FNSFMB402A Assessment 1
Business & Finance/Banking & Finance/Bankstown
Last updated: Feb 12
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Diploma of Finance and Mortgage
Provide finance and mortgage broking services
All elements of this unit are covered by this assessment
This unit is UNGRADED and will be recorded as competent/not yet competent on your official transcript
To be assessed as competent in this section of the unit you must achieve 80% overall competency
I accept by uploading this assessment that I am certifying that this is entirely my own work, except where I have given fully documented references to the work of others, and that the content of this assessment has not previously been submitted for assessment in any formal course of study.
Note: Copying information directly from the course notes is plagiarism unless it is properly referenced. In addition it is not a competent answer unless an explanation in your own words is also provided to demonstrate your understanding.
A scenario below is given with initial contact and interview script. Based on the information provided you are required to complete the following forms to help determine the clientsÃ¢â‚¬â„¢ financial position prior to completing a lender application form;
Ã¢â‚¬Â¢ Client Enquiry
Ã¢â‚¬Â¢ Serviceability worksheet
Ã¢â‚¬Â¢ Loan cost worksheet
You are Daniel Rogers, a Mortgage Broker for Thistown Mortgage Brokers, Thistown, NSW. Greg and Robyn Hogan have received a phone enquiry about a home loan for their new home on 24 September 2010.
Broker: Good morning, Thistown Mortgage Brokers, this is Daniel, how can I help you?
Greg: Hi Daniel, my name is Greg Hogan. My wife and I heard from our friends, Ben and Melissa Brown, that you can help us find the right loan to buy a home we are looking at. Can you help us with that?
Broker: I can certainly help with finding the right loan for you. I know how exciting it is to buy a home, itÃ¢â‚¬â„¢s a major decision. It may be best to come in for an interview to discuss your needs and find a suitable loan product. Can we arrange an appointment date and time now?
Greg: Yes that would be great. After hours would suit us as we work full time.
Broker: Certainly, we can make the interview any time after 6.00pm at your home or at my office. What day and time would suit you and Mrs Hogan?
Greg: This Wednesday, 26 September would be great at 6.00pm. We can come to your office.
Broker: Not a problem. We will make the appointment for this Wednesday at 6.00pm at my office. The office details are Thistown Mortgage Brokers, 150 Main St Thistown. I will need to take down some contact details now if thatÃ¢â‚¬â„¢s ok?
May I have your full names?
Greg: Greg John Hogan and Robyn Anne Hogan
Broker: Your work numbers?
Greg: My number is ********** and RobynÃ¢â‚¬â„¢s is **********
Broker: Your mobile numbers?
Greg: My number is ********** and RobynÃ¢â‚¬â„¢s is **********
Broker: Your home number?
Greg: Our number is **********
Broker: Do you have an email address?
Greg: It is ******@****.au
Broker: What is your current address?
Greg: We have been living with my parents for the last 6 months since we got married. The address is 29 Acacia Road, Thatown NSW.
Broker: And prior to that?
Greg: I was still at Mum and DadÃ¢â‚¬â„¢s and Robyn was with her parents at 78 Mountain St Thatown NSW. We have been saving really hard for the last 2 years since we were engaged. Over this period, we have saved $45,000 and we plan to use it for the fees and deposit for the purchase. And we want to keep some for furniture and things we will need.
Broker: That is great. You obviously have shown a real commitment to buying your own home. Have either of you owned a home before?
Greg: No this will be our first home. It has been made easier not having any children. However, we hope to start a family in a couple of years.
Broker: What is the purchase price of the property you are interested in?
Greg: The purchase price is $342,000 and we want to borrow $315,000. It is a really nice house in a great street.
Broker: Thank you for all that information Greg. We will run through all your figures at the appointment. I will email you to confirm the interview date, time and location of my office. In the email I will also list the documents required to support the loan application such as payment summaries, purchase contract, loan statements, bank statements, identification documents and a list of your assets and liabilities. If you can have the documents ready at the interview that would be very helpful. Do you have any further questions?
Greg: No, not for now.
Broker: Well thank you for your call Greg. As I mentioned earlier, expect an email by the end of the day. I look forward to meeting with you and Robyn on Wednesday the 26th September at 6.00pm at my office. Bye for now.
Greg: Thanks Daniel, see you then.
