Mortgage Affordability and Serviceability Calculation

This assignment provides a detailed walkthrough of a mortgage application assessment. It includes calculations for depreciation, variable income (rental), non-taxable income, and various commitment types. The document also outlines the serviceability calculations using NDI ratios, monthly repayments, and maximum loan amounts at different interest rates. It serves as an example to understand how lenders evaluate mortgage applications.

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]
Page 2 of 58

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.
Page 3 of 58

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.
Page 4 of 58

Submitting the assignment
You must submit the completed assignment in acompatible Microsoft 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.
Page 5 of 58

‘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.
Remember, your online tutor cannot preview or check your assignment answers, or provide specific answer
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.
Page 6 of 58

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
Page 7 of 58

Assets
Big Bank offset savings account (joint) $180,000
Little Bank fixed term account (joint) $10,000
FordFalcon G6, 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 58

Interest income
Approximately $30 per month from the $10,000 term deposit,interest of 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
• residentialinvestment loan
• 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.
Page 9 of 58

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 documents that needs to be provided to the client are as given below:
1) Credit Guide
2) Quote
3) Poposal Document
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 documents that are to be given to the client for levying the fees for brokerage are as follows:
 Name of the licensee and the contact details
 The brokerage percentage that is to be levied from the client and the basis of the calculation.
 The explanation and the details of the services for which the brokerage fees would be charged
 The maximum amount that can be levied as brokerage.
The advisor should also explain whether the brokerage fee is to be paid one time or in a periodical manner.
Assessor feedback: Resubmission required?
No
Page 10 of 58

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
Page 11 of 58

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 this scenario, it is observed that there are two different maximum amount level that Jennifer and Clinton
can borrow. The first and the lower one comprises of $892.341, which is in respect to the growth
serviceability calculation and the second one is the higher amount which is the actual amount that amounts
to $1,168.697. This has been due to the fact that the special interest that Jennider and Clinton are aligible
for.
Student response to Task 3: Question 2(b)
The deposit amount has been 10% of the property value which amounts to $45,000.
Student response to Task 3: Question 2(c)
The combined net monthly income that is less than the cost of living has been $7.113.
Page 12 of 58

Student response to Task 3: Question 2(d)
Jennifer and Clinton will be needing LMI. This has been due to the fact that they are only contributing
around 10% of the loan amount. The LMI amount accounts to $ 8.627.
Student response to Task 3: Question 2(e)
By looking at the figures and the facts that have been provided by Clinton and Jennifer, it can be said that
they will not have much impact with respect to the capability to meet their obligations as they both have
permanent and full time jobs for a long term that would be sufficient to cover any kind of risk and which
would give them a sustainable inflow of cash. In the present scenario their actual NDI ratio has been
observed to be very healthy that accounts to 2.02:1 in comparison to Genworth’s ratio of 1.73:1. Even after
the settlement there has bee fund surplus of $8,627 in order to cover any kind of unprecedented costs. In
the worst scenario, they have the ability and the option to make use of the equity as well. The only risk that
would be applicable is the rate of interest. If the scenario changes and they are no longer eligible for any
kind of special rate, then their NDI will have an impact but it has been observed that NDI has been so
healthy that they would be able to meet their financial obligations.
Assessor feedback: Resubmission required?
No
Page 13 of 58

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
The Lender’s Mortgage Insurance (LMI) is a one-off insurance mode of payment which is to defend the
lenders in case the borrower is unable to make repayments and when the loan-to-valuation ratio (LVR) is
more than 80%. It can even be capitalised into the loan repayments. An increased deposit would mean a
smaller amount of loan so it will reduce the LVR. So in this scenario, Clinton and Jennfier have to reduce
LVR in order to avoid the LMI. They can utilise their equity or saving of the offset accounting to deposit
higher than 20%. Since their LVR is lower than 80%, they can evade the LMI cost which accounts to $8627.
Assessor feedback: Resubmission required?
No
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
The couple Jennifer and Clinton have an offset account of $180,000 and even they have an equity of
$610,000 on the home where they reside. It has to be noted that the couple still have a mortgage amount
of $190,000 on this house.
Therefore, in general it is seen that they can utilise their savings in order to pay off their loan for their
residential house and use their equity to receive 100% of the loan for the investment property. All of this
cost of interest will be tax deductible as the loan was taken out in order to purchase the investment
property.
Assessor feedback: Resubmission required?
No
Page 14 of 58

