Rental Income and Loan Serviceability Calculation

This assignment focuses on calculating rental income and assessing loan serviceability for a mortgage application. It presents the applicant's rental income from a standard property, detailing the frequency, ownership percentage, and total income generated. The document further explores non-taxable income, living costs (both actual and HEM), commitment details including other mortgages and personal loans, and various serviceability ratios (NDI ratio). Calculations are presented for both assessment rate and actual interest rate scenarios, ultimately determining the maximum loan amount permissible.

Assignment
Certificate IV in Finance and Mortgage Broking
(CIVMB_AS_v3A3)
Student identification (student to complete)
Please complete the fields shaded grey.
Student number 10437021
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 57

Before you begin
Read everything in this document before you start your assignment for Certificate 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 Jennifer Andrews
– 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 57

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 a compatible 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 KapLearn under 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
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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.
Page 6 of 57

Section 1: Case study 1 — Clinton and Jennifer Andrews
Background
Clinton and Jennifer Andrews live in Sydney with their two school-age children. They bought 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: 29 Pacific Drive, Ipswich, Queensland 4305
Purchase price: $450,000
Description: 4-bedroom brick 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 57

Assets
Big Bank offset savings account (joint) $180,000
Little Bank fixed term account (joint) $10,000
Ford Falcon G6, 8 years old (Clinton) $15,000
Holden Barina, 10 years old (Jennifer) $5,000
Superannuation — MPA Insurance (Clinton) $82,000
Superannuation — CLM Insurance (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: Kelly Williams, 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: Joan Collins, HR Manager
Length of service: 7 years
Driver’s licence: 2897HT
Email: [e-mail]
Page 8 of 57

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
28 West 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
• residential investment 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 57

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 to that document.
(40 words)
Student response to Task 1: Question 1(a)
Below are the four documents that I must provide to Clinton and Jennifer Andrews:
1. Credit Guide: It will provide information about me;
2. Quote: It will inform Clinton and Jennifer Andrews the estimated cost to them of using my services, if I
charge them as fee;
3. Proposal Document: It sets out the costs to them of using my services, including any commissions I may
receive;
4. Written Assessment: This is a preliminary or final written assessment that a credit contract or consumer
lease is ‘not unsuitable’ for them;
(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)
Out of these four documents, “Quote” will provide detailed information that I will charge a broker fee. In
order to make it valid the consumer must have accepted the quote by signing and dating the quote and I
must give the consumer a copy of the accepted quote.
Assessor feedback: Resubmission required?
No
Page 10 of 57

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 the Excel 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 57

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)
The above figure is indicating that Clinton and Jennifer can borrow two different amount of loan. As per
Genworth calculator, the maximum loan amount will be $698,158.00, whereas as per actual rate
serviceability calculation, the maximum loan they can avial is $914,377.00. This is because of special
interest Clinton and Jennifer eligible for.
Student response to Task 3: Question 2(b)
Here, the deposit amount is $45,000, which is 10% of the property value.
Student response to Task 3: Question 2(c)
Total net income for all applicants: $140,519.02
Total cost of living expense as specified by the borrower: $68,139.49
Therefore, combined net monthly income, less cost of living expense as specified by the borrower =
$140,519.02-$68,139.49 = $72379.53
Page 12 of 57

Student response to Task 3: Question 2(d)
As Clinton and Jennifer has small deposits ($45,000), they require Lenders Mortgage Insurance (LMI). Refer
to the Genworth LMI estimator as mentioned below, it will be $8,627.00
Student response to Task 3: Question 2(e)
Considering the information provided by Clinton and Jennifer, they won't be influenced much regarding the
capacity to meet their commitment as they have lasting fulltime occupations for enough time to cover any
risks and which gives them nonstop money inflow. In current circumstance their actual NDI ratio is looking
exceptionally sound which is 1.52:1 when contrasted with Genworth's 1.34:1. Indeed, even after the
settlement there is overflow of store of $8,627 to take care of any unanticipated expenses. In most
pessimistic scenario they have choice to utilize Equity also. The main hazard would be the financing cost. In
the event that conditions changes and they are not any more qualified for extraordinary rate, their NDI will
get influenced yet it looks so sound that they will in any case have the capacity to meet their monetary
commitment.
Assessor feedback: Resubmission required?
No
Page 13 of 57

