Certificate IV in Finance and Mortgage Broking Assignment

This document is an assignment for Certificate IV in Finance and Mortgage Broking (CIVMB_AS_v3A3). It includes instructions for completing and submitting the assignment, case studies, proposed loan details, and other relevant information. The case study 1 is about Clinton and Jennifer Andrews who want to purchase an investment property. The document also includes their financial and employment details, assets, liabilities, income, expenditure, and solicitor's details.

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 69

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 69

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 69

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
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 69

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
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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 69

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.
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Assignment tasks (student to complete)
Task 1 — Initial disclosures
Following a personal introduction and before you begin gathering information about the clients’ existing
financial situation or needs, there are certain disclosures you are required to make as a finance broker.
These disclosures include the way you are remunerated and the range and limitation of your services.
1. There are four (4) documents listed in ASIC Information sheet INFO 146 ‘Responsible lending disclosure
obligations – Overview for credit licensees and representatives’ that must be provided to customers.
Refer to this Information sheet and the information contained in your topic notes to answer part (a) and
(b) below.
(a) Identify which of these four (4) documents you must provide your client before you commence
providing credit assistance and explain the main disclosures relevant to that document.
(40 words)
Student response to Task 1: Question 1(a)
Before you initiate giving credit guide you should give a Credit Guide to a customer. Credit guide gives
initial informaiton about you to a client. The time at which you need to give a credit guide will rely upon
what sort of entity you are and what credit exercises you take part in, yet will by and large be before you
take part in acknowledge exercises for the buyer
Credit Guide generally must include:
• your name, contact details and Australian credit permit number or credit agent number, and
information about your procedure for settling debate with a buyer, including contact details to get to:
• your inside debate goals (IDR) procedure, and
• the EDR plan of which you are a part.
There are also additional obligations, depending on the type of entity as listed in Aisc Information sheet
INFO 146
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(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)
Expect to charge a broker fee, at that point it must be clearly referenced and clarified in the statement that
you will give to a client. The statement should mention the following.
- For which service the fee will be charged.
- Express plainly the amount of the fee will be charged.
- Mention when fee is payable.
It is require to marked by the client upon acknowledgment and give duplicate.
Assessor feedback: Resubmission required?
No
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
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2. Based on the information provided in the case study and using the tools available to you
(e.g. loan calculators, including those available on lenders’ websites), provide an assessment
of the clients’ borrowing ability. Consider and comment on the following issues:
(a) the maximum loan using the Genworth calculator
(b) deposit requirements for the loan required
(c) combined net monthly income, less cost of living expense as specified by the borrower
(d) do they require Lenders Mortgage Insurance (LMI) and if so, how much will it cost?
Refer to Genworth LMI estimator for this figure
(e) any other issues that may impact, now or in the future, on the clients’ ability to meet their
obligations, including any possible risks.
Provide data to support your comments and conclusions.
(No word count requirement for questions (a) to (d)).
Question (e) (100 words)
Student response to Task 3: Question 2(a)
$798666.00
Student response to Task 3: Question 2(b)
$45000.00
Student response to Task 3: Question 2(c)
Joined net month to month Income $5476 + $4837 = $10313 (*12) =$123756.00
Less month to month costs of living $3,200 (*12)=$38,400
Joined net month to month salary after removing everyday costs $7113 (*12)=$85356.00
Student response to Task 3: Question 2(d)
LMI is require. It will cost $8627.00 plus stamp duty or $43.00 every month if premium promoted
Student response to Task 3: Question 2(e)
Following are mentioned points could be the reasons that may impact on clients ability to meet their
obligations
1. