Mortgage Affordability Assessment

This assignment presents a detailed financial assessment for a mortgage application. It includes calculations of variable income (rental, non-taxable), total net income for all applicants, living costs, commitments (credit cards, other mortgages), and serviceability ratios (NDI). Both standard and actual interest rate serviceability calculations are presented, showcasing the maximum loan amount achievable under different scenarios.

Assignment
Certificate IV in Finance and Mortgage Broking
(CIVMB_AS_v3A3)
Student identification(student to complete)
Please complete the fields shaded grey.
Student number
Assignment result (assessor to complete)
Result — first submission (Details for each activity are shown in the table below)
Parts that must be resubmitted:
Result — resubmission (if applicable)
CIVMB_AS_v3A3

Result summary(assessor to complete)
First submission Resubmission (if required)
Section 1: Case study 1 —
Clinton and Jennifer Andrews
Task 1— Initial disclosures Not yet demonstrated Not yet demonstrated
Task 2 — Gathering and documenting client information Not yet demonstrated Not yet demonstrated
Task 3 — Assessing the clients’ situation Not yet demonstrated Not yet demonstrated
Task 4 — Using equity Not yet demonstrated Not yet demonstrated
Task 5 — Reasonable enquiries Not yet demonstrated Not yet demonstrated
Task 6 — Recommendations Not yet demonstrated Not yet demonstrated
Task 7 — Clinton and Jennifer’s professional network Not yet demonstrated Not yet demonstrated
Task 8 — Interest rates Not yet demonstrated Not yet demonstrated
Task 9— Settlement Not yet demonstrated Not yet demonstrated
Section 2: Case study 2 —
Tony and Lorraine Denton
Task 10 — Establishing level of financial knowledge Not yet demonstrated Not yet demonstrated
Task 11 — Responsible lending obligations Not yet demonstrated Not yet demonstrated
Task 12 — Self Employed special considerations Not yet demonstrated Not yet demonstrated
Task 13 — Advising on strategies Not yet demonstrated Not yet demonstrated
Task 14 — Impact of credit history Not yet demonstrated Not yet demonstrated
Task 15 — External dispute resolution Not yet demonstrated Not yet demonstrated
Task 16 — Effective access to files Not yet demonstrated Not yet demonstrated
Feedback (assessor to complete)
[insert assessor feedback]
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Before you begin
Read everything in this document before you start your assignment forCertificate IV in Finance and
Mortgage Broking (CIVMB_AS_v3A3).
About this document
This document includes the following parts:
• Part 1: Instructions for completing and submitting this assignment
• Section 1: Case study 1 — Clinton and JenniferAndrews
– Task 1 — Initial disclosures
– Task 2 — Gathering and documenting client information
– Task 3 — Assessing the clients’ situation
– Task 4 — Using equity
– Task 5 — Reasonable enquiries
– Task 6 — Recommendations
– Task 7 — Clinton and Jennifer’s professional network
– Task 8 — Interest rates
– Task 9 — Settlement
• Section 2: Case study 2 — Tony and Lorraine Denton
– Task 10 — Establishing level of financial knowledge
– Task 11 — Responsible lending obligations
– Task 12 — Self Employed special considerations
– Task 13 — Advising on strategies
– Task 14 — Impact of credit history
– Task 15 — External dispute resolution
– Task 16 — Effective access to files
• Appendix 1:Client information collection tool/Fact Finder.
• Appendix 2:Serviceability calculator.
How to use the study plan
We recommend that you use the study plan for this subject; it will help you manage your time
effectively and complete the assignment within your enrolment period. Your study plan is in the
KapLearn Certificate IV in Finance and Mortgage Broking (CIVMBv3) subject room.
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Part 1: Instructions for completing and submitting
this assignment
Completing the assignment
Saving your work
Download this document to your desktop, type your answers in the spaces provided and save your work
regularly.
• Use the template provided, as other formats will not be accepted for these assignments.
• Name your file as follows: Studentnumber_SubjectCode_Submissionnumber
(e.g. 12345678_CIVMBv3A3_Submission1).
• Include your student ID on the first page of the assignment.
Before you submit your work, please do a spell check and proofread your work to ensure that everything is
clear and unambiguous.
The assignment
This assignment is split into 16 Tasks, over 3 Sections. To finish this assignment, you must complete
all 16 tasks.
The information and data needed to complete Sections 1 and 2 is presented in case studies at the
beginning of those sections.
Word count
The word count shown with each question is indicative only. You will not be penalised for exceeding the
suggested word count. Please do not include additional information which is outside the scope of the
question.
Additional research
When completing the Client Information Collection Tool in Appendix 1, assumptions are permitted,
although they must not be in conflict with the information provided in the Case Study.
You may also be required to source additional information from other organisations in the finance industry
to find the right products or services to meet your client’s requirements or to calculate any service fees that
may be applicable.
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Submitting the assignment
You must submit the completed assignment in acompatibleMicrosoft Word document.
You need to save and submit this entire document.
Do not delete/remove any sections of the document template.
Do not save your completed assignment as a PDF.
The assignment must be completed before submitting it to Kaplan Professional Education.
Incomplete assignments will be returned to you unmarked.
The maximum file size is 5MB. Once you submit your assignment for marking you will be unable to make
any further changes to it.
You are able to submit your assignment earlier than the deadline if you are confident you have completed
all parts and have prepared a quality submission.
The assignment marking process
You have 26 weeks from the date of your enrolment in this subject to submit your completed assignment.
Should your assignment be deemed ‘not yet competent’ you will be given an additional four (4) weeks to
resubmit your assignment.
Your assessor will mark your assignment and return it to you in the Certificate IV in Finance and
Mortgage Broking (CIVMBv3)subject room in KapLearnunder the ‘Assessment’ tab.
Make a reasonable attempt
You must demonstrate that you have made a reasonable attempt to answer all of the questions in
your assignment. Failure to do so will mean that your assignment will not be accepted for marking;
therefore you will not receive the benefit of feedback on your submission.
If you do not meet these requirements, you will be notified. You will then have until your submission
deadline to submit your completed assignment.
How your assignment is graded
Assignment tasks are used to determine your ‘competence’ in demonstrating the required knowledge
and/or skills for each subject. As a result, you will be graded as either competent or not yet competent.
Your assessor will follow the below process when marking your assignment:
• Assessing your responses to each question (and sub-parts if applicable)then determining whether you
have demonstrated competence in each question.
• Determining if, on a holistic basis, your responses to the questions have demonstrated overall
competence.
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‘Not yet competent’ and resubmissions
Should sections of your assignment be marked as ‘not yet competent’ you will be given an additional
opportunity to amend your responses so that you can demonstrate your competency to the required level.
You must address the assessor’s feedback in your amended responses. You only need to amend those
sections where the assessor has determined you are ‘not yet competent’.
When making changes to your original submission, use a different text colour for your
resubmission.This way, your assessor will be in a better position to gauge the quality and nature of your
changes. Ensure you leave your first assessor’s comments in your assignment, so your second assessor can
see the instructions that were originally provided for you. Do not change any comments made by a
Kaplan assessor.
We are here to help
If you have any questions about this assignment you can post your query at the ‘Ask your Tutor’ forum in
your subject room.
Before you submit your assignment
If you have any queries about the assignment questions, please use the ‘Ask your Tutor’ forum in your
subject room. You can expect an answer from your Tutor within 24 hours of posting your question.
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guidance. Please ensure that your questions are about clarification of the intent of an assignment question.
After your assignment has been assessed
If you have questions about your assessor’s feedback, please
email:<[e-mail]>and include a copy of your assessed assignment. Never post your
assignment answers or assessor comments in the ‘Ask Your Tutor’ forum.
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Section 1: Case study 1 — Clinton and Jennifer Andrews
Background
Clinton and Jennifer Andrews live in Sydney with their two school-age children. Theybought their home
15 years ago. With the rise in its value over time they have generated substantial equity and have decided
to purchase an investment property. Recently they went to a real estate seminar where the presenter
explained that it is possible with correct leverage to purchase more than one investment
property.Consequently, they have decided to borrow 90% LVR on the investment property plus the LMI.
The deposit, stamp duties and other costs will come from their ‘offset account’ attached to their home
loan.They have requested not to use their current lender.
After conducting research over the last six months they have decided to purchase a new four-bedroom
home in outer Brisbane for $450,000 with a rental income of $450.00 per week.
The real estate agent has recommended they contact you to arrange their finance.Their accountant has
been providing some advice in relation to negative gearing benefits.
The following tables are a summary of the details obtained from the couple during the fact find interview.
The details provided include a description of the property they wish to purchase, their financial and
employment details and the loan features that they require.
The investment property
Address: 29PacificDrive, Ipswich, Queensland 4305
Purchase price: $450,000
Description: 4-bedroombrick veneer home
Rent: $450.00 per week
Agent details: Rain and Hall
Phone: [phone]
Mobile: [phone]
The borrower’s home address
Current address: 17 Moss Ave, East Hills, NSW 2213
Description: 5-bedroom full brick home
Value: $850,000
Mortgage: $190,000
Monthly repayment: $1,020.00 per month
Home phone: [phone]
Clients’ view of funding requirements
Purchase price: $450,000
Estimated costs: $20,000
Total required: $470,000
Loan: $405,000 + LMI
Own contribution: $65,000
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Assets
Big Bank offset savings account (joint) $180,000
Little Bank fixed term account (joint) $10,000
FordFalconG6, 8 years old (Clinton) $15,000
Holden Barina, 10 years old (Jennifer) $5,000
Superannuation — MPAInsurance (Clinton) $82,000
Superannuation — CLMInsurance (Jennifer) $54,000
Household effects (insured value) $80,000
Liabilities
Big Bank standard home loan (Joint)
(P&I repayment, variable, no fees)
5.0% $190,000(repayments $1,020 p.m.)
Big Bank Visa card (Clinton) 18.5% $800(limit $5,000) (clears monthly)
Little Bank Visa card (Jennifer) 12.9% $1,200(limit $3,000) (pays $500 per month)
All debts have been repaid according to arrangements. In relation to the credit card debt, the minimum
monthly commitment for servicing purposes should be calculated at 3% of the credit limit.
Income/employment
Clinton (date of birth 24/5/84)
Position: Project Manager (full time)
Employer: ACM Construction
10 Wide Rd, Ryde, NSW
Phone: [phone]
Income (gross): $85,000 p.a., gross monthly income of $7,083, net monthly income of $5,476
Employer contact: KellyWilliams, HR Manager
Length of service: 16 years
Driver’s licence: 8869KL
Email: [e-mail]
Jennifer (date of birth 8/10/87)
Position: Accounts Assistant (full time)
Employer: Pretty Clothing Pty Ltd
80 High Street, Penrith, NSW
Phone: [phone]
Income (gross): $74,000 p.a., gross monthly income of $6,166, net monthly income of $4,837
Employer contact: JoanCollins, HR Manager
Length of service: 7 years
Driver’s licence: 2897HT
Email: [e-mail]
Page 8 of 59