Task 4 — Using equity
1. Although Clinton and Jennifer have 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
Lenders Mortgage Insurance (LMI) is a coincidental protection installment which secures your home loan
moneylender against your default. LMI is ordinarily paid when the Loan to Value Ratio (LVR) is at least 80%.
This happens when over 80% of the estimation of the property is acquired from the bank by a purchaser. To
avoid LMI there are two options available:
1. Save 20% or more as a deposit; or
2. Have someone go guarantor for your loan.
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
It would be possible for Clinton and Jennifer to borrow 100% of the purchase price ($450,000) and obtain a
tax benefit for the interest charged. They are already own property and thus they can use the equity in
their existing property as a deposit for the new investment purchase. Both Clinton and Jennifer can borrow
100% or 105% of the property value depending on the lender they apply with. Here, they need $470,000 to
purchase this property. They can get loan of $360,000 secured against their new investment property [i.e.
80% gearing strategy…$450,000*80%] and $110,000 loan secured against your home (i.e. funds drawn-
down by refinancing their home to 80% LVR, $850,000 * 80% = $680k equity release after refinancing your
home). In total this provides them with $470k of total investment borrowings (i.e. $360k + $110k) which is
all tax deductible against the income derived from their new investment property.
Assessor feedback: Resubmission required?
No
Page 14 of 57

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
Below are the reasonable enquries:
1. The reasonable inquires, such as the amount of credit required, time framefor repayment, the purpose
and whether the desired product has appropriate features and flexibility can be made to determine
Andrew andStephanie’s objectives.
2. Andrew and Stephanie have provided their employment details and historyof residence. I will ask
Andrew’s loan bank statement of his personal loan. This is to determine the likelihood that they will meet
repayment obligations over the term of the loan.
3.I will consider clients main source of income including their salaries and interest income by checking their
pay slips and tax returns to conFrm that the clients have the capacity to repay the loan.
4.The borrower’s appreciation of the risks associated with the features of a particular credit product need
to be noticed. I also will conFrm with Andrewand Stephanie that the deposit to calculate LVR.
5.Valuations will be required for the property that the clients want to purchase. This will also be used by
bank to assess their level of risk in proving loan to the clients.
6.Additional loan protection – Lender’s mortgage insurance will be required
Assessor feedback: Resubmission required?
No
Page 15 of 57

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
Summary of client needs:
The client Clinton and Jennifer Andrews both are salaried workers and having two dependent school going
kids. As of late they came to realize that with their accessible wage is workable for them to buy another
venture. In this way, their primary prerequisite is to get the money related guidance in regards to buy of
new investment property through the private venture credit, for which the reimbursement choice will be
fortnightly and will have internet banking an dredraw facility. Be that as it may, as their
accountant furnished them with some guidance in regards to the negattiv egearing benefits, they wisjh to
take the counsel of a money related specialist organization to buy the venture without influencing their
present expectations for everyday comforts.
Summary of current financial position:
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
Page 16 of 57

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
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
Product options:
• IMB budget home credit – it offers focused rate, straightforwardness and other features like
unhindered reimbursements, free withdrawals, adaptability in reimbursement and markdown in life-of-
advance. In the event that the spending home credit does not meet the prerequisite criteria of the
customer, IMB offers other variable alternatives of home advance like basic variable home advance,
fundamental home advance, standard variable shone advance a ddiscount-split home advances. Platinum
bundle advances and settled advance alternatives are additionally accessible there. However to be qualified
for the exceptional rate , the borrower must be the proprietor occupier and open the exchange account
with IMB.
• NAB choice package fixed rate home loan – it offers rebate on standard settled rate of intrigue and
couple of different expenses when it is converged with the Tailored settled rate home advance. It
additionally offers the clients of home advance 350,000 NAB remunerate focuses on the off chance that
they apply for the Banking group and NAB qualified home credit before 31st August 2017. In any case, the
home credit might be drawn before 30th November 2017 and it should not be the renegotiate from the
NAB or renegotiate from Advantage or UBank. The base sum that is qualified for home credit is $ 250,000.
Reason for recommendation:
The IMB spending home credit is prescribed as it is straightforward and the rate is focused. Advance it
offers different alternatives for home advances like starting variable home advance, basic home advance,
standard variable shome credit a discount split home advances. Consequently, the customer Clinton and
Jennifer can pick the alternative according to their need and inclination. Further, the cleinet needed the
web managing an account and redraw office and these offices are accessible with the IMB budhet home
advance.
Then again, the NAB decision bundle settled rate home credit is suggested as it offers rebate on standard
settled rate of intrigue and couple of different charges when it is converged with the Tailored settled rate
home advance. They will likewise have the capacity to get the 350,000NAB prizes focuses as it is very
certain from the reality discoverer that they will apply for the credit quickly that is before 31st August and it
is normal that the advance will be drawn before 30th November 2017. Further, the base qualified sum for
the advance is $ 250,000 and the customer's necessity is $ 413,000.
Disclosure:
In light of the requirements, budgetary position of Clinton and Jennifer, it is recommended that before
applying for the credit from any of the previously mentioned sources, the customers might comprehend
their inclination eand needs obviously. They should likewise take inti thought the reimbursement timetable
Page 17 of 57