It is now Wednesday 26 September and below is a script of the interview conducted.
Greg and Robyn Hogan have arrived for their interview.
Broker: Good evening Mr and Mrs Hogan. IÃ¢â‚¬â„¢m Daniel Rogers, ItÃ¢â‚¬â„¢s a pleasure to meet you both. Please take a seat.
Broker: I know how exciting it is to buy your first home, itÃ¢â‚¬â„¢s a major milestone and you might also qualify for the first home ownerÃ¢â‚¬â„¢s grant.
Greg: Yes we are very excited. We hope you can help us with choosing the best loan. We have looked into it and we should be eligible for the grant of $7000 and we know we will not have to pay stamp duty but we would like you to work out the stamp duty figure anyway just so we know what we are saving.
Broker: I can certainly help you find a suitable loan and am happy to work out the stamp duty for you. Firstly, let me briefly tell you about my role as a broker. I have been a mortgage broker for 3 years now and previously worked with Eastbank for 5 years as a lending manager. I am accredited with over 40 lenders. This means I am authorised to sell the loan products on behalf of these lenders. This benefits my clients because I have access to a variety of lenders and loans products. My role is to find a product that best suits your needs from this panel of lenders that I am accredited with.
Greg: So do we have to pay you to find the best loan for us and what are the costs involved?
Broker: All of my lenders pay me commission which I disclose to all my clients upfront prior to submitting a loan application. I donÃ¢â‚¬â„¢t charge a fee to the client. In fact here is a pamphlet outlining the broking process and here is a list of the fees associated with the loan.
Broker: LetÃ¢â‚¬â„¢s complete a few details before we move into looking at the right product for you.
Robyn: OK, what would you like to know?
Broker: What are your dates of birth?
Robyn: I was born on 14/10/85 and Greg was born on 07/04/84
Broker: What are your occupations?
Greg: I am an ambulance officer for NSW Health. I have been there for 4 years.
Robyn: I am a primary school teacher at Thatown Public school. I have been there for 3 years. I have brought all the documents that were outlined in your email.
Broker: Thanks for that, it looks like everything is here. Greg I notice that you have been late with your credit card payment the last two months. Is there a reason for that?
Greg: I completely forgot it was due. I really need to get the balance down on that. I had some repairs done to my bike that cost a fair bit.
Broker: Well we will have to explain that to the lender. It may affect your application and we may need to wait for the next statement showing you paid it on time. Now Greg and Robyn are there any needs or goals that you may have that may affect your future financial position? For example short term goals such as renovating or starting a family? We ask this information to help find the product that best suits your needs.
Greg: Yes, we need to buy furniture so we donÃ¢â‚¬â„¢t want to use all our savings. We would like children, but not for at least 5 years.
Broker: Are you looking for a loan that is fixed or variable?
Greg: Well with interest rates so low at the moment we would like to fix the loan so we know what our payments are for the next 3 years. We want to go overseas before we have children so we would rather save and do that than pay it off the loan. Can we put extra on the loan and then get it back when we want to use it?
Broker: You can. That is called redraw. With a fixed loan usually extra repayments are limited per year, for example an extra $10000 per year. Would you want to pay more than this in extra payments?
Robyn: I donÃ¢â‚¬Ëœt think so as we will now have the mortgage payments to make.
Broker: That is true. If you were planning more than this I would suggest we look at variable but if you want the security of fixed and are happy with the limit then this sounds like what you want. Are there any lenders you do not wish to use?
Greg: None that we can think of right now
Broker: Looking at your figures if you borrow $315000 and the property is $342,000, you will have to pay some Mortgage Insurance. You can add this to your loan or you can pay it yourselves.
Greg: Yes we have done some research into this and we think we can pay it and keep the loan at $315000. Can you tell us the amount?
Broker: I sure can. It might also be wise to speak with one of our specialists about different insurance for yourselves as Mortgage Insurance is for the lender, not you.