Interest income
Approximately $30 per month from the $10,000 term deposit,interestof 3.5% p.a.
Expenditure
Monthly expenditure for living expenses— $3,200.
Solicitor’s details
Jackson &Williams
28West Street, Yagoona, NSW
Phone: [phone]
Fax: [phone]
Note:The solicitor has quoted $1,500 to cover estimates costs.
Proposed loan details
• application fee— $600.00 (includes valuation)
• 30-year term
• principal and interest
• residentialinvestmentloan
• standard variable interest rate of 5.68% (comparison 5.82%), special offer rate of 4.78%
(5.16% comparison) (Note: Clinton& Jennifer will qualify for this special loan offer.)
• proposed settlement date — 6 weeks’ time
• ability to make additional payments from time to time without penalty
• fortnightly repayment option
• redraw facility
• internet banking.
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Assignment tasks (student to complete)
Task 1 — Initial disclosures
Following a personal introduction and before you begin gathering information about the clients’ existing
financial situation or needs, there are certain disclosures you are required to make as a finance
broker.These disclosures include the way you are remunerated and the range and limitation of your
services.
1. There are four (4) documents listed in ASIC Information sheet INFO 146 ‘Responsible lending disclosure
obligations – Overview for credit licensees and representatives’that must be provided to customers.
Refer to this Information sheet and the information contained in your topic notes to answer part (a) and
(b) below.
(a) Identify which of these four (4) documents you must provide your client before you commence
providing credit assistance and explain the main disclosures relevant tothat document. (40 words)
Student response to Task 1: Question 1(a)
The four kinds of documents that is essential to be provided to Clinton and Jennifer are:
1. Proposal Document
2. Quote
3. Credit Guide
4. Written assessment
(b) Identify which of these four documents you will provide the client should you intend to charge a
broker fee and explain what is required for it to be valid. (40 words)
Student response to Task 1: Question 1(b)
The various kinds of documents that is to be given to the customers for the brokerage fees are:
 The contact details and the name of the licensee
 The percentage of brokerage that would be levied from the customer and the calculation process
for the fees
 The details and the description of the services due to which the fees of brokerage would be
charged
 The optimum amount of money that can be charged as a brokerage fee
The consultant needs to address whether the fee of brokerage needs to be paid once or has to be paid
from time to time.
Assessor feedback: Resubmission required?
No
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Task 2 — Gathering and documenting client information
Complete the Client Information Collection Tool (located at the end of the assignment in
Appendix 1)using the information provided in Case Study 1.
Note:Any assumptions you make should be listed and should not be in conflict with the case study
information already provided.
Assessor feedback: Resubmission required?
No
Task 3 — Assessing the clients’ situation
1. Using theExcel or Online version of the Genworth Serviceability Calculator,calculate the Genworth NDI
for the borrowers. This will require you to enter all the data, including their future rental income.
<http://www.genworth.com.au/online-tools-forms-and-reports/lmi-tools/serviceability-calculator>.
Once you have completed the calculations, copy the data into the Serviceability Calculator
(located at the end of this assignment in Appendix 2).
Do not upload the Excel spreadsheet as a separate file.
Assessor feedback: Resubmission required?
No
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2. Based on the information provided in the case study and using the tools available to you
(e.g. loan calculators, including those available on lenders’ websites), provide an assessment
of the clients’ borrowing ability. Consider and comment on the following issues:
(a) the maximum loan using the Genworth calculator
(b) deposit requirements for the loan required
(c) combined net monthly income, less cost of living expense as specified by the borrower
(d) do they require Lenders Mortgage Insurance (LMI) and if so, how much will it cost?
Refer to Genworth LMI estimator for this figure
(e) any other issues that may impact, now or in the future, on the clients’ ability to meet their
obligations, including any possible risks.
Provide data to support your comments and conclusions.
(No word count requirement for questions (a) to (d)).
Question (e) (100 words)
Student response to Task 3: Question 2(a)
In accordance to the case study, it is seen that there are two different optimum level of money that Clinton
and Jennifer can take as loan. The lower amount or the first amount is $885,954, which is calculated in
accordance to the growth of the serviceability and the second one is the bigger amount and this value is
$1,160,333. This value has been generated due to the special interest that is received by Clinton and
Jennifer.
Student response to Task 3: Question 2(b)
The depository value is 10% of the value of the property and the amount comes to $45,000
Student response to Task 3: Question 2(c)
The combined net income of the couple is $140,368.71 and the monthly combined income comes to
$11697.39 and the living expense for the couple is $38,400 having a monthly value of $3200. Hence the
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combined monthly value less by the cost of living is $8497.39
Student response to Task 3: Question 2(d)
Clinton and Jennifer are in need of LMI and this is mainly due to the factor that the couple have been
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funding about 10% of the actual amount of loan. The amount that accounts for LMI is $8,627.
Student response to Task 3: Question 2(e)
After having an observation at the figures and the information that is given by the couple, it is said that they
will not have any effect in accordance to the ability to meet the compulsions of the couple as they have full
time and permanent long term jobs and the income from their jobs would be adequate to mitigate any sort
of risks and thereby would provide the client with significant amount cash inflow. With respect to the
current case study, the real NDI ratio of the client has been very vigorous and the ratio is 2.08: 1 in
accordance to ratio of Genworth that has a ratio value of 1.76:1. After the settlement of the money there
has been additional money of $8,627, which can be used in order to meet any costs and expenses that are
unprecedented. In the poorest circumstances, they have the capability and the choice of utilising the equity
that is available to them. The associated risk for the couple is the interest rate. In circumstances, when
there is a transformation in the situation and the couple is not qualified for any sort of special interest, then
their NDI would be affected, but according to the current scenario, the NDI for the couple is so good that
they would be able to pay off their financial commitments.
Assessor feedback: Resubmission required?
No
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Task 4 — Using equity
1. Although Clinton and Jenniferhave chosen to borrow 90% LVR on the investment property plus the
LMI costs, what other option could you present that would avoid the cost of LMI?(100 words)
Student response to Task 4: Question 1
In property market of Australia, the financial ombudsman, APRA, introduced transformations asking the
lenders and the banks to hold a certain amount of capital in case there is cash in the market.
As part of these changes, banks, constructive societies and other Authorised Deposit-taking Institutions
(ADIs) have been required to limit high LVR investor lending, specifically, 90% investment loans and higher.
One option is to get the LVR on new property purchase to a max 80% LVR. Clinton and Jennifer need to
prepare a 20% deposit to avoid paying Lender’s Mortgage Insurance.
On the other hand, the other option is to maintain a guarantor that can be possible in some casesand it is
not necessary in this scenario due to the strength of the other options that would be preferred by a lender.
By having a family member it would provide extra equity against their own property, the client may be
borrowing up to 100% of the value of the new property, but because the family is providing a guarantee for
20%, the risk to the bank remains at 80%.
Suitably, the guarantor is a father, mother, grandmother and grandfather. The family member must have
adequate free equity in their property and have an income source, even if it is in retirement funds.
The couple should also could consider selling something for more deposit. If they are planning to add value
or renovate to their new property, they could select to phase the renovations so that as the property value
increases and the LVR stays lower.
Assessor feedback: Resubmission required?
No
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2. Explain how it could be possible for Clinton and Jennifer to borrow 100% of the purchase price
($450,000) and obtain a tax benefit for the interest charged. (100 words)
Student response to Task 4: Question 2
In this scenario, the residential house is worth $850,000 and current loan balance is $190,000. By
refinancing to 80% (to avoid the cost of mortgage insurance in this instance), this provides with $490k of
equity/cash release which you can put towards the next property purchase ( $850,000 x 80% = $680k less
current home loan of $190k = $490k equity release.
As it is known that the purchase price of investment property is $450,000. The total funds required to
purchase the property is $476824.60 (based on the appendix 1), as stamp duty and other costs amount to
$26824.60.
Therefore, the total funds is around $477k, as stamp duty and other costs amount to $27k.
The borrowing strategy will be as follows: :
$360k loan secured against the new investment property (i.e. 80% gearing strategy - $450k x 80%)
$117k loan secured against the home (i.e. funds drawn-down from the $490k equity release after
refinancing your home)
In total, this provides with $477k of total investment borrowings (i.e. $360k + $117k) which is all tax
deductible against the income gained from the new investment property.
Assessor feedback: Resubmission required?
No
Page 16 of 59