and rate of intrigue. Further, they might consider different sources previously finanlizing anything identified
with the credit.
Conflict of interest:
A standout amongst the most imperative intrigue struggle is that if the customer benefit the advance from
NAB decision bundle settled rate home advance, the credit help supplier will get commission @ 1% of the
advance sum. Another enthusiasm of contention is that the bookkeeper and duty advisor of Clinton and
Jennifer is one of the nearby relative of the specialist. Accordingly, odds are there that the specialist won't
check the archives of the customer in detail.
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 1st home buyer is eligible for concessions or home buyer grants from the
government.
• The exemption of duty on existing and new homes are valued up to the amount of $ 650,000 and
on vacant land amounting up to $ 350,000
• The exemption of duty on existing and new homes are valued between the amount of $ 650,000
and $ 800,000 and on vacant land amounting between $ 350,000 and $ 450,000
• If the value of the new home is less than $ 600,000 or where the buyer enters into the
comprehensive building contract, or is the owner builder for which the value is less than $ 750,000, then $
10,000 grant is available for the 1st home buyers.
Assessor feedback: Resubmission required?
No
Page 18 of 57

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)
Other fees and costs that Clintonand Jennifer shall be aware of are as follows –
• Stamp duty - $ 15,241
• Rates and taxes - $ 1397
• Pest inspection - $ 300
• Building inspection - $ 300
• Establishment/Application fee - $ 600
• Mortgage stamp duty - $ 175
Assessor feedback: Resubmission required?
No
Page 19 of 57

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
On the off chance that I am their broker for Clinton and Jennifer, I ought to include following three parties
to keep informed of the progress of their finance application who are not directly involved in the loan
processing:
I) Conveyancer/solicitor: The lawful part of a property buy is taken care by an authorized and qualified
conveyancer. In the event that they are a specialist, they can likewise give lawful counsel. Their part is
toprepare the records to guarantee that exchange of responsibility for property has met the legitimate
necessities in Clinton and Jennifer's state or domain.
II)Accountant and monetary advisor:A proficient who enables people to deal with their funds by giving
counsel on cash issues, for example, ventures, protection, contracts, school reserve funds, home arranging,
duties and retirement, contingent upon what the customer demands. Here Cliton and Jennifer is purchasing
a speculation property and their bookkeeper has been giving some counsel in connection to negative
equipping benefits.
III)Mortgage Broker: the home loan representative is the connectors among the borrower and
moneylender (for the most part a bank), who will arrange the credit for the benefit of the borrower. They
play out the exploration take a shot at different items in te showcase and lawful work and furthermore the
procedure of settlement. For the most part, the specialist does not charge anything from intermediary as
they get commission from the bank
Assessor feedback: Resubmission required?
No
Page 20 of 57

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
When I meet Clinton and Jennifer, as their broker, I will ensure how would they like to speak with me and
note down ideal time to get in touch with them. After that I will make the accompanying 9 aspects while
getting approval for their investment property loan:
1) Collecting data: The underlying application meet is the way to the advance procedure going easily
and shutting on time. This is when to acquires all germane documentation fromClinton and Jennifer , in
order to stay away from pointless issues and postponements.
2) Loan application:I will get cliton and Jennifer to top off the credit application shape. Here I will ask
for payslips,recent bank explanations and elucidation of client's acknowledge action as a supporting
records. I will likewise speak with them about the sort of item and loan cost they are looking for.
3) Get preapproval: After revewing the finished advance application ,the bank can give a preapproval
letter.It is a composed letter that affirms the cost of home that can be bought by the customer.
4) Assesement process: During the security appraisal the loan specialist may require a valuation on
the property being obtained. I might have the capacity to organize a valuation for their sake for the buying
property.
5) Receiving endorsement: Here home advance is genuinely affirmed, a formal Letter of Offer will be
issued by the moneylender. Once the offer has been acknowledged, customer can lawfully dedicated to
proceeding with the deal.
6) Insurance: After credit is affirmed, and before the end archives can be drafted, we are required to
arrange a protection cover for your new home. It is best to contact protection operator early so they are
arranged and don't postpone the end.
7) Closing Disclosure: It incorporates the advance terms, anticipated regularly scheduled installments,
and the amount Clinton and Jennifer will pay in expenses and different expenses to get their home loan
(shutting costs). It is a law to have the Closing Disclosure no less than three business days prior.
8) Loan settlement: Inform customer's about the settlement of the loan.Here credit documentation is
issued to customer's specialist/conveyancer, who will then liaise with the bank to plan a settlement date.
The principal reimbursement on the credit will normally be required one month after the settlement date.
9) Loan servicing: The means taken to keep up an advance from the time it's shut until the point that
it's paid off, for instance charging the Clinton ann Jennifer, gathering installments, and rolling out contract
improvements.
Assessor feedback: Resubmission required?
No
Page 21 of 57

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 total home loan process can take anyplace in the vicinity of 19 and 46 business days. Working with a
broker improves the procedure as we control borrower through the application and endorsement stages
and expels the anxiety while purchasing home.
On the off chance that you have particular time limitations or requirements when purchasing your
property, the broker will help arrange longer of shorter circumstances for settlement and work with the
moneylender to address customer's issues.
Assessor feedback: Resubmission required?
No
Page 22 of 57

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 understand the 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 Australia's national bank and is in charge of monitoring the
nation's authentic cash rate. The Reserve Bank is additionally in charge of moving the cash rate to help deal
with the nation's financial expansion, cash and loan costs, and issuing certified receipts. It gives certain
saving money benefits as required to the Australian Government and its offices and to various abroad
national banks and authority institutions.Thus every one of the banks are obliged to take after the RBA
money rate.
The one thing we should realize that the loan costs will change when the RBA chooses to either animate or
'chill' financial movement. In the event that we are acquiring to purchase a property, we have to precisely
consider what the economy is doing as such we can have some thought of where financing costs are going.
As a rule, high financial movement prompts high loan costs. Purchasing in a blast implies a high price tag
which may fall and low financing costs, which may rise, so Clinton anfd Jennifer may chance paying more
for an advantage that may lose an incentive temporarily. In the long haul, land quite often increments in
esteem. So I propose them to have settled home advance as they as of now been offered extraordinary
financing cost and it will be genuine feelings of serenity in the event that if there is augmentation of loan
cost by RBA.
Assessor feedback: Resubmission required?
No
Page 23 of 57

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 can be ensuredwith their reimbursements as it dosen't change for a set timeframe. On
the off chance that loan costs transcend their settled rate, they will be cheerful knowing they are paying
not as much as the variable rate.This implies they can have the capacity to prepare and keep up a specific
way of life with certainty.
Disadantage of settling a credit is that Clinton and Jennifer won't profit by falling financing costs on the off
chance that the Reserve Bank cut the money rate . They can pass up a great opportunity for the lower
reimbursements that a variable rate can bring.
They should pay break charge on the off chance that they change or pay off their advance inside the settled
rate period.Also settling a credit isnot appropriate in the event that in the event that they alter their
opinion and thought of offering home or need the flexibility to switch home advances on the off chance
that they locate a superior arrangement.
Assessor feedback: Resubmission required?
No
3. Suggest how Clinton and Jennifer could potentially manage the risks associated with fixing a loan in the
event they need to break the fixed loan contract. (100 words)
Student response to Task 8: Question 3
Fixed rate home loan is a legitimate contract ensuring for the reimbursement a settled measure of
enthusiasm on a loan for a predetermined day and period. On the off chance that Clinton and Jennifer
choose to break that agreement by exchanging, their current loan, broker must be made up for any
misfortune they cause.
Another alternative is to make a wager both courses by having a section settled, part factor intrigue credit.
A split credit enables you to deal with a portion of the dangers of financing cost rises while as yet having
the capacity to make additional reimbursements.
Assessor feedback: Resubmission required?
No
Page 24 of 57