Robyn: That would be great. WeÃ¢â‚¬â„¢d like to organise that
The clients have each provided the following documentation:
3 Recent Pay Slips
6 months Bank statements evidencing savings
12 months Loan Statements (all loans)
Recent Credit Card statements
FHOG Documents (see FHOG guidelines)
Below you will find a table of all the relevant information obtained from these documents provided by Greg and Robyn Hogan
Gross salary (p.a.) $67000 $66000
Monthly salary $5583 $5500
Yearly tax $14955 (inc Medicare levy) $14640 (inc Medicare levy)
Monthly Tax $1246 $1220
Other income Nil Nil
Motor Vehicles $33,000 $18,000
Motor Cycle $8000
Savings (Fedbank) $22500 $22500
Furniture $3000 $3000
AGC Car Loan $22000 ($400 per month repayment)
ANZ Credit cards limits $12000 $7000
Credit card amount owing $10000 $1000
Daniel has calculated all the costs associated with the loan. Below are all the details.
Application fee $800
Valuation fee 1st valuation free (subsequent securities $220 each)
Settlement fee $150
Mortgage Stamp Duty N/A as clients are buying in NSW
Transfer Stamp Duty refer to table below the Ã¢â‚¬ËœNSW transfer stamp dutyÃ¢â‚¬â„¢. This will not be charged, but you will need to advise the clients of the amount.
Lenders mortgage insurance ? refer to table pg 43 Unit 5 Product Knowledge (round to nearest dollar. Assume stamp duty on this premium is at a rate of 9%.
Solicitors Fees $2,200
Home Building Insurance $900
Registration of Mortgage $95
Discharge of Mortgage $95
Register Of Transfer of Title $190
Title Searches (x2) $28
Pest & Building Inspection $650
Interest rate details based on 30 year loan
Interest rate 6.45% Loaded Rate 7.95%
Monthly repayment $1981 Monthly repayment $ 2300
Per Annum Per Month
Single (no dependants) 11300 942
Adult couples(married or with partner) 16,500 1,375
Each additional adult 11,300 942
Each dependant child 3,900 325
Use the figures provided.
The loan required is $315000.
Use $7000 as the figure for the First Home Owners Grant.
Show workings for Transfer Stamp Duty but do not include in Lender Fees and Charges.
The Discharge of Mortgage is a government fee that covers the VendorÃ¢â‚¬â„¢s discharge of their mortgage and the Registration of Mortgage is a government fee that covers the registration of the mortgage for the Vendor.
A Discharge Fee is an internal fee from a bank that is charged when a Mortgage is closed, for example when a property is sold. It is not applicable in this case.
Progress Inspection Fees are for building loans and are not applicable in this case.
Credit Card commitment is calculated on the limit. (3% per month)
List assets per client unless they are jointly owned.
NSW Transfer Stamp Duty
Transfer value of the property Rate of duty
$0 - $14,000 $1.25 for every $100 or part of the dutiable value
$14,001 - $30,000 $175 plus $1.50 for every $100 or part, by which the dutiable value exceeds $14,000
$30,001 - $80,000 $415 plus $1.75 for every $100 or part, by which the dutiable value exceeds $30,000
$80,001 - $300,000 $1,290 plus $3.50 for every $100 or part, by which the dutiable value exceeds $80,000
$300,001 - $1m $8,990 plus $4.50 for every $100 or part, by which the dutiable value exceeds $300,000
over $1m $40,490 plus $5.50 for every $100 or part, by which the dutiable value exceeds $1,000,000
CLIENT ENQUIRY FORM
Enquiry Date: Broker Name: Appointment Date: Time:
Referral Source: ? website ? newspaper ? existing client ? walk-in ? other______________
Applicant 1 Applicant 2
Date of Birth: Age: Age:
No. of Dependants: No. Ages: No. Ages:
(if < 3 years):
Previous Credit Defaults
Are there any Lenders you would like to avoid/use? ? No ? Yes Give Details:
Needs relevant to application
? First Home Buyer ? Buying/Selling ? Building New Home ? Investment Property
? Refinance ? Line of Credit ? Other Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦.
Purchase Price/Refinance Amount Security Property Address:
Estimated Value Estimated Finance/Settlement Date:
Plus Fees/Duties/LMI payable
(after Duty Concessions & FHOG) FHOG Eligible: ? No ? Yes
Less Client Contribution Source of Funds:
Total Loan Required LMI Required: ? No ? Yes ? Capitalised Amount:
Interest and Product Features
Interest Rate ? Variable ? Fixed ? Split ? Other Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦.