Task 5 — Reasonable enquiries
In the course of gathering information about the couple, you are required under the National Consumer
Credit Protection Act 2009 to make all ‘reasonable’ enquiries to determine a borrower’s objectives,
requirements and financial situation.
Identify at least six (6) ‘reasonable’ enquiries that you would make with the clients in the case study and
explain why these enquiries are important in terms of NCCP compliance. (200 words)
Student response to Task 5
The various reasonable enquiries that can be taken by the couple Jenifer and Clinton are given below:
(a) The credit amount that is required, the time span for the payment of the credit and the purpose of
the fact that whether the required product has appropriate features and flexibilities that can be
created to determine the aims and objectives of the client.
(b) The adviser will consider the main and the primary source of income and this income is inclusive of
the salaries and the earnings from the interest by assessing the salary slips and the return on taxes
in order to determine that the client have the capability pay for the loan they have taken.
(c) Clinton and Jennifer have disclosed their employment status and their details along with any past
histories that is related to their residence. The client may even be asked to submit their bank
statement and assess their credit history. This has been to determine the possibility that the couple
would be able to satisfy their accountabilities for the payment of the loan within the timespan of
the loan.
(d) The valuation of the property will be required with respect to the property that the couple has the
intention of purchasing as this information will be exploited by the banks in order to assess the
extent of risk in processing and allowing the loan to the couple.
(e) The risk appreciation of Clinton and Jennifer is associated to the features of a particular credit
product that needs to be noticed. A confirmation can be made from Clinton and Jennifer regarding
the depository amount in order to calculate LVR as this will have an effect on the LMI of the couple.
(f) The reasonable predictable changes in the domestic and financial position of the couple that can
have an impact on the income, expense and repayment of Clinton and Jennifer.
Assessor feedback: Resubmission required?
No
Page 17 of 59

Task 6 — Recommendations
Note: Incorrect or uninformed advice can lead to significant financial detriment for your client and lead to
possible complaints against you for misleading or deceptive and misleading conduct.Therefore, all three (3)
questions of this task are ‘critical’ and you must demonstrate the required knowledge in each to be deemed
competent.
1. Based on the information presented in the case study, prepare a written proposal (letter or email)
outlining your proposal to clients. (750 words)
The style and language used in the proposal should be appropriate to the case study client’s level of
understanding. It should be clear and concise and written in language that is easy to understand,
while still remaining professional in its presentation.
You may base your response to this part of the assignment either on your knowledge of the products
currently offered by your own organisation or on the products offered by a lender you have researched.
In your proposal, you should include:
• a summary of your understanding of the clients’ needs (this could be an outline summary of their
proposed loan structure)
• a summary of their current financial position (use information from the ‘funds to complete’ template
completed in Appendix 1)
• the product options you have considered that meet their needs (research two lenders and detail
their loan features; you can use the internet or if working in industry, internal software)
• the option you recommend and the reasons for the recommendation — explain how the
recommended product meets the clients’ needs (refer to the case study and explain why you are
recommending this lender)
• disclosures applicable to the situation (a summary of likely applicable disclosures is adequate).
Include disclosures in the Credit Guide and any conflicts of interest.
Note: List any assumptions you have made about the clients and their situation in order to complete this
part of the assignment. There are no rules regarding the format. Please use the format that best suits
you. Should you require it, an example of a written proposal format has been provided in topic 3.3.Note
that the credit guide in your resources is not a ‘written proposal’.
Student response to Task 6: Question 1
The Credit Proposal for Clinton and Jennifer have been given as follows:
Credit proposal
Applicant's details
Applicant 1 Applicant 2
First name/s Clinton Jennifer
Surname Andrews Andrews
Date of birth 24.05.1984 08.10.1987
Number of dependant 2 2
Relationship with the applicant Parents Parents
Mobile/Phone [phone] 6051 2121
Email [e-mail] [e-mail]
Current address 17 Moss Ave, East
Hills, NSW 2213
17 Moss Ave, East
Hills, NSW 2213
Employment status Full time Full time
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Occupation Project manager Accounts Assistant
Basic salary $ 85,000 Per month $ 74,000 Per month
Max price of the property $450,000.00
How much to be borrowed $405,000.00
First home buyer No
Loan term Up to 30 years
Loan to value ratio (LVR) 90%
Premium payable LMI $8,627.00
Capitalised premium, if any $43.00
Dear Mr and Mrs Andrews,
This is letter has been drafted in order to give provide you with a summary of your requirements and the
current financial scenario that has been constructed in this paper. The explanation about your requirement
states that you have a need of borrowing money and the same can be gained by taking a loan that would
have a value of $405,000 and the premium of LMI has a value of $8,627 and has a capitalised return of $43.
Both of you are employed full time and is salaried employee and have two children who are dependent as
they are still in school. You have attained knowledge about the fact that with the income and the earnings
that are available it is ideal to undertake another investment. Therefore, currently you are in the need of
receiving financial advice for the new investment purchase with effective amount of leverage with the help
of the existing residential home loan and the repayment option of the same has been fortnightly and has
the access of internet banking that has withdrawal feature as well. The accountant will provide benefits of
negative gearing and therefore you are seeking consultation services from a financial service consultant in
order to undertake the investment without having an effect on the present lifestyle and standard of living.
The financial information explains that the price of the property is $470,000 and you have agreed to pay
$45,000 out of the total amount as down payment. Thus, the own fund that is required is $56,373 as $8627
is the premium payable for LMI and this is the extra money that is left which can be used in order to meet
any unexpected expenses as this is the additional value for LMI. .
The products that can be recommended for both of you are as follows:
IMB Budget Home Loan: This loan provides rate of interest that is competitive in nature and have easiness
and other features like the unrestricted payments that are withdrawal free, flexibility in the repayment
structure and discount over the loan time period. If the IMB Budget Home Loan is unable to fulfil the
requirements you desire, then there are other offers as well from IMB. They have variable alternatives to
the home loan that includes the introductory variable home loan, fixed home loans and priority home
loans. But in order to be eligible for the special rate of interest, the debtor has to be the owner of the
inhabitant and initiate a transaction account with IMB.
NAB Choice Package Fixed Rate Home Loan: This loan provides discount over a generalised fixed rate of
interest and certain other associated fees when it is added with the Tailored Fixed Rate Home Loan. It even
provides their customers with home loan with 350,000 NAB reward points for the application on the
banking package.
In accordance to the products explained I would like to recommend The IMB loan as the loan process is
very simple and the interest rate is competitive. Furthermore, it provides various alternatives for the home
loans like the introductory variable home loan, general variable home loan and essential home loan along
with discount-split loans. Thus, both of them can choose the product in according to their needs and
preferences. Furthermore, both of you demand the need of internet banking and the facility of re-
withdrawal and these services are provided by IMB Budget Home Loan.
The other product that can be recommended is the NAB Choice Package Fixed Rate Home Loan as it gives a
discount on the standardised fixed rate and several other fees when it is added with the Tailored Fixed Rate
Home Loan. You would be able to gain 350,000 reward points as it is lucid by observing the fact finder that
Page 19 of 59