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
Subsequent to receiving, surveying and affirming home loan application, loan broker will issue the
accompanying archives:
Letter of Offer – Lender send letter of offerto the client in composing structure and duplicates are sent to
every one of the gatherings who have enthusiasm for the application and inevitable advance, for example,
underwriters. It contains the points of interest of home advance with the term and condition under which
the loan specialist proposes to give the assets.
Home loan document - A record that will be held up by bank to the State or Territory as a feature of
enlisting a home loan. The name of the home loan archives that the moneylender gets ready needs to
coordinate the name on the exchange that the specialist will hold up with the land titles office generally the
home loan record is invalid and void.
T&C letters: This documentis for the client to recognize acknowledgment of the advance terms and
conditions. On the off chance that there are more than two account holders, each gathering must consent
to the arrangement. Some T&C letters have an area where borrowers give data, for example, the name of
their specialist or conveyancer, points of interest of reserve payment and assigned record for expenses to
be charged.
Witness affirmation - This should be finished by a free observer to affirm borrower character. The witness
who finishes and sign this frame must be a similar individual who saw the marking of the credit supplier's
home loan record.
Disburshment and settlement frame – Once the sum total of what documentation has been effectively
executed, the moneylender hands over the advance assets to the borrower. Fundamentally, this archive is
to enable bank to pull back assets from their record to meet everything due at settlement, or to store
surplus assets where pertinent
Direct credit installment form – Borrower needs to finish this frame ifthey wish to set up a repeating
installment to their connected advance records.
Assessor feedback: Resubmission required?
No
Page 25 of 57

Section 2: Case study 2 — Tony and Lorraine Denton
Background
Tony and Lorraine Denton have a small cleaning business at which they have been working for the last
eight 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 happened nine (9) months ago and no report was made
to the credit agency.
Page 26 of 57

After reading the case study above and reviewing their funding position below, answer the 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 57

Assignment tasks (student to complete)
Task 10 — Establishing level of financial knowledge
What communication skills might you use to confirm Tony and Lorraine’s understanding and knowledge
about credit and finance, as well as their current position, including establishing their 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
Verbal communication
Verbal or oral communication is delivered through speech. It requires that the speaker shall use
appropriate tone and stress to deliver it to the listener. For the successful communication the speaker as
well as the listener both shall be actively engaged. The conversation characters under verbal
communication are as follows –
• Informal
• Face to face
• Open and sincere
• Two way procedure
• Enjoyable and desired
• Adapted the situation under which it takes place
• constitutes the ways to end
Written communication
It is any form of communication that are carried out with the written word. It is the most important and
most common method of communication in any business and is increasing with the dependency on the
SMSs, social media, e-mail and other e-communication. A good written communication for business is –0
• is written with regard to the target audience
• is concise, complete, clear, courteous and correct
• answers the questions like what, who, when, where and when
• includes the graphics and examples, if required
• avoids offensive, abusive and discriminatory terminiligy
Assessor feedback: Resubmission required?
No
Page 28 of 57

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 term substantial hardship is expressed as the one of a kind, lawful, mechanical, evident monetary or
some other sort of hardship for the individual who asks for the waiver or fluctuation that inpairs the
individual's capacity to keep working under the controlled practice.
A credit won't be reasonable if the shopper is not ready to meet monetary commitment of the contrct or
not ready to meet without the generous hardship. Further, the buyer won't have the capacity to manage
the cost of the advance – (1) if the supplier of credit after the evaluation don't concur with the purchaser in
regards to whether the reimbursement of advance requires significant hardship or not (2) where advance is
sorted out fro camouflaging the way that the rapyment is unrealistic without considerable hardship. Where
the buyer is not ready to bear the cost of the credit the guide might contend that the shopper can not meet
the monetary commitment without the considerable hardship or the advance doe not meet 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 means taking out new advance for rapayning numerous charge card adjust or
obligations.
The greatest favorable position of the obligation combination for Lorraine and Tony is that none of their
propery is in danger. Further, the rate of intrigue might be high when contrasted with the secured advance
yet in the meantime is might be less when contrasted with the loan fee charged on the Visas. Hence, it will
diminish their weight of intrigue and reimbursement. It likewise includes having lesser installments
required to be paid each months and there is less possibilities that the customer will make late installments
or miss installments.
Assessor feedback: Resubmission required?
No
Page 29 of 57