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 reasonable enquiries that would be undertaken by Clinton and Jennifer are detailed as follows:
(a) The amount of credit that is needed, the time period for the repayment and the intention whether
the demanded product has suitable characteristcs and the flexibility that can be made to ascertain
the objectives of Clinton and Jennifer.
(b) We would consider the main income source of the income inclusive of their salaries and the income
from interest by examining their pay slips and the tax returns in order to confirm that the couple
have the ability to repay the loan.
(c) The couple Clinton and Jennifer have given out their employment status and details and their
history with respect to their residence. We would even ask for their bank statement and examine
their credit history. This is to ascertain the likelihood that they would meet their obligaions for
repayment over the tenure of the loan.
(d) The valuations will be needed for the property that the couple would want to purchase as this will
be utilised by the banks to evaluate their degree of risk in granting the loan to the client.
(e) The appreciation of the risk by the borrower is related to the characteristics of a specific credit
product that requires to be noticed. We would even confirm with Clinton and Jennifer the amount
of deposit in order to compute the LVR as it would have an impact on their LMI.
(f) The reasonable foreseeable transformations in their financial and domestic scenarios that may
have an impact on their repayments, expenditure and income.
Assessor feedback: Resubmission required?
No
Page 15 of 58

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 proposal of the client
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
Page 16 of 58

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 trem Up to 30 years
Loan to value ratio (LVR) 90%
Premium payable LMI $8,627.00
Capitalised premium, if any $43.00
In order to borrow the amount, the couple has to take a loan that amounts to $405,000 and the LMI
premium will account to $8267 with the capitalised premium of $43 if there are any.
Need of the client
The couple Clinton and Jennifer are both employees who are salaried and have two children who are school
going. Currently they have come to know that withtheir available income it is adequate for them to
purchase another investment. Hence, their primary requirement at the current time period has been to
gain financial consultation with respect to the purchase of new investment with precise leverage with the
assistance of theresidential investment loan, for which the option for repayment would be fortnightly and
will have internet banking with the facility of withdrawal. Convsersely, as their accountant had provided
them with some advice with respect to the negative gearing benefits. It is due to the fact that the couple
desires to take certain advices froma financial service provider in order to purchase the investment without
having an impact on their current standard of living.
Current financial position
By looking at the details provided by the client, it has been identified that they need a total amount of
$470,000 in order to buy the new house and out of the totak sum, $65,000 would be paid by the couple.
Conversely, the required amount of loan becomes $413,000.Hence, the demanded own funds will account
to $56,373 and the additional fund that will be left with the couple would be $8627 ($65,000-$56,373) in
order to cover the unprecedented costs.
Product Options
IMB budget home loan- It gives out competitive rate, simplicity and other characteristics like the
unconstrained repayments that are free of withdrawal, repayment flexibility and the discount in the life-of-
loan. If the budget hom,e loan does not satisfy the requirement criterion of the couple, IMB offers other
variable options of the home loan like the Introductory variable home loan, essential home loans and the
fixed loan options that are even available. Conversely, to be qualified for the special rate, the borrower
must be the proprietor of the occupier and open the transaction account with IMB.
NAB choice package fixed rate home loan- This loan offers discount on a standard fixed rate of the interest
and few other fees when it is combined with the Tailored Fixed rate Home Loan. It even offers the home
loan customers with 350,000 NAB reward points of they make application for the banking bundle and NAB
qualified home loan before 30th October 2017. Conversely, the home loan shall be drawn before 30th
December 2017 and it would not be the NAB refinance or any refinance form U Bank or Advantage. The
minimum value that is qualified for the home loan is $250,000.
Resaon for Recommendation
It is seen that the IMB budget home loan is suggested as it is easy and the rate of interest is competitive.
Additionally, it offers numerous options for the home loans like the introductory variable home loan,
essential home loan, standard variable home loan and discount-split home loans. Hence, the couple Clinton
and Jennifer can select the option according their preference and ned. Additionally, the client was in need
of the internet banking facility and the re-withdrawal facility and these facilities are found in the IMB
Page 17 of 58