they are willing to apply for the loan as fast as possible. Additionally, the minimum amount that is eligible
for the loan is $250,000 and the demand of the couple is $413,000.
By observing the requirements and the financial scenario provided, it is suggested that prior to undertaking
an application for the loan from any kind of resources that have been explained earlier; you need to have a
knowledge about their preferences and requirements effectively. You should even consider the repayment
schedule and the rate of interest. Along with this, you need to examine the other sources prior to finalising
anything that is related to the loan.
One of the key issues of interest is that if you apply for the loan from NAB Choice Package Fixed Rate Home
Loan, the lender of credit assistance would gain 1% commission of the overall amount of loan.
These are the recommendations that are ideal for both of you and I hope that these products can improve
the financial scenario and in case of any query feel free to contact me.
Regards
Andrew Tyler
Assessor feedback: Resubmission required?
No
2. (a) Describe the home buyer assistance scheme benefits and stamp duty concessions that are
available in your State or Territory, who would be eligible and what would be their benefit?
Note: Please identify what State or Territory you are from in your answer.(150 words).
Student response to Task 6: Question 2(a)
The first loan purchaser in New South Wales is eligible for the grants of the home purchaser and the
discounts that is given by the government.
The exclusion of the duty on the new and the existing houses have been valued to an amount accounting to
$650,000 and $800,000 and on the land that is vacant which has a value coming to $350,000 and $450,000.
It is observed that if the new loan amount is less than $600,000 or where the buyer undertakes a complete
and precise building contract, or the owner for which the amount is less than $750,000, then $10,000 will
be available for the grant to the first purchaser.
Assessor feedback: Resubmission required?
No
Page 20 of 59

2. (b) Provide a summary of all additional costs and fees, that the couple should be made aware of.
(100 words)
Note: When considering your response, you can refer to your completed Appendix 1
which lists fees expected and charges. Apart from known costs, you can estimate other costs
(i.e. pest inspection, rate etc.).
Student response to Task 6: Question 2(b)
The expenses and the costs that Clinton and Jennifer needs to be conscious about are given below:
 Stamp Duty: $ 15,740
 Pest Inspection: $300
 Taxes and rates: $ 1397
 Inspection of the Building: $300
 Stamp Duty for the mortgage: $175
 Establishment and Application fee: $138.80
Assessor feedback: Resubmission required?
No
Page 21 of 59

Task 7 — Clinton and Jennifer’s professional network
1. Name three (3) parties Clinton and Jennifer may wish you, as their broker, to keep informed of the
progress of their finance application who are not directly involved in the loan processing? (100 words)
Student response to Task 7: Question 1
The three key parties whom Clinton and Jennifer wants to keep me informed as I am their mortgage broker
for the proceeding of the loan are as follows:
1. Conveyancer/ Solicitor: The legal aspect related to the property purchase is monitored and
controlled by a skilled and eligible conveyancer who has an authentic license. In case they are
solicitors, then they can provide legal advices too. Their role and function involves constructing of
the documents in order to guarantee that the transfer of ownership of the property has been able
to meet the legal demands that are existent in the state or territory of Clinton and Jennifer.
2. Financial consultant and Accountant: A skilled and experienced person who aids the customers to
manage their finances by providing consultations and suggestions on the finance related to the
problems insurance, investments, retirement and taxes, planning of the estate, savings for the
future college expenses of their children and mortgages by depending on the need of the client. In
this case study, the couple is buying a property for investment and the accountant of the couple is
giving advises in relation to the benefits of negative bearing.
3. Mortgage Broker: The mortgage broker is the connection among the borrower and the provider,
which is banks in most of the cases who will undertake a meeting and a discussion about the loan
on behalf of the borrower. They do their work of researching on the several products in the market
and the legal tasks and even undertakes the process of settling the loan. In most of the cases, the
mortgage broker does not impose any charges from the borrower as they are accountable to
receive a commission from the lender.
Assessor feedback: Resubmission required?
No
Page 22 of 59

2. It is important that as a broker you understand the loan application process and how to effectively
manage the progress of a loan application. Outline to Clinton and Jennifer the process that will occur
from your first meeting through to post settlement. Please present nine (9) steps in the process.
(350 words)
Student response to Task 7: Question 2
After the initial introduction with Clinton and Jennifer, it is necessary to find a way with the help of which
the couple can communicate with the broker. Therefore, an appointment is given to them when a meeting
with the client can be undertaken. The confirmation of time initiates the process that would be undertaken
in order to grant the loan. The process involves:
1. Collecting data and information: The initial review of the application is an essential role for the
intention of loan processing that has been going ahead smoothly within the specified time period.
This is the period during which all the information and document of the couple are put together in
order to avoid any unexpected postponements and issues.
2. Loan Application: It is the duty of the couple to fill in the loan application form. The form asks the
client to provide information regarding their present statement of the bank, salary slips, the credit
history and the activity that is existent. These data act as a supportive documents. It is necessary to
communicate with Clinton and Jennifer regarding the sort of product and the interest rate that the
client is asking for.
3. Receive the Pre-Approval: After the assessment of the overall application of the loan, the lender
can give out a letter for pre-approval. It is a documented letter that acts as a confirmation for the
purchasing price of the property that the couple wants to purchase.
4. Process of Evaluation: During the time of assessment of the security, the lender may require the
valuation amount of the property that will be purchased. There is a possibility of constructing a
valuation on the property that will be purchased.
5. Receiving the approval: In this circumstances, the home loan is unconditionally approved and a
formal Letter of Offer is provided by the lender. After the grant of the offer, Clinton and Jennifer
can be committed legally to go ahead with the sale of the property.
6. Insurance: The time after the approval of the loan and prior to the loan closure, the information
can be documented and it is required to purchase an insurance binder for the new property. It is
ideal for the client to meet an insurance agent so that the insurance process is ready and thereby
not hampering the closure process.
7. Closing Disclosure: This includes the tenure of the loan, the projected payments that have to be
done monthly and the value the couple would have to pay as fees and the other costs in order to
gain the mortgage. It is essential to have a Closing Disclosure prior to three working days.
8. Settlement of loan: It is necessary to notify the couple about the settlement of the loan. In this
circumstances, the loan documentation is allotted to the conveyancer or the solicitor of the client
who would them mediate with the lender to undertake and confirm the settlement date. The
primary repayment of the loan will be needed generally within one month after the settlement
date.
9. Loan Servicing: The actions that are undertaken to conquer the loan from the time it is closed till
the time it has been paid off in scenarios like billing of Jennifer and Clinton, payment collection and
making transformations in the contract.
Assessor feedback: Resubmission required?
No
Page 23 of 59

3. Briefly explain why is it important for the broker to remain informed of developments in the lending
process despite not being actively involved at every stage? (100 words)
Student response to Task 7: Question 3
The entire process of home loan can be completed within the time span of 18 to 46 working days. The idea
of working with the mortgage broker curtails the process as a guideline which is to be given to the
borrower with the help of the presentation and the approval stages and thereby mitigates the stress
during the purchase of the investment property.
If there are specific time limitation or demands during the property purchase, the broker will be supportive
in conveying the longer and the shorter time settlements and the work of the lender in order to satisfy the
demands and requirement of the couple.
Assessor feedback: Resubmission required?
No
Page 24 of 59

Task 8— Interest rates
Clinton and Jennifer have reconsidered the loan proposed and have called in to discuss whether they
should consider fixing the interest rate on their proposed loan — they have conflicting opinions and are
seeking your guidance.
1. Firstly, they need to understandthe role of the RBA with respect to interest rates and why it is necessary
to have these controls. Conduct some research and answer the following;
(a) What is the role of the RBA with respect to the movements of interest rates?
(b) Why is it important to have these controls and how do they impact mortgage loans in Australia?
(c) Are banks obliged to follow the RBA cash rate? Explain the reason for your answer.
(200 words)
Student response to Task 8: Question 1(a)–(c)
RBA also known as the Reserve Bank of Australia is the Australian central bank and is obligated for keeping
and preserving the track for the certified rate of cash for the country. The Reserve Bank is even responsible
for transmitting the rate of cash in order to aid in the managing and the controlling of the currency ,
interest rate, inflation and the issuance of the bank notes. It provides distinct services related to banking as
demanded by the Government of Australia and the associated agencies and even to the several
International Banks and the corporate firms. Hence, all the banks are obliged to follow the rate of cash
regulated by the Reserve Bank of Australia.
The features that are needed to be understood is the interest rate which would change when the RBA
undertakes the decision to either “cool off” or to excite operations of the economy. If they are looking to
take a loan for purchasing the investment property, it is essential to consider cautiously what the economy
is doing so that distinct ideas can be known in accordance to the interest rates and where they have been
going. Explaining distinctively, rise in the economic activities leads to a rise in the interest rate. In the time
of buying the property at the time of boom and this would mean that there would be a rise in the price of
the property and there may be opportunities for low rate of interest and therefore the client may
undertake the challenge of paying extra for the asset that may decrease the value during the short term. In
case of long term, the value of real estate can be increased. Hence, it is suggested to the couple to gain a
fixed home loan as they have been offered already at a special interest rate and it would create peace in
mind in case there is a rise in the rate of interest by Reserve bank of Australia.
Assessor feedback: Resubmission required?
No
Page 25 of 59