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
Answer here
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 57

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
Total amount of debt needs to be repaid through taking the ‘new bank loan’ at 4.5% amounted to $
300,000. Therefore, the interest on that amount would be $1,540. However, if theloan is not availed, then
they will have to pay total interest amounting to $ 4,117. Therefore, the savings will be $ 2,557.
Assessor feedback: Resubmission required?
No
Page 31 of 57

Task 12 — Self Employed special considerations
1. As Tony and Lorraine are self-employed, what documents will you need to obtain and assess their
income? (150 words)
Student response to Task 12: Question 1
As Lorraine and Tony are independently employed and wins through sole exchanging of cleaning business,
the most recent return of individual duty and the appraisal made by Ausytralian Tax Office (ATO) and the
itemized accounting report and Profit and Loss explanation will be adequate proof for deciding the wage of
them. Further, where the monetary record, benefit and misfortune proclamation, impose evaluation and
government forms are given, these reports must be upheld by the enlisted or confirmed bookkeeper. Aside
from this, the individual pay expense forms for every individual upheld by latest duty appraisal by ATO and
points of interest of the organization's liabilities like adjust, term and rate must be submitted for evaluation
of their salary.
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 records required for the low doc applications for helping the reimbursement of the home
loan or loaning securely are as per the following –
• Bank proclamations: most effective route for demonstrating the execution of the independently
employed wander is giving the required iformation through the bank articulation. These will uncover the
measure of cash in the record and the costs made for doing the calling
• Letter from bookkeeper: confirm from the bookkeeper in composed frame can be demonstrated
advantageous fro utilization of independently employed home advances. The letter might diagram the
condition concerning the business back and should bolster othetr archives that are displayed to the bank.
• Steatement of business movement: the announcement of business action is changed as to the
specifics of the organization and it demonstrates the commitment of expense to which the organization is
liable to. This incorporates benefit charge and in addition merchandise assess through the PAYG portions
and withholding. In addition, the proof of recent months might likewise b eprovided.
Assessor feedback: Resubmission required?
No
Page 32 of 57

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
Unsatisfactory credits incorporate the agreement where it is normal that the borrower won't have the
capacity to reimburse or can reimburse just with generous hardship or the agreements that does not meer
the target eor prerequisite of the borrower. Consequently, the agent might make sensible enquiries with
respect to the budgetary condituion of the borrower a dtheri objective ean drequirements. Aside from this,
they might attempt sensible endeavors for accommodating the statemnent of the borrower. Utilizing these
data, the home loan representative should decide if the proposal of credit item is reasonable or
unsatisfactory. On the off chance that it is appeared that the credit items are unacceptable, at that point
the dealer can continue with suggestions. Be that as it may, under the low-doc application, the wage and
the money related circumstance of the borrower are not confirmed fullyby the home loan merchant or the
moneylender. Further, under the low-doc application, by and large, the borrower does not have the most
recent government form or have over confused assessment illicit relationships, which thusly make it
exceptionally diffult to check his own salary. Along these lines, under the Low Doc Loanthe contract
intermediary can be charged for suggesting the unsatisfactory item.
Assessor feedback: Resubmission required?
No
Page 33 of 57

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
Golden rules for debt management are as follows –
• Tally up the debts
• Get immediate assistance, if required
• Set the budget
• Prioritise the debts
• Considering debt consolidation or refinancing
However, before refinancing the loans the following things shall be taken care of –
• Consider other available options before refinancing
• Checking whether the loan for debt consolidation is appropriate for the borrower or not
• Avoid the traps of refinancing
• Get the free assistance regarding debt
Various strategies for managing the loan or debt are as follows –
• Match the liabilities and assets
Advantages – it helps in moving from stocks towards cash over the years for the purpose of saving for
retirement age or for the education or any future big expense. It further helps in assessing the assets
available to the person at the time of requirement.
Disadvantage – long term assets shall not be financed through short term credit like credit card. Further,
borrowing long-trem for financing the short term will also not proved to be viable.
• Maintain the liquid saving
Advantages – refinancing the mortgage at lower rat eis a smart idea. It will also enable the borrower to pay
off the short-term obligations with the available liquid savings
Disadvantages – the person may required to make the payment from the closing of out-of-pocket costs an
dit proved to be good idea only when the person strat rebuilding the liquid savings immedsiately.
• Minimize the expenses related to regfular debt
Advantages – minimizing the debt expenses will enable the person to minimize the refular payment of
interst and instalments. Therefore, it is a wise decision to eliminate the debt, even if the loan rates are
favourable
Disadvantages – generally, the debt are serviced every month and therefore,falls under the unavoidable
regular expenses. Larger the size of such expenses, lesses the flexibility to deal with suchexpenses.
Assessor feedback: Resubmission required?
No
Page 34 of 57