Budget home loan.
On the other hand, the NAB choice package fixed rate home loan is suggested as it offers discount on the
standard fixed interest rate and few other fees when it is combined with the Tailored fixed rate home loan.
They would be able to receive 350,000 NAB reward points as it is very clear from the fact finder that they
are wanting to apply for the loan immediately that is before 30th October and it is estimated that the loan
will be drawn vefore 30thDecenber 2017. Additionally, the minimum qualified amount for the loan is
$250,000 and the requirement of the couple on the other hand has been $413,000.
Disclosures
By looking at the demands and the financial situation of Clinton and Jennifer, it is advisable that before
making application for the loanfrom any of the sources discussed above, the couple should understand
their needs and presence clearly. They would even take into consideration the schedule of repayment and
the rate of interest. Additionally, they shall look into the other sources before finalising anything that is
associated with the loan.
Conflict of Interest
One of the significant conflict of interest is that if the couple take the loan from NAB choice package fixed
rate of home loan, the provider of credit assistance would receive a commission at 1% of the total loan
amount. The other conflict of interest is that the accountant and the tax consultant of the couple is a close
relative to the solicitor. Hence, there are chances that the solicitor would not examine the client documents
in details.
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)
 In New South Wales, the first purchaser of the loan is qualified for the home purchaser grants and
the concessions from the government.
 The exemption of duty on the prevailing and the new homes are valued up to the value of $650,000
and on the vacant land accounting to $350,000.
 The duty exemption on the new homes and the prevailing one are valued among the amount of
$650,000 and $800,000 and on the vacant land that accounts between $350,000 and $450,000.
 If the amount of the new loan is lower than $600,000 or where the purchaser enters into the the
comprehensive buiding agreement, or is the proprietor for which the value is lower then $750,000,
then $10,000 would be available to the first purchaser as grant.
Assessor feedback: Resubmission required?
No
Page 18 of 58

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 other fees and the expenses that the couple Clinton and Jennifer should be aware of are as follows:
 Rate and taxes- $1397
 Stamp Duty- $15.740
 Pest Inspection- $300
 Building Inspaection- $300
 Application and Establishment fee- $138.80
 Mortgage Stamp Duty- $175
Assessor feedback: Resubmission required?
No
Page 19 of 58

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
Being a mortgage broker for the client Clinton and Jennifer, the following three parties who play a
significant role in the proceeding of the loan and they are as follows:
I) Solicitor/ Conveyancer: The legal component of the purchase of the property is taken care by a qualified
and licensed conveyancer. If they are ven a solicitor, then they can give out legal consultations as well.
Their function has been to construct the documents to guarantee that ownership transfer of the property
has satisfied the legal demands in Clinton and Jennifer’s territory or state.
II)Accountant and financial consultant: :A skilled personnel who assists the individuals handle their finances
by giving out advices and suggestions on finance associated issues likemortgages, insurance, investments,
college savings, taxes and retirement and estate planningrelying on the requests of the client. In this
scenario, Cliton and Jennifer is purchasing an investment property and their accountant has been providing
certain suggestions in association to negative gearing benefits.
III)Mortgage Broker: The mortgage broker is the link between the lender and the borrower (generally a
bank), who will discuss the loan on the borrower’s behalf. They undertake the work of the research on
numerous products in the market and legal jobs and also the method of settlement. Generally, the
motgagebroker does not levy any charge from broker as they receive commission from from the lender.
Assessor feedback: Resubmission required?
No
Page 20 of 58