2. Explain to Clinton and Jennifer some of the advantages and disadvantages of fixing a loan. (150 words)
Student response to Task 8: Question 2
Clinton and Jennifer would be assured for their repayment as it does not change within a distinct time
period. In case of the interest rate rises over the rate that is fixed, the client can be happy and satisfied by
gaining an understanding about the fact that they are paying off a value that is lower than the variable rate.
This recommends that the client would be able to organise and manage their finances effectively and
preserve their living standard with confidence.
The drawback of the loan fixing is that the client will not gain any benefit from the reducing interest rate in
situations when the Reserve bank of Australia reduces the cash rate. The client may miss out on the
prospect on a least possible repayment value that have a variable rate can bring forward.
The client would even have to pay fees for brokerage if they change their plan or pay back their loan within
the fixed time period. The loan fixation is not appropriate in circumstances if they change their mind and
have an idea of selling off the house or may require liberation to change the home loan if they find a better
offers for home loan.
Assessor feedback: Resubmission required?
No
3. Suggest how Clinton and Jennifercould potentially manage the risks associated withfixing a loan in the
event they need to break the fixed loan contract. (100 words)
Student response to Task 8: Question 3
The fixed home rate home loan is a legal contract that assures the repayment at a fixed interest value on
the loan for a specific time span. If Clinton and Jennifer are in the idea of closing the contract by changing
to some other loan provider, then the lender needs to financially compensated for any sorts of loss that
may take place.
The another alternative that is available to initiate a gamble on both the ways by gaining a part that is fixed
and a section that is variable in the loanable interest. A split loan would allow the client to control and
manage various risks in accordance to the interest rate that rises while even having the ability to initiate
extra repayments.
Assessor feedback: Resubmission required?
No
Page 26 of 59

Task 9 — Settlement
Outline in detail the steps a Lender should take post-approval in order to document, settle the loan and
administer the loan post-settlement. (300 words)
Student response to Task 9
The completion of the receiving, assessment and the approval of the form of the home loan, the lender will
have to provide the following documents. They are as follows:
Offer Letter: The lender lender needs to forward an offer letter to the borrower in a written document and
the copies of the same are forwarded to the related parties who are keen in the application and the
eventual of the loan. It contains the relevant data about the home loan with the terms and conditions with
respect to which the lender advises to grant the fund for the loan.
Mortgage Document: A disclosure needs to be forwarded to by the lender to the State or the Territory as a
section of making the mortgage registered. The name of the mortgage document has to be similar to the
name that is written in the transfer that would be filed by the solicitor with the land titles office or else the
document of the mortgage will be null and void.
Terms and Conditions Letter: This document is solely for the client for the acceptance of the loan
acceptance conditions and terms. If there is a presence of two or more debtors, every party needs to sign
the agreement paper. There are certain terms and conditions letter that contains a section that highlights
that borrowers can give out the details like the name of the solicitor, conveyancer, data about the fund
disbursements and the nominated account for the fees that would be levied.
Acknowledgement of the Witness: This needs to be completed by a free eyewitness in order to authorize
the borrower identity. The witness who signs and completes the process needs to be similar the person
who have witnessed the mortgage document signing of the credit provider.
Settlement form and disbursement: The completion of the documentation successfully, the lender has the
responsibility of handing over the loanable funds to the borrower. Distinctively, this document permits the
lender to take the fund out from their account in order to satisfy the full value that is left during the
settlement or in order to deposit the additional funds whenever possible.
Direct loan payment form: The loan borrower has to fill this form if they have the wish to generate a
recurring payment for the interlinked loan accounts.
Assessor feedback: Resubmission required?
No
Page 27 of 59

Section 2: Case study 2 — Tony and Lorraine Denton
Background
Tony and LorraineDentonhave a small cleaning business at which they have been working for the
lasteight years. As it is only the two of them in the business they operate as sole traders.
They have approached you to help restructure their finance, as they are finding the management of their
debts a struggle following the loss of one of their major cleaning contracts.
After further questioning, you realise that the situation is more serious than they originally explained;
they have missed payments on their mortgage, only pay the minimum on their credit card of 3% each
month and the work car they have on lease is expiring. They have a $15,000 residual or balloon payment
due and do not have the funds available.
When they lost the major contract and fell behind on the mortgage payments, they spoke to their lender
(Popular Credit Union) and accepted a ‘hardship application’. The missing payments have now been
corrected by extending the term of their loan. Thishappenednine(9) months ago and no report was made to
the credit agency.
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After reading the case study aboveandreviewing their funding position below, answerthe questions that
follow:
Assets
23 Watkins Road, Central Park $450,000
Popular Credit Union savings account (joint) $1,200
Little Saving Building Society cheque account (joint) $2,300
Business debtors (unpaid invoices for work) $6,200
Ford Utility, 3 years old (work vehicle) $25,000
Holden Commodore, 7 years old (family car) $15,000
Superannuation — AMB Insurance (Tony) $36,000
Superannuation — AMB Insurance (Lorraine) $24,000
Household effects (insured value) $60,000
Liabilities
Lender Situation Interest rate Monthly repayment Debt
Popular Credit Union
(home loan — joint)
Currently up to date though had 3-month
extension to contract after hardship application
9 months ago
5.7% $1,567.00 $270,000
Big Bank Visa card
(Tony)
Only able to repay 3% per month for last
6 months
18.95% (pays 3% per month)
$230.00
$7,600
(limit $8,000)
Little Bank Visa card
(Lorraine)
Only able to repay 3% per month for last
6 months
Is over limit by $800
21.5% (pays 3% per month)
$90.00
$3,800
(limit $3,000)
Hardly Normal
Furniture Store
Did not keep to interest free contract and paying
debt by instalments
28.50% $380.00 $3,600
Super Car Loan lease 3-year contract expiring next month and need
$15,000 to pay residual
n/a $850.00 $15,000
(residual)
Cleaning Contract
Supplies
Purchase approx. $1,000 per month in supplies,
they are behind 1 month
n/a $1,000.00 $1,800
Total $4,117.00 $301,800
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Assignmenttasks(student to complete)
Task 10 — Establishing level of financial knowledge
What communication skills might you use to confirm Tony and Lorraine’sunderstanding and knowledge
about credit and finance, as well as their current position, including establishingtheir requirements and
objectives with the refinance?
Provide examples of how you would use these skills to establish Tony and Lorraine’s level of financial
knowledge.
(150 words)
Student response to Task 10
The cases by taking help of which the skills can be used in order to have the financial knowledge about
Tony and Lorraine are provided as follows:
Verbal Communication: The verbal and the oral communication is undertaken by using the power of
speech. It explains that the speaker shall make use of appropriate focal tone to deliver the speech to the
listener. In order to have an effective discussion with the speaker along with the listener, both of them have
to be actively involved. The characteristics of the conversation with respect to verbal communication are
explained as follows:
 Open and sincere
 Face to face
 Two way method
 Informal
 Enjoyable and desirable
 Amendments with the circumstances within which it takes place
 Constructs the process of ending the method.
Written Communication
It is seen that these kind of communication take place with the help of written alphabets. It is most suitable
and the most general process of communication in any business and is increasing with the reliance on
electronic mails, e-communication techniques, social media and SMSs. A precise process of written
communication for a business has been explained as follows:
 Is explained with respect to the target audience
 Complete, precise, correct, clear and courteous
 Looks to answer the questions related to what, who, when and where
 It even includes the examples and the graphics if required.
 Limits the abusive, discriminatory and offensive terms
Assessor feedback: Resubmission required?
No
Page 30 of 59