Features ? Redraw ? Extra Repayments ? Offset ? Portability ? Other Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦
Applicant 1 Applicant 2
Gross Salary/Wages p.a
Other Regular Income
Assets and Liabilities
Asset/Liability Type Lender Value
Amount Owing Monthly
Commitments Applicant 1 (%) Applicant 2 (%)
? Copy of Contract (new purchase)
? Title Particulars (additional security)
? Rates Notice/Certificate of Title (new security)
? 6 months Bank statements evidencing savings
? Evidence of other source of funds
? 12 months Loan Statements (all loans)
? Recent Credit Card statements ? Pay Slips (at least 3 recent)
? PAYG Summaries
? 3 years financials/tax returns (self employed)
? Rental Income confirmation (new investment)
? ID verification (circle: passport/birth certificate, drivers licence, Medicare card, other_______)
? FHOG Documents (see FHOG guidelines)
Referral to Specialist Required ? No ? Yes Give details:
Loan Cost Worksheet - Estimate
Purpose of Loan: ? First Home Buyer ? Buying/Selling ? Building New Home
? Investment Property ? Refinance ? Line of Credit
? Other Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦Ã¢â‚¬Â¦.
Note: The following costs are esTimates only and actual amounts may vary. Any First Home Owner Grants and Duty Concessions are subject to Office of State Revenue approval.
LENDER FEES AND CHARGES
Application Fee Progress Inspection Fees N/A
Discharge Fee N/A TOTAL
GOVERNMENT DUTIES AND CHARGES
Transfer Stamp Duty1. Register of Transfer of Title
Mortgage Stamp Duty2. Title Search ( x 2)
Registration of Mortgage
Discharge of Mortgage TOTAL
Solicitors Fees Sundry
Home Building Insurance TOTAL
SUB TOTAL $
3. LENDERS MORTGAGE INSURANCE $
4. TOTAL LOAN COSTS $
Total Loan Costs (from 4)
Less Clients Contribution
Less FHOG and Duty Concessions 5.
(A+B) Ã¢â‚¬â€œ (C+D)
Loan Required - NB must be more than (A+B) Ã¢â‚¬â€œ (C+D) ( Note:You are to use this loan figure) $315000
1. Transfer Stamp Duty:
2.Mortgage Stamp Duty:
3.Lenders Mortgage Insurance: 5.FHOG & Duty Concessions:
Client Signature: Date:
Clients Name(s): Loan Amount:
Loan Number: Actual rate: Loaded rate:
Number of Adults: Loan Term
Number of Children: Security Value:
Monthly Loan Repayment- loaded:
Income Details: Salary and Wage earner
Gross Salary & Wages p.a Other Income (interest, dividends) Total Income p.a Monthly Income Tax payable on monthly income Net monthly income after tax Monthly Rent income 80% included Total Net monthly Income after tax
TOTAL NET MONTHLY INCOME AFTER TAX A =
Income details: self employed/businesses
Income from income statement Add backs Adjusted Net Income (Gross income) Tax payable on adjusted net income Net income after tax Rent income 80% included Total Net Income after tax Net monthly income after tax
TOTAL NET MONTHLY INCOME AFTER TAX B =
COMBINED NET MONTHLY INCOME AFTER TAX A + B = C
Credit card Limit $
Total Financial Commitments
Living Expenses Ã¢â‚¬â€œ see lender table
Debt to Service ratio Net Service Ratio Gearing ratio
Total financial Commitments Net income after tax Total financial commitments
Gross Income Living expenses Living expenses
Total financial commitments Net Income after tax
DSR = NSR = GR =
After undertaking your credit assessment for Greg and Robyn Hogan in Question 1, provide three comments for each of the 5 CÃ¢â‚¬â„¢s of Character, Capacity, Capital, Conditions and Collateral relevant to the assessment of their loan application. You may provide two strengths and one weakness OR one strength and two weaknesses. Every box in the table must be completed.
5CÃ¢â‚¬â„¢s Strengths Weaknesses
Greg and Robyn realise that Lenders Mortgage Insurance is for the lender. They would like to know about insurance for themselves in case they canÃ¢â‚¬â„¢t pay their mortgage for any reason at all. What can you tell them?
You are meeting with new clients Michelle and Peter Sherwood for their first interview.
Identify and explain in your own words 5 types of relevant background information that you should give the client at the first interview about your role as a mortgage broker.
Explain how you can build rapport with your client and why it is important.