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 meeting with the client, Clinton and Jennifer, being the broker to the client, it is essential to assure
what is the mode with the help of which they would want to communicate with the broker and provide the
suitable time to contact them. After the confirmation of the time, it is eesntial to make sure that the
following nine steps in the method of granting a loan for them.
1) Gathering information: The primary application review is a key function for the purpose of the
processing of the loan that has beenfunctioning smoothly and on the closage of the time. This is the time
when togather all precise documentation from the couple , in order to restrict unprecendented delays and
problems.
2) Application for the loan:It is essential for the client to fill up the form for the loan application. Here
it is requested to provide the current bank statements, payslips and illumination of credit activity of the
customer as an assisting documents. It is essential toconverse with the client about the kind of product and
rate of interest as it is looking for it.
3) Get pre-approval: After evaluating the entire loan application ,the lender can provide a pre-
approval letter.It is a written letter that makes confirmation that the purchase price of the property that
can be bought by the couple.
4) Assesement process: During the security evaluation the lender may be in need of a valuation on the
property that is being purchased. It is possible to arrange a valuation on their part for the property
purchase.
5) Receiving approval: In this scenario, the home loan is approved unconditionally, a formal Letter of
Offer that will be given by the lender. After the offer has been granted, couplecan legallybe committed to
go through with the sale.
6) Insurance: After the approval of the loan, and before the closure of the documents can be
documented and it is needed to order an insurance binder for the new property. It is suitable to contact
with the insurance representative before time so that they are ready and do not postpone the closure.
7) Closing Disclosure: It is inclusive of the loan tenujre, estimated monthly payments, and the amount
Clinton and Jennifer would pay in fees and other expenses to attain their mortgage (closing costs). It is a
regulation to have the Closing Disclosure at least before three working days.
8) Loan settlement: It is essential Inform the couple about the loan settlement. In this scenario the
documentation of the loan is issued to the solicitor/conveyancer of the couple, who will then liaise with the
lender to program a date of settlement. The first loan repayment will generally be needed in one month
after the date of settlement.
9) Loan servicing: The steps undertaken to prevail a loan from the time it is closed until it has been
paid off, for instance billing Clinton and Jennifer, collection of payments, and making changes in the
agreement.
Assessor feedback: Resubmission required?
No
Page 21 of 58

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 overall method of home loan can undertake within anytime between 19 and 46 working days.
Functioning with amorgage broker abridges the method as a guidance is given to the borrower through the
presentation and stages of approvaland eliminates the strain while purchasing the house.
If there existsdistimnct limitation of time or demands while purchasing the property, broker will assist in
negotiatingshorter and longer settlement times and function with the lender to meet the demands of the
couple.
Assessor feedback: Resubmission required?
No
Page 22 of 58

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)
The Reserve Bank of Australia (RBA) is the central bank of Australia and is accountable for maintaining the
track of the official rate of cash for the nation. The Reserve Bank is also accountable for transferring the
cash rate to assist in managingthe currency,economic inflation, rates of interest and bank note issuance. It
gives outspecific banking services as demanded by the Australian Government and their agencies and to
variousinternational central banks and corporate organizations.Therefore, all the banks are appreciative to
follow cash rate of RBA.
The factor that requires to be knownis thatthe rate of interest will transform when the RBA takes the
decision to either ‘cool off’ or stimulate economic operations. If they are in the idea of taking a loan for the
purchase of the property, it is required to prudently consider what the economy is undertaking so certain
ideas can be gain regarding where rates of interest are going. Specifically explaining, incrsased economic
operations leads to increased rate of interest. During the purchase of the property during the boom would
mean an increased purchase price which may decline and there may be chances of low interest rates, so
the couple may undertake the risk of paying more for the asset that may reduce their value in the short
term. During the long term, real estate almost always raises in their value. Therefore, it is recommended to
them to have a fixed home loan as they already have been offered a special rate of interest and it would
provide peace of mind in case there is an increase of rate of interest by RBA.
Assessor feedback: Resubmission required?
No
Page 23 of 58

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
The couple can be guaranteed with their repayments as it do not transform for a specific time period. In
case the rate of interest increases over their rate that is fixed, the couple would be satisfied and happy by
having knowledge about the fact that they are paying lower than the variable rate.This would suggest that
would be able to organise their finance before hand and maintain a certain standard of living with
confidence.
The disadantage of fixing a loan is that the couple will not profit from the declining rate of interest in case
the Reserve Bank lowers the rate of cash. The couple may even miss the opportunity on a minimum
amount of repayments that a variable rate can bring out.
The couple would have to paya brokerage fee if they transform or pay off their loan within the fixed rate
period.Also fixation of the loan isnot ideal in case if theyalter their mind and had an idea of selling the
house or would want independence to switch the home loans if they discover a more effective home loan
offer.
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
It is seen that fixed rate home loan is a legal agreement that guaranteed for the repayment at a fixed value
of interest on the loan for a distinct period of time. If the couple looks to close the agreement by switiching
to some other lender, then the prevailing lender must be remunerated for any kind of loss that they would
incur.
The other option that is available is to undertake a bet on both the ways by having a segment that is fixed
and a part variable in the interest loan. A split loan would permit the couple to manage certain risks with
respect to the rate of interest that increases while still being able tp undertake additional repayments.
Assessor feedback: Resubmission required?
No
Page 24 of 58