Task 11 — Responsible lending obligations
The National Consumer Credit Protection Act 2009 imposes ‘responsible lending’ obligations on brokers
that must be satisfied by all people arranging loan applications. The primary objective under responsible
lending guidelines is that the credit facility offered to the borrower is ‘not unsuitable’ for the borrower,
meets their requirements and objectives and will not create substantial hardship.
1. How would you define ‘substantial hardship’ (detailed information on this subject is found at RG 209
issued by ASIC)? (150 words)
Student response to Task 11: Question 1
The word substantial hardship is referred to as the distinctive, technological, economic, legal, demonstrable
or any sort of hardship for an entity who loos for a variance or the waiver that weakens the capability of an
individual to sustain their operations under the restricted practise.
A loan will not be suitable if the client does not have the ability to satisfy the obligation of the contract or
incapable of meeting the substantial hardship. Furthermore, the consumers will be incapable of taking the
loan in cases:
(1). If the loan given after the assessment is not in line with the client with respect to whether the loan
repayments requires substantial hardship or not
(2). Where the loan is constructed from hiding the information that the loan repayment is impossible
without substantial hardship. In cases when the consumers are unable to pay out for the loan, the adviser
shall announce that the client is unable to satisfy the financial obligations without the help of substantial
hardship or if the loan is not able to meet the demanded criteria.
Assessor feedback: Resubmission required?
No
2. What are the benefits of debt consolidation for Tony and Lorraine? (100 words)
Student response to Task 11: Question 2
The process of debt consideration explains the process of taking a loan for the intention of repaying back
the existent credit card debts and balances.
The key benefit of the process of debt consolidation for the client has been that their properties and assets
are free of any risks. Furthermore, the rate of interest will be higher with respect to the securable loan
amount but at the same time can be low in accordance to the interest rate that is incurred on the credit
cards. Therefore, it will minimise the burden of the interest and their repayment. It is even related to
maintaining a minimum value of payments that is required to be paid for every month and there are lower
chances that the clients will miss out on the payments.
Assessor feedback: Resubmission required?
No
Page 31 of 59

3. Tony and Lorraine have decided to consolidate their debts into one home loan with two splits, one for
the existing home loan and a second split for the all other debts. They will not be including the cleaning
supplies bill as they pay this in full each month.
In the template below provide a new liabilities summary once Tony and Lorraine have completed the
debt consolidation including their new monthly repayments.
Note: They have chosen ‘New Bank Loan’ who are offering a 4.5% interest rate on a variable,
principal and interest loan over 30 years.
Student response to Task 11: Question 3
Lender Interest rate Monthly repayment Debt
Nrew bank loan (home loan –
joint)
4.5% $ 1378.00 $ 270,000
Other debt excl. Cleaning
supplies
4.5% $ 162.00 $30,000
Total 4.5% $ 1540 $ 300,000
Assessor feedback: Resubmission required?
No
Page 32 of 59

4. What savings will Tony and Lorraine obtain in monthly repayments?
(Include calculation how you determined the savings.)
Student response to Task 11: Question 4
The total debt amount that is demanded to be paid out by taking assistance of the new loan at the rate of
4.5% is seen to be $270,000. Therefore, the interest that would fall on this value would come to $1378 and
in situations when the loan is not taken, then they would have to pay a total interest of $4117. The savings
for the client is $2739.
Assessor feedback: Resubmission required?
No
Page 33 of 59

Task 12 — Self Employed special considerations
1. As Tony and Lorraine areself-employed,what documents will you need to obtain and assess their
income? (150 words)
Student response to Task 12: Question 1
There has been an observation that Tony and Lorraine are self-employed and the income is earned with the
cleaning business for which the client are the sole traders. It is viewed that most current returns of the
entity based tax calculations and the assessment done by the Australian Taxation Office (ATO), the Balance
Sheet and the Profit or Loss Statement are sufficient evidences for determining the total earnings of the
couple. Additionally, the balance sheet, statement of profit and loss, tax returns and tax assessment are
provided and these documents needs to be supported by a registered and certified accountant. Apart from
this, the income tax of the individual income is supported by the most current tax assessment given by ATO
and addresses the liabilities of the company like the tenure of the balance and the rate that needs to be
given for the assessment of their earnings.
Assessor feedback: Resubmission required?
No
2. If a Low Doc application is an option for the customer, name three (3) extra documents you will need to
obtain and assess. Explain how each these documents will establish their income? (150 words)
Student response to Task 12: Question 2
The extra documents demanded for the low doc applications for assisting the lending repayments or the
mortgage in a safe way. They are given as follows:
 Bank Statements: One of the most precise way for explaining the performance of the self-
employed ventures and projects is providing the data that is required by taking assistance of the
bank statement. This will reveal the value of money available in an account and the costs that has
been incurred in order to proceed with this profession.
 Letter from the accountant: The letter that is given from the part of the accountant is a proof in
the written format can be discovered to be beneficial for the implementation of the self-employed
home loans. The letter will explain the circumstances with regards to the finance of the business
and would even support the other documents that are provided by the lender.
 Business operation statement: The statement in accordance to the activities of the business is
altered in accordance to the characteristics of an organization and it explains the obligations of
the tax that the company is liable to. This adds in the service tax and taxation on the goods
through the PAYG instalments and withholding. In addition, the proof for the last 12 monthsis
even explained.
Assessor feedback: Resubmission required?
No
Page 34 of 59

3. Explain how applying for a ‘Low Doc Loan’ could lead the mortgage broker to be accused
of recommending an ‘unsuitable’ product. (250 words)
Student response to Task 12: Question 3
The loans that are not appropriate includes the contracts where it is projected that the borrower is
incapable of repaying and can even repay by taking assistance of substantial hardship or the treaties that
are unable to meet the requirement and the goal of the borrower. Thus, the mortgage broker needs to
make reasonable investigations in accordance to the financial circumstances of the borrower and their
demands and needs. Apart from this, they need to undertake reasonable efforts for satisfying the demands
of the borrower income statements.
The use of these information would assist the mortgage broker to determine whether the advices for the
loan products is suitable or not. In case it is seen that the credit items are unsuitable, then the broker can
move ahead with the advices. On the other hand, with regards to the low doc application , the financial
circumstances and the earnings of the borrower is not evaluated in a precise way by the broker and even
the lender. In addition, in the low-doc application, distinctively, the loan taker does not have knowledge
about the current return on taxes a and even have complex tax affairs, which alternatively makes it very
hard to personify their personal income. Thus, in accordance to the Low Doc Loan, the broker to the
mortgage can be levied for advising the product that is unsuitable.
Assessor feedback: Resubmission required?
No
Page 35 of 59

Task 13 — Advising on strategies
Following the presentation of your proposal, Tony and Lorraine say that they would like your advice
regarding loan and debt management strategy tools that are available to help them to pay down their
home loan as quickly as possible.
List strategies or methods that will help them achieve their aim.
Note to students:You may refer to the MoneySmart website for information on this subject and your
answer may also include available mobile phone apps used for debt management.
Provide the advantages and disadvantages of each. (300 words)
Student response to Task 13
The rules that are associated with the management of the debt has been given as follows:
 Register the debts
 Get prompt assistance if needed
 Development of a budget
 Prioritisation of the debts
 Managing the debt consolidation and refinances.
On the other hand, before taking any refinances of the loans there are various things that can be taken care
of and they have been explained as follows:
 Bearing in mind the other alternatives that are available before undertaking refinancing
 Assessing the fact that whether the loan in accordance to the debt consolidation is ideal for the
credit taker or not.
 Limit the gaps in refinances
 Receive free assistance in accordance to the debt
The several plans and strategies for managing the loan and the debt has been explained as follows:
Compare the liabilities and the assets
Advantages- It helps in the taking the stocks over the cash during the year with the idea of savings that can
be used during the time of retirement or for the knowledge for any coming huge expenses. It mainly aids in
assessing the available assets that can be received by the individual during the time of demand.
Disadvantages- The assets that are long term in nature are not financed by taking assistance of the short
term credits that is inclusive of the credit card. Furthermore, taking the short term and long term financing
will be found to be possible.
Overcome the savings in the form of liquid
Advantages- The mortgage refinances at a lower rate is a precise and effective idea. It even facilitates the
credit taker to pay back the compulsions that are short term in nature along with the savings that are
available.
Disadvantages: A person may require to undertake payments from the closure of the costs that are out-of-
pocket and it has been discovered to be an innovative and clever idea only in scenarios when the individual
initiates the reconstruction of the liquid savings as fast as possible.
Lower the costs related to the general debts
Advantages- The lowering of the cost of debt will support a person to minimise the general payments for
the interest and their instalments. Therefore, it is a clever decision to eliminate the debt even in the
scenarios if the rate associated to the loan are favourable.
Disadvantages-There has an observation that in common cases, the debts are serviced every month and
therefore comes under the common expenses that are inescapable. The huge range of the expenses
Page 36 of 59

highlights lower level of the flexibility in order to manage these expenses.
Assessor feedback: Resubmission required?
No
Page 37 of 59