Page 35 of 57

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 present, three main credit reporting agencies are operating there in Australian market. These are—Veda
Advantage, Tasmanian Collection Service and Dun and Bradstreet. Veda Advantage is the major consumer
credit reporting agency that states that it maintains credit worthiness related data on more than 11 million
individuals in New Zealand and Australia. It has more than 5,000 subscribers from wide range of industries,
that includes finance telecommunications, banking, retail, trade credit, utilities, government, mortgage
lenders and credit unions.
Informations included in the credit report are as follows -
• your full name
• your sex
• your date of birth
• your present address and previous two addresses
• Licence number of the driver
• the names of any credit providers that provided the consumer credit, and whether they are
licenced by ASIC
• the day on which that consumer credit was made available to you and terminated
• the limit on consumer credit
• certain terms and conditions of that consumer credit, including limited information about your
repayment and interest obligations
• repayment history information, which is information about whether you have made a consumer
credit payment on time, or whether you have missed a payment.
• the amount and type of commercial or consumer credit that you sought in the application
• any court judgements made against you that relate to credit provided to, or applied by you
Assessor feedback: Resubmission required?
No
Page 36 of 57

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) – you can get the copy of credit report within minutesthrough purc hase of
one of their packages or can get teh free credot report to be despatched within ten days. Cost of the
poackages are as follows –
• Equifax Basic – it includes the updated score from Equifax and the copy of credit file and costs $79
• Equifax Plus – it offers long-term support to protect the identity an dcredit file and costs $ 89
• Equifax advanced – it enable you to stay one step ahead of the identity theft and help in protecting
the identity and costs $ 104
• Equifax Premium – provides preium level of identity an dcredit protection and costs $ 119.
Dun & Bradstreet – you can get the report for free within ten days or can opt for fast-tracked online report
within one business daythrough paying a fee of $10.
It costs $ 179 to get 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 errors
rectified? Hint: Refer to the Veda website. (150 words)
Student response to Task 14: Question 3
If you have the copy of credit report and you are on the view that there is any error in the report, it is
important to get this fixed as information contained in the credit report impacts your credit rating and
whether or not you might be accepted for credit card, loan or credit account such as electricity contract or
mobile phone
There are simple steps you can take:
• Complain to the present credit provider, the credit reporting body or the listing creditor
• Complain to the commissioner or the Ombudsman scheme.
Assessor feedback: Resubmission required?
No
Page 37 of 57

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 loan application is declined based on the content of the credit agency file, then the lender is obliged
to provide with the list of reasons for its decision or the notice stating the main reasons. He shall also
provide –
• the credit score that it used for taking the adverse decision or the factors that affected the score
• address, telephone number and name of credit reporting organization that provided the report
• state the procedure for fixing the mistakes of the report or include the additional information for
making the report more complete.
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 available to Tony and Lorraine are as follows –
• get the copy of credit reports and find out the way to imprive it
• reducing the debts through repaying the debts
• create a budget to make savings that can be shown to the credit provider that the borrower is able
to make the repayments in future
• can take help from the financial counsellor regarding managing the debts, which in turn will enable
him to gain confidence while applying for the next loan.
• He can also find a guarantor for his loan to strengthen his loan application
• Alternatively, he can apply for no interest loan or low interest loan. However, these loans are for
the lower income group people.
Assessor feedback: Resubmission required?
No
Page 38 of 57