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
After evaluating, receiving, and approval of the application of the home loan, the lender will issue the
following documents:
Letter of Offer –The lender forwards the letter of offerto the consumer in writing format and the copies are
forwarded to all the parties who are interested in the eventual and application of the loan, like the
guarantors. It has the information about the home loan with the condition and the terms under which the
lender recommends to provide the funds.
Mortgage document - A document that will be given by the lender to the TerritoryorState as a segment for
registering a mortgage. The mortgage documents name that the lender constructs has to match the name
that is on the transfer that the solicitor will file with the land titles office or else the mortgage document
becomes null and void.
T&C letters: This paper is for the customerin order to acknowledge the loanacceptance terms and
conditions. If there exists more than two debtors, each of the party requires signing the agrement.
CertainT&C letters have a section where borrowers can provide details such as the solicitor’s name or the
conveyancer, the information about the disbursements of the fund and the nominated account for the fees
to be levied.
Witness acknowledgement - This requires to be concluded by an independent eyewitness to confirm
identity of the borrower. The witness who concludes and sign the form requires to be the same person who
have witnessed the signing of the mortgage document of the credit provider.
Disbursement and settlement form –after all the documentation has been executedsuccessfully, the lender
hands over the loan funds to the borrower. Specifically, this document is to permit the lender to pull outthe
funds from their account in order to meet the full valuethat is due at the settlement, or to deposit surplus
funds wherever possible.
Direct loan payment form – The borrower has to complete this form ifthey desire to construct a recurring
payment to their comnnected loan accounts.
Assessor feedback: Resubmission required?
No
Page 25 of 58

Section 2: Case study 2 — Tony and Lorraine Denton
Background
Tony and LorraineDenton have 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. This happenednine(9) months ago and no report was made
to the credit agency.
Page 26 of 58

After reading the case study above andreviewing 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
Page 27 of 58

Assignment tasks(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 instances with the help of which these skills canb be used to gain the financial knowledge of Tony and
Lorrained are given below:
Verbal communication
Oral and verbal communication is provided with the help of speech. It means that the speaker shall
utiliseideal tone and focus to deliver it to the listener. For a successful discussion with the speaker along
with the listener both requires to be engagedactively. The conversation features under verbal
communication are depicted as follows:
• Face to face
• Informal
• Sincere and open
• Two way process
• Desired and enjoyable
• Adjustedwith the scenario under which it takes place
• Establishes the ways to end
Written Communication
It is any kind of communication that are undertaken with the written alphabets. It is the most appropriate
and most common communication process in any business and is rising with the dependency on the SMSs,
e-mail , social media and other e-communication tools. An effective written communication for business is
given as follows:
• Is inscribed in accordance to the target audience
• Isclear, complete, concise, correctandcourteous
• Answers the questions like who, what, when, where and when
• Is inclusive of the graphics and examples, if needed
• Restricts offensive, abusive and discriminatory terminology
Assessor feedback: Resubmission required?
No
Page 28 of 58

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
Substantial hardship is explained as the, legal,unique, demonstrable, technological, economic or any other
type of hardship for the individual who asks for the varianceor waiver that impairs the ability for the person
to continue working under the delimited practice.
A loan will not be appropriate if the consumer is unable to meet financial compulsion of the agreement or
unable to meet without the substantial hardship. Moreover, the client will beunable to afford the loan if-
(1) if the credit provider after the evaluation do not agree with the consumer in accordance to whether the
repayment of loan needs substantial hardship or not (2) where loan is planned fromconcealing the
information that the repayment is not possible without substantial hardship. Where the client is not able to
pay for the loan the consultant shall contend that the customers cannot meet the financial obligations
without the substantial hardship or the loan does not satisfy the required 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
Debt consolidation refers to taking out new loan for the purpose of repayment of multiple credit card
balance and debts.
The significant benefit of the debt consolidation for Tonyand Lorraine has been that all of their property are
risk free. Additionally, the interest rate may be higher in comparision to the secured loan but
simultaneously can lower in comparison to the rate of interest levied on the credit cards. Hence, it will
lower their interest burden and its repayment. It also associates having minimum amount of payments
needed to be paid each month and there is lesser probability that the customers will miss payments.or will
miss payments.
Assessor feedback: Resubmission required?
No
Page 29 of 58