Task 14 — Impact of credit history
Tony tells you that his former wife failed to properly meet their unsecured personal loan debt obligations
before they separated. Although he eventually repaid the debt he is afraid that this incident may count
against him when he applies for a loan. There are a few things Tony can do as he is concerned about his
credit rating. What information would you provide in the following two situations?
1. Provide Tony with the details of three (3) major credit reporting agencies and explain what information
may be recorded on his credit file. (Information can be sourced from the websites of credit reporting
agencies and <http://www.oaic.gov.au>.) (200 words)
Student response to Task 14: Question 1
In accordance to the present situation, there are three significant credit reporting companies that are
operating in the market of Australia. The names are: Veda Advantage, Dun and Bradstreet and Tasmanian
Collection Service.
It is seen that Veda Advantage is one of the biggest consumer credit reporting firm and this can be
understood with the help of the evidence that the company maintains worthiness of credit related
information of more than 10 million people in Australia and even in New Zealand. The agency has more
than 5000 customers from various segments of the industries that includes the financial,
telecommunication, banking, utilities, retail, trade credit, government, mortgage, lenders and the credit
unions.
The data that is available in the credit report has been given as follows:
 Name
 Date of birth
 Sex
 Address (Current and previous)
 Driving license number
 The names of any credit givers that are provided to the customer credit and whether these are
ASIC licensed.
 The date on which the credit for the consumer was made available to the customers and
eliminated.
 The degree of restriction on the consumer credit
 Distinct scenario and the conditions and the terms of the credit to the consumer that includes the
data that is limited regarding the process of repayment and the obligations of the interest.
 The history of the repayment information, which is the information about whether they have
taken a payment of the consumer credit in a timely manner or in cases they have forgotten any
payment.
 The value and the sort of consumer and even the commercial credit that is wanted in the
application
 Any decision of the court that have been made against the couple that is connected with the
credit that has been given or the ones that have been applied.
Assessor feedback: Resubmission required?
No
Page 38 of 59

2. Tony has decided he would like to obtain a copy of his credit report from either Veda or Dun &
Bradstreet. Explain what options are available for each provider, how long it takes to obtain a copy,
and the associated costs. (100 words)
Student response to Task 14: Question 2
Veda Advantage presently known as Equifax- The client can obtain a copy of the credit report in a small
time after the purchase of any of the loan products of the firm and can even obtain a free credit report,
which requires to be delivered in 10 days. The expense that is related with the loan products are:
 Equifax Basic: This includes the score that is updated from Equifax and the credit file copy and this
has an expense of $79.
 Equifax Plus- This product offers longer support in order to safeguard the information and identity
and the credit file and has an expense of $89.
 Equifax Advanced- It helps an individual to stay a step ahead of the theft recognition and helps in
the protection of the individuality and has a price of $104.
 Equifax Premium- This product gives a premium extent of the individuality and the protection of
credit which has a price of $119.
Dun and Bradstreet- A person can receive the report for free within 10 days and can even select for the fast
tracked report that is available online that is available in one working day and this report is available by
paying a fee for $10.
Therefore, there is an observation it has an expense of $179 in order to attain a copy of the credit report
from Dun and Bradstreet.
Assessor feedback: Resubmission required?
No
3. If there are errors on file, what is the procedure for Tony to follow in order to have these
errorsrectified?Hint: Refer to the Veda website. (150 words)
Student response to Task 14: Question 3
If an individual gains a copy of the credit report and the customer has the knowledge that there is an
existence of any mistakes and faults in the disclosure , it is essential to resolve it as the information that is
available in the credit disclosure has an effect on the credit rating and whether a person may or may not
receive the loan, credit account and credit card in instances of mobile phone and electricity contract.
There are simple processes that one can initiate and they are:
 Protest to the present credit reporting firm, lender and the creditors who are listed
 Criticise to the commissioner and the Ombudsman scheme.
Assessor feedback: Resubmission required?
No
Page 39 of 59

4. What are the Lender’s legal obligations if they decline an application due to the content of the
credit agency file? (100 words)
Student response to Task 14: Question 4
In case the loan application is rejected by observing the information available in the credit agency file, then
the credit provider is entitles to address the list of the reasons for their decision or even a notice that would
explain the essential factors. The person may even provide:
The credit score that is used for the process of the decisions that are unfavourable or the features that
affect the score
The name of the credit reporting organization, telephone number and the address that is provided in the
report
Address the method for rectifying the disagreements in the report or even add in additional data for the
development of the report in a more precise way.
Assessor feedback: Resubmission required?
No
5. What options are available to Tony and Lorraine in the event that the loan was rejected by the lender
you initially proposed due to a credit report (150 words)
Student response to Task 14: Question 5
The options and the alternatives that are available for Tony and Lorraine are discussed as follows:
 Accept a copy of the credit reports and find out the ways in order to enhance it.
 Lowering the debts by taking assistance of the debt repayment
 Compute a budget in order to initiate savings that can be addressed to the lender that the
borrower has the ability to make repayments in the future course of time.
 Take help from the financial consultants in accordance to managing of the debts which would assist
them to gather confidence during the next application of the loan.
 They may even find out a guarantor for the loan in order to strengthen the loan application.
 On the other hand, a person may even apply for a no interest loan or a loan that has low level of
interest. These loans however, are for the individuals who are in the lower income group.
Assessor feedback: Resubmission required?
No
Page 40 of 59

Task 15 — External dispute resolution
During the loan process, Tony is starting to become upset with the time it’s taking to get him an approval.
Although you’ve explained that this is because of delays with the lenders processing system due to staff
being away, you’re concerned the matter may escalate beyond your control.
1. As a broker it is important to understand the role of the Credit Ombudsman. Explain the function and
role of the Credit and Investment Ombudsman (CIO) in the EDR process. (200 words)
Student response to Task 15 Question 1
The Credit and Investment Ombudsman (CIO) is an Australian ombudsman or an alternative discrepancy
disclosure that aids in the discrepancy settlement in the financial lender and the consumers. The CIO is a
prominent External Disputes Resolution (EDR) policies in Australia in accordance to the number of
members. The CIO is even an allowedEDR policy in accordance to the regulatory code that has been
permitted by ASIC and the services offered to the customers as they are given for free. If a person is not
happy in accordance to the credit reporting body or the credit giving body decisions about their issues or
about the end result of the relationship and the request for admission and thereby can take their complaint
to the CIO as long as the credit reporting agency is a CIO member.
Assessor feedback: Resubmission required?
No
2. What could be the maximum financial compensation limitimposedby the CIO?
(You can obtain this information on the CIO website.) (10 words)
Student response to Task 15 Question 2
The maximum amount of penalty that is imposed by CIO is the maximum amount of $309,000 and
furthermore other remedies like an apology for the mistake can even be requested.
Assessor feedback: Resubmission required?
No
Page 41 of 59

Task 16 — Effective access to files
The loan application is finally approved. Loan offers have been produced by the lender, as have numerous
documents that the client needs to access and review. The lender has requested these documents be
forwarded as soon as they are available. Tony and Lorraineareaway at the moment and their email provider
has a size limit on the data that can be sent via email. Name a service provider that could assistin solving
this problem? (100 words)
Student response to Task 16
The documents and the information can be mailed or delivered by taking help of Cloud Storage. This
method aids the storages that are cloud reliant and presenting the files that can be uploaded and preserved
in the central storage system that is available in the cloud by utilising the servers that is connected with the
help of internet and can have an accessibility by making use of electronic devises like tablets, laptops and
smart phones from any region. The advantages of cloud storages are:
 The sharing of files becomes easy
 The files get synchronised in the electronic devices automatically of an individual from the cloud
storage
 Provides enhanced security in circumstances when the electronic devices are damaged or lost.
Assessor feedback: Resubmission required?
No
Page 42 of 59

Appendix 1: Client information collection
tool/Fact Finder
Appointment date:
Appointment time:
Applicant 1 Applicant 2
Surname ANDREWS ANDREWS
Other names CLINTON JENNIFER
Contact details Address 17 MOSS AVE, EAST HILLS, NSW,
2213
17 MOSS AVE, EAST HILLS, NSW,
2213
Phone (W)
Phone (H) 02 7061 2111
02 6051 2121
02 9940 3677
02 60512121
Mobile
Email [e-mail] [e-mail]
Employment PROJECT MANAGER ACCOUNTS ASSISTANT
How long? 16 YEARS 7 YEARS
Previous employer (if less than 2 years) NA NA
How long? NA NA
Employment status FULLTIME FULLTIME
PAYG $19284 $15948
Self-employed NA NA
Gross income (p.a.) $85000 + $180 (INTEREST
INCOME)
$74000 + $180 (INTEREST
INCOME)
Number of dependants 2 2
Motor vehicles 1 1
Loan purpose Investment Property
Purchase price/Valuation $450,000
Deposit $45,000
Loan amount $413,627
GenworthBorrowing capacity (Task 3) The higher value is $11,68,697 and the lower value is $892,341
Page 43 of 59

Assets and liabilities
Assets Liabilities
Details Market value Details Monthly payments Amount owing
Owner Occupied
Property at:17 MOSS
AVE, EAST HILLS,
NSW, 2213
$850,000 Mortgage with:
BIG BANK
$1020 $190,000
Investment Property at: NA Mortgage with: NA NA
Investment Property at: NA Mortgage with: NA NA
Cash at bank
(includes fixed deposits) $10,000 Car leasing NA NA
Other cash
(includes offset accounts) $180,000 Personal loans
1.
2.
NA NA
Deposit paid on property NA Overdraft NA NA
Motor vehicles:
1.
2.
$15,000
$5,000
Other loans:
1.
2.
NA NA
Personal effects NA Credit card limit:
$8000 (COMBINED)
$240 (COMBINED) $2,000
(COMBINED)
Business value Credit card limit:
$NA
NA NA
Shares and investments NA Other: NA NA
Superannuation $136,000
COMBINED
Other:
Other assets (give details) $80,000 Other:
Total assets $12,76,000 Total liabilities $1,260 $192,000
Surplus/deficiency: $ 8627
Page 44 of 59