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 option question
determination that aids settlement of debate among the money related credit supplier and the shoppers.
The CIO is one of the greatest outer debate determination (EDR) conspires inside Australia according to the
quantity of individuals. The CIO is the affirmed EDR conspire under the administrative code endorsed by
ASIC and the administrations gave to the buyers by it are free of cost. On the off chance that any individual
is not satisfaied with respect to the choice of the credit supplier or the credit detailing body about their
grievance or about the consequence of a connection or get to ask for, the can raise their protest to the CIO
seeing this as long as the credit supplier or the credit announcing body is the individual from the CIO.
Assessor feedback: Resubmission required?
No
2. What could be the maximum financial compensation limit imposed by the CIO?
(You can obtain this information on the CIO website.) (10 words)
Student response to Task 15 Question 2
The maximum penalty that can be imposed by the CIO is up to the maximum amount of $ 309,000 and in
addition other remedies like apology might be asked for.
Assessor feedback: Resubmission required?
No
Page 39 of 57

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 Lorraine are 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 assist in
solving this problem? (100 words)
Student response to Task 16
The documents can be sent through Australian post, under which –
• The documents will be reached within same dat if it is under their network
• Tracking an dsignature on the delivery is included
• The documents will get extra cover
• The rate is available at medium satchels or as postage label
Assessor feedback: Resubmission required?
No
Page 40 of 57

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
Genworth Borrowing capacity (Task 3)
Page 41 of 57

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:
$
$240 (COMBINED) $2,000
(COMBINED)
Business value Credit card limit:
$
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: $
Page 42 of 57

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 43 of 57

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 44 of 57

Notes
Page 45 of 57

NB: Providing substantive notes is a compulsory part of your assessment.
Page 46 of 57

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)=$15,241
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 47 of 57

Funds to complete
PURCHASE AND LOAN COSTS: AVAILABLE FUNDS:
Purchase price: $450,000 Deposit paid $45,000
Lender application / valuation fees: $600 Cash savings: $65,000
Transfer stamp duty $15,241 Sale proceeds: $470,000
Legal and registration fees: $1500 Gift: NIL
FHOG: NIL
Other: NIL
LMI: 1. $8,627 2. No Add to Loan?
TOTAL COSTS (A): $470,000 TOTAL OWN FUNDS (D): $65,000
LOAN AMOUNT REQUESTED (B): $413,627 OWN FUNDS REQUIRED (A-B) = C: $56,373
OWN FUNDS REQUIRED (A-B) = C $56,373 SURPLUS/SHORTFALL (D-C) $8,627
Page 48 of 57

Loan interview diary
Name(s) of client(s) present at interview
Date of interview:
Location of interview
Indicate all clients who were interviewed in person
Do all of the clients appear to clearly understand English? Y/N
If not, have the services of an interpreter been recommended? Y/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?
Page 49 of 57

Are any clients acting as though they are under duress or other disability? Y/N
Are any clients acting as though they are unsure of anything about the loan? Y/N
Are any of the clients acting as though they are unable to comprehend their obligations? Y/N
Are there any guarantors? Y/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/N
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 50 of 57

Appendix 2: Serviceability calculator
Page 51 of 57

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) 0
LVR 91.92%
Page 52 of 57

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)
Interest
Other add-backs
Depreciation
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 $10,444.08
Total rental income $11,700
Non-taxable income calculation
Non-taxable income $0.00
Applicant 1: Total net income $73,862.01
Page 53 of 57

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
Gross
Base income $74,000 Base income frequency Annually
Self-emplyed/sole trader/partnership
Current year Previous year
Net profit (loss) before tax (NPBT)
Interest
Other add-backs
Depreciation
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 $10,444.08
Total rental income $11,700
Non-taxable income calculation
Non-taxable income $0.00
Applicant 2: Total net income $66,657.01
Total net income for all applicants $140,519.02
Page 54 of 57

Commitments
Actual living costs $38,400 HEM living costs $48,971.52
Total credit card limits $8,000 Commitments (maximum 8) 3
Commitment type Amount Frequency Limit/scheduled balance (plus redraw)
Commtiment 1 Other mortgage $1020.00 Monthly $190,000.00
Commtiment 2 Other commitments $800 Monthly $0.00
Commtiment 3 Other commitments $500 Monthly $0.00
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 $68,139.49
Page 55 of 57

Serviceability calculations
NDI ratio 1.34:1 Net disposable income $91,547.00
Assessment rate 7.3% Monthly repayment $2,835.71
Maximum loan amount $698,158.00
Page 56 of 57

Actual rate serviceability calculations
NDI ratio 1.52:1 Monthly repayment $2,165.16
Actual interest rate 4.78% Maximum loan amount $914,377.00
Page 57 of 57