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 30 of 58

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 overall amount of debt that is required to be repaid with help of the new loan at 4.5% has been
accounted to $300,000. Hence, the interest that would be on that amount would account to $1540.
Conversely, if the loan is not undertaken, then they will have to pay an overall interest accounting to
$4117. Hence, the savings will be around $ 2557.
Assessor feedback: Resubmission required?
No
Page 31 of 58

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
It is seen that are Lorraine and Tony are self employed and that is earned through sole trading of cleaning
business, it is seen that the most recent return of the individual tax and the evaluation undertaken by
Australian Tax Office (ATO) and the Profit and Loss statement and explained Balance Sheet will be an
adequate evidence for ascertaining the income of the couple. Furthermore, where the profit and loss
statement, balance sheet, tax evaluation and tax returns are given and these documents requires to be
assisted by the certified or registered accountant. Leaving this behind, the returns for the personal income
tax for every individual assisted by most present tax evaluation by ATO and explains of the liabilities of the
firm like the term of balance and the rate that requires to be submitted for the evaluation of their income.
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 additional documents needed for the low doc applications for supporting the repayment of the lending
or mortgage in a secured manner are as follows –
• Bank statements: The most effective way for disclosing the performance of the self-employed
projects is giving the required data with the help of the bank statement. This will disclose the amount of
money within the account and the expenditure made for undertaking the profession.
• Letter from accountant: The proof from the accountant in the written format can be proved
advantagoues from the incorporation of self-employed home loans. The letter shall delineate the scenario
with with respect to the business finance and shall assist other documents that are disclosed to the lender.
• Statement of business operation: The statement of with respect to the business operations is
transformed with respect to the distincts of the firm and it reveals the tax obligation with respect to which
the organziaiton is subject to. This is inclusive of the service tax as well as goods tax through the PAYG
withholding and instalments. Additionally, the evidence with respect to the previous 12 months is even
given out.
Assessor feedback: Resubmission required?
No
Page 32 of 58

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 unsuitable are inclusive of the agreements where it is anticipated that the borrower will
be unable to repay or can repay only with the help of the substantial hardship or the agreements that does
not satisfy the aim or the requirement of the borrower. Hence, the mortgage broker shall make reasonable
enquiries with respect to the financial scenario of the borrower an their aims and needs. Leaving this apart,
they shall make reasonable tries for meeting the requirements of the statemnent of the borrower.
Utilisation these data would help thethe mortgage broker to ascertain whether the suggestions of loan
commodity is ideal or inappropriate. If it is discovered that the credit products are inappropriate, then the
broker can proceed with suggestions. Conversely, with respect to the the low-doc application, the income
and the financial scenario of the borrower are not assessed effectively by the mortgage broker or the
lender. Additionally, under the low-doc application, specifically, the borrower does not have the latest tax
return or have comples affairs of tax, which in turn makes it very complex to confirm his personal income.
Hence, under the Low Doc Loan the mortgage broker can be charged for suggesting the inappropriate
product.
Assessor feedback: Resubmission required?
No
Page 33 of 58

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 golden rules for debt management are explained below: –
• Tally up the debts
• Get immediate support, if required
• Construct the budget
• Prioritise the debts
• Looking at the refinancing or debt consolidation
Convserely, before refinancing of the loans the following things can be taken care of and they are given as
follows –
• Considering the other optionsthat are available before refinancing
• Examining whether the loan with respect to the debt consolidation is suitable for the borrower or
not
• Restrict the refinancing gaps
• Get the free support with respect to the debt
The numerous strategies for handling the loan or debt given below:–
• Match the assets and the liabilities
Advantages – It assists in moving from stocks towards cash over the years for the intention of saving for
retirement age or for the knowledge for any future big expenditure. It additionally assists in evaluating the
assets that are available to the individual at the time of the need.
Disadvantage – The long term assets will not be financed with the help of the short term credit like credit
card. Additionally, undertaking long-term financing and the short term will even be evident to be feasible.
• Prevail the liquid saving
Advantages – The refinancing the mortgage at reduced rateis an intelligent idea. It will also facilitate the
borrower to pay off the short-term compulsions with the liquid savings that is available.
Disadvantages – The individual may be needed to make the payment from the closure of out-of-pocket
expenses and it has proved to bea smart idea only when the individual starts reconstructing the liquid
savings immediately.
• Lower the expenditureassociated to regular debt
Advantages – The minimizing the debt expenditure will assist the individual to reduce the regular payment
of interst and their instalments. Hence, it is an intellogent decision to terminate the debt, even if the rate of
loans are favourable
Disadvantages – It is seen that generally, the debt are serviced each month and hence,falls under the
inescapable general expenditure. It is seen that bigger the size of such expenditure, the lower is the
flexibility to deal with such expenditures.
Page 34 of 58