CURRENT MONTHLY LIVING EXPENSES (Provide a breakdown of the total amount listed in the case study – use your discretion)
Food/housekeeping $1400
Insurance (e.g. motor vehicles, home contents/ building, medical, life/income protection) $150
Utilities (e.g. rates, gas, electricity, transport) $550
Transport (e.g. public transport, petrol, registration, repairs) $300
Education (e.g. school, college, university) $300
Dependents support(e.g. childcare, child maintenance) $200
Entertainment $300
Other (detail below:
MONTHLY LIVING EXPENSES $3200
Page 45 of 59

Needs analysis
1 Name of your current lender? BIG BANK
2 What type of mortgage loan do you have? STANDARD HOME LOAN, P&I REPAYMENT
3 Why did you choose this particular loan and lender? NO FEE AND OFFSET ACCOUNT
4 What is the interest rate? 5% VARIABLE
5 What are your payments? Amount $1020
6 Frequency MONTHLY
7 Do you know the fees and charges? NO FEE
8 What is your proposed purpose for the loan you are
applying for? INVESTMENT PROPERTY
9 Branch access available with current lender YES (ASSUMED)
10 Internet banking available with current lender YES (ASSUMED)
11 Phone banking available with current lender YES (ASSUMED)
12 Lenders not to be considered BIG BANK
13 Type of loan sought RESIDENTIAL INVESTMENT LOAN
14 Preferred Interest rate range 4.5%--5.25%
15 Payment frequency FORTNIGHTLY
16 Redraw YES
17 Offset YES
18 Salary crediting YES
19 Low fees and charges YES
Page 46 of 59

Notes
Page 47 of 59

NB:Providing substantive notes is a compulsory part of your assessment.
There are several projections and assumptions that can be undertaken like the unavailability of the
information and even the income from interest is divided with an equivalent percentage of 50% each for
Jennifer and Clinton and then it is added in their gross income.
Information Collection
The information is collected at the initial phase and should be complete. By observing the category of the
consumers and the service, the required data at this phase includes:
 Data regarding the sustainable relationship among the customer and the credit giver
 Business and personal data in accordance to the customers
 Services and products that have been purchased previously by the consumers
Information Recording
The collected data and the document shall become a section of the credit application. The information
and the documentation shall be attained according to the processes and the policies or according to the
regulatory demand. The needs of the documentation needs to be satisfied by:
 Making use of the loan calculator or any other mechanisms provided by the firm
 Notes and minutes of the meetings that have been completed with the consumers
 Documented evidence provided by the customers
 Completed Forms
Page 48 of 59

Anticipated fees and charges
Anticipated purchase price = $450,000
Deposit = $45,000
Loan amount = $405,000
LVR = 90%
Purchase costs = 20,000
Stamp duty on transfer (include transfer
fee)=$15,740
Solicitor/conveyancer (estimate) = $1500
Rates and land taxes (estimate)$1397
Pest inspection (estimate) = $300
Building Inspection (estimate) = $300
Borrowing costs = NIL
Application/establishment fee = $600
Valuation fee = NIL
Security admin fee = NIL
Mortgage stamp duty = $175
LMI = $8,627
Registration of mortgage = $175
Release of mortgage = $175
Search fees = $136.30
Other = NIL
Total of purchase costs = $470,000
Page 49 of 59

Funds to complete
PURCHASE AND LOAN COSTS: AVAILABLE FUNDS:
Purchase price: $450,000 Deposit paid $45,000
Lender application / valuation fees: $138.80 Cash savings: $7,113
Transfer stamp duty $15,740 Sale proceeds: NIL
Legal and registration fees: $138.80 Gift: NIL
FHOG: NIL
Other: NIL
LMI: 1. 2. No $8,627
TOTAL COSTS (A): $450,000 TOTAL OWN FUNDS (D): $45,000
LOAN AMOUNT REQUESTED (B): $413,627 OWN FUNDS REQUIRED (A-B) = C: $36,373
OWN FUNDS REQUIRED (A-B) = C $36,373 SURPLUS/SHORTFALL (D-C) $8,627
Page 50 of 59

Loan interview diary
Name(s) of client(s) present at interview
Clinton Andrews
Jennifer Andrews
Date of interview:
Location of interview
New South Wales, Sydney
Indicate all clients who were interviewed in person
Clinton Andrews
Jennifer Andrews
Do all of the clients appear to clearly understand English? Y
If not, have the services of an interpreter been recommended? N
Do all of the clients clearly benefit from taking out this loan? N
If not, what inquiries have been made to ascertain the level of benefit to each party of the loan?
The couple was clear with respect to the profit and the benefit they would attain by taking the services of
the consultant. Additionally, the consultant will give out the brochure which is inclusive of the conditions,
terms, conditions, services provided and the fees framework that will aid the clients to have an enhanced
understanding.
Page 51 of 59

Are any clients acting as though they are under duress or other disability? N
Are any clients acting as though they are unsure of anything about the loan? N
Are any of the clients acting as though they are unable to comprehend their obligations? N
Are there any guarantors? N
If yes is answered to any of the above questions, have the clients been advised to seek
the services of a lawyer or financial adviser? Y
Provide details of other pertinent information obtained during the loan interview which
may be of interest or of any unusual circumstances you may wish to record.
Page 52 of 59

Appendix 2: Serviceability calculator
Page 53 of 59

Loan details
Loan amount $405,000 Security value $450,000
Loan term (in months) 360 Actual rate 4.78%
Repayment type Principle and interest Interest only period (in years) 0
LVR 90%
Page 54 of 59

Applicant details
Applicant type Individual
No. of applicants (maximum 6) 2
Applicant 1
Applicant name Clinton Andrews Joint with applicant… 2
Marital status Couple No. of dependents 2
Residential suburb East Hills Residential postcode 2213
PAYG
Select income type
Base income $85,000 Base income frequency Annually
Self-emplyed/sole trader/partnership
Current year Previous year
Net profit (loss) before tax (NPBT) 0 0
Interest 0 0
Other add-backs 0 0
Depreciation 0 0
Variable income calculation
Income type Select income type
Frequency Select frequency Amount
Rental income calculation
Rental type Standard Amount $450
Frequency Weekly Ownership (%) 50%
Amount of investment loan $405,000 Amount of interest add-back $10,226.25
Total rental income $11,700
Non-taxable income calculation
Non-taxableincome $
Applicant 1:Totalnet income $73,786.86
Page 55 of 59

Applicant 2
Applicant name Jennifer Andrews Joint with applicant… 1
Marital status Couple No. of dependents 2
Residential suburb East Hills Residential postcode 2213
PAYG
Select income type
Base income $74,000 Base income frequency Annually
Self-emplyed/sole trader/partnership
Current year Previous year
Net profit (loss) before tax (NPBT) 0 0
Interest 0 0
Other add-backs 0 0
Depreciation 0 0
Variable income calculation
Income type Select income type
Frequency Select frequency Amount
Rental income calculation
Rental type Standard Amount $450
Frequency Weekly Ownership (%) 50%
Amount of investment loan $405,000 Amount of interest add-back $10,226.25
Total rental income $11,700
Non-taxable income calculation
Non-taxableincome $
Applicant 2:Totalnet income $66,581.86
Total net income for all applicants $140,368.71
Page 56 of 59

Commitments
Actual living costs $38,400 HEM living costs $48,971.52
Total credit card limits $8,000 Commitments (maximum 8) 1
Commitment type Amount Frequency Limit/scheduled balance(plus redraw)
Commtiment 1 Other mortgage $1,020 Monthly $190,000
Commtiment 2 Commitment type $ Select frequency
Commtiment 3 Commitment type $ Select frequency
Commtiment 4 Commitment type $ Select frequency
Commtiment 5 Commitment type $ Select frequency
Commtiment 6 Commitment type $ Select frequency
Commtiment 7 Commitment type $ Select frequency
Commtiment 8 Commitment type $ Select frequency
Total commitments $51,829.76
Page 57 of 59

Serviceability calculations
NDI ratio 1.76:1 Net disposable income $91,397
Assessment rate 7.30% Monthly repayment $2,776.56
Maximum loan amount $885,954
Page 58 of 59

Actual rate serviceability calculations
NDI ratio 2.08:1 Monthly repayment $2,120
Actual interest rate 4.78% Maximum loan amount $1,160,333
Page 59 of 59