there will be a body corporate fee in the new unit complex which they have been told is $75 per week per unit. Mr Grimms works as a carpenter with a major construction company in Bankstown and has been there for 32 months. His salary is $72,000 p.a. plus he has earned an average of $500 per week in regular overtime over the previous 18 months. He previously worked for a Tweed Heads Joinery company for 4 years before being made redundant when the business was bought out. Mrs Grimms works as a receptionist/admin assistant with the BB Real Estate company and earns $47,000 p.a. She has been there for 30 months. She previously worked for another Real Estate company in Tweed Heads for 4 years. The clients own 2 cars – a 2010 Holden Ute worth $12,000 and a 2011 Nissan Xtrail worth $20,000 with Nissan finance of $15,000 with repayments of $343 per month over 48 months. Assumptions: o For the purpose of duty/cost calculations, assume that the clients live in the same state as you (the broker). o Assume a Standard Variable Rate of 5.5% and a Qualifying rate of 2% above the Standard Variable Rate. o Assume the clients will be “full-doc”. LVR AND LMI TIP To work out the LVR you first have to decide how much money they can afford to borrow. 1. One method would be to determine if they could do a 95% loan so you would simply work out what 95% of the purchase price would be. The purchase price is $485,000 x 95% = $460,750 (loan amount) LVR 95%. The LMI is worked out on $460,750 and the clients pay the fees from their own funds or some lenders will allow them to capitalise it into their loan. 2. Another method would be to work out the total funds available to the clients e.g. $55,000 savings plus FHOG. After working out costs and taking these away from their available cash you would then know how much is left for a deposit. Once you know how much deposit they have you would then know the loan size and then work out the LVR. The LMI is worked out on the loan amount that you end up with. Keep in mind that first home buyers tend to want to do things with their first house, such as carpets, furniture, fittings, etc. and if they have some funds left over after settlement, they wouldn’t need to rely so heavily on credit cards, etc. Please note: The table for living allowances on the NSR sheet is based on the Henderson poverty index and may be used in these assignments as we are not using a real client. However in real life ASIC has ruled that a budget must be completed for each client to assess living expenses (we provide a sample budget form in Appendix B22 for interest). FNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING – ASSESSMENT TASKS Page 3 © Copyright 2015, The National Finance Institute V.051115 ASSIGNMENT 2 Continued 1. Recommend a product for the clients and explain your reasons for the recommendation ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. FNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING – ASSESSMENT TASKS Page 4 © Copyright 2015, The National Finance Institute V.051115 ASSIGNMENT 2 Continued 2. List the supporting documents that would be needed to support the loan application. Even though there may be a checklist in the lender’s application form, you must list the documents separately below. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. ................................................................................................................................. .................................................................................................................................