Assessor feedback: Resubmission required?
No
Page 35 of 58

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
At the current scenario, there are three main credit reporting agencies that are functioning in the
Australian market. They are— Tasmanian Collection Service, Veda Advantage and Dun and Bradstreet. Veda
Advantage is one of the renowned consumer credit reporting agency that explains that it sustains credit
worthiness associated data on more than 11 million persons in Australia and New Zealand. It has more than
5,000 customers from a wide extent of organizations, that are inclusive of the telecommunications, finance,
retail, banking, utilities, trade credit, mortgage, government, credit unions and the lenders.
Informations included in the credit report are highlighted below -
• Full name
• Sex
• Date of birth
• Present address and previous two addresses
• Licence number of the driver
• The names of any credit providers that are given gto the consumer credit, and whether they are
licenced by ASIC
• The date on which the consumer credit was made available to the client and terminated
• The extent of limit on consumer credit
• Specific conditions and terms of that consumer credit that are inclusive of the restricted data
about therepayment and interest obligations
• Repayment history data, which is the data about whether they have undertaken a consumer credit
payment timely, or whether they have missed a payment.
• The amount and the kind of consumer or commercial credit that sought in the application
• Any court judgements made against the client that link to the credit provided to, or applied
Assessor feedback: Resubmission required?
No
Page 36 of 58

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 (now Equifax) – One can receive the copy of credit report within few minutes of the purc
hase of one of their loan packages or can receive the free credit report which is to be despatched within 10
days. The cost associated with the packages are as follows –
• Equifax Basic – It is inclusive of the updated score from Equifax and the copy of credit file and this
has a cost of $79
• Equifax Plus – It offers long-term assistance to protect the identity and the credit file and has a cost
of $ 89
• Equifax advanced – It enables one to stay one step ahead of the theft identity and assists in
safeguarding the identity and has a cost of $104.
• Equifax Premium – It provides preium level of identity and the credit protection has a costs of $
119.
Dun & Bradstreet – One can get the report for free within 10 days or can choose for fast-tracked online
report within one working day by paying a charge of $10.
It is seen that it costs $ 179 to receive the copy of credit report from Dun & 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 one receives a copy of credit report and the client is on the idea that there are any faults in the report, it
is significant to get it fixed as data that is contained in the credit report has an impact on the credit rating
and whether or not one might be granted for loan, credit card or credit account like the electricity
agreement or the mobile phone
There are easy steps one can undertake such as:
• Criticize to the current credit provider, the credit reporting institution or the listed creditor
• Complain to the Ombudsman scheme and the commissioner.
Assessor feedback: Resubmission required?
No
Page 37 of 58

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
If the application of the loan is rejected by looking on the content of the credit agency file, then the lender
is obligated to give out with the list of factors for its decision or the notice explaining thekey factors. One
shall even provide –
• The credit score that it exploited for undertaking the unfavorable decision or the factors that have
an impact on the score
• The telephone number, address, and name of credit reporting firm that has given out with the
report
• Explain the process for fixing the discrepancies of the report or bring in the extra information for
constructing the report more precise.
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 available options for Tony and Lorraine are explained below –
• Receive the copy of credit reports and discover the way to improve it
• Decreasing the debts with the help of the repayment of the debt.
• Construct a budget to undertake savings that can be disclosed to the credit provider that the
borrower is capable to make the repayments in in the coming time.
• Can take assistance from the financial counsellor with respect to handling the debts, which would
help them to gain confidence during the application for the next loan.
• They may even discover a guarantor for the loan in order to reinforce the application of the loan.
• Alternatively,one can apply for no interest loan or low interest loan. But, these loans are for the
people who fall in the lower income.
Assessor feedback: Resubmission required?
No
Page 38 of 58

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 Invetsment Ombudsman (CIO) is the Australian ombudsman or alternative dispute
declaration that helps in the dispute settlement within the financial credit provider and the customers. The
CIO is one of the renowned External Dispute Resolution (EDR) schemes within Australia according to the
number of members. The CIO is a permitted EDR scheme under the regulatory code granted by ASIC and
the services given to the consumers as they are free of cost. If any ondividual is not satisfied with respect to
the decision of the credit reporting body or the credit provider about their grievances or about the
outcome of a relationship or admission request, the can increase their complaint to the CIO with respect to
this as long as the credit reporting body or the credit provider is the member of the CIO.
Assessor feedback: Resubmission required?
No
2. What could be the maximum financial compensation limitimposed by the CIO?
(You can obtain this information on the CIO website.) (10 words)
Student response to Task 15 Question 2
The utmost penalty that can be levied by the CIO is up to the highest amount of $ 309,000 and additionally
other cures like the apology might be requested.
Assessor feedback: Resubmission required?
No
Page 39 of 58

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 Lorraineare away 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 can be forwarded with the help of the Cloud storage. This process assists the cloud
dependent storage and hosting the files can be uploaded to the central storage system within the cloud
with the use of the server that is linked by internet and can be gained accessed to with the help of
numerous smartphones, tablets from any locations. The benefits of cloud storages are –
• It makes the files sharing easy
• Automatically Synchronise the files in the laptops, computer and the smartphones of the person
with respect to the cloud storage
• Offer more security in case the computer or the phone is destroyed or lost.
Assessor feedback: Resubmission required?
No
Page 40 of 58

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
Page 41 of 58

Loan purpose INVESTMENT PROPERTY
Purchase price/Valuation $450,000
Deposit $45,000
Loan amount $413,627
GenworthBorrowing capacity (Task 3) Maximum amount is $11,68,697 and minimum amount will
be $892,341
Page 42 of 58

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 43 of 58

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 44 of 58

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 45 of 58

Notes
Page 46 of 58

NB:Providing substantive notes is a compulsory part of your assessment.
Certain estimations were undertaken where data was not given and the interest income has been the
divided with a percentage of 50% each for Clinton and Jennifer and added to their gorss income.
Collection of Information –
The data is gathered at the primary stage and shall be complete. By looking at the service and customer
category, the demanded information at this stage are inclusive of –
• Information of the sustaining relationship with credit provider and the customer
• Personal or business information regarding the customer
• products and services that have been purchased earlier by the customer.
Recording of the information –
The gathered information and document shall form part of credit application. The documentation and
information shall be collected as per the procedures and policies of the or as per the regulatory
requirement. The requirements of documentation shall be satisfied by –
• Use of the loan calculator or any other tools delivered by the company
• Minutes and notes of the meetings with customers
• Documentary evidence offered by the clients
• Completed forms
Page 47 of 58

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 48 of 58

Funds to complete
PURCHASE AND LOAN COSTS: AVAILABLE FUNDS:
Purchase price: $450,000 Deposit paid $65,000
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 49 of 58

Loan interview diary
Name(s) of client(s) present at interview
Clinton Andrews
Jennifer Andrews
Date of interview:
Location of interview
Sydney, NSW
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? Y/N
If not, what inquiries have been made to ascertain the level of benefit to each party of the loan?
Clients were clear regarding the benefiot they can gain from the taking the services of the advisor.
Further, the advisor will provide the prospectus that will include the terms, conditions, serviced covered
and fee structure that will enable the clients to get better understanding.
Page 50 of 58

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 51 of 58

Appendix 2: Serviceability calculator
Page 52 of 58

Loan details
Loan amount $413,627 Security value $450,000
Loan term (in months) 360 Actual rate 4.78%
Repayment type Principle and interest Interest only period (in years) 10
LVR 90%
Page 53 of 58

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
Gross
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 $413,627 Amount of interest add-back $Nil
Total rental income $225
Non-taxable income calculation
Non-taxableincome $
Applicant 1:Total net income $5476
Page 54 of 58

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 $413,627 Amount of interest add-back Nil
Total rental income $225
Non-taxable income calculation
Non-taxableincome $
Applicant 2:Total net income $74,000
Total net income for all applicants $1,59,000
Page 55 of 58

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 $53,082.12
Page 56 of 58

Serviceability calculations
NDI ratio 1.73:1 Net disposable income $94,803
Assessment rate 7.30% Monthly repayment $2,776.56
Maximum loan amount $892,341
Page 57 of 58

Actual rate serviceability calculations
NDI ratio 2.02:1 Monthly repayment $2,120
Actual interest rate 4.78% Maximum loan amount $1,168,697
Page 58 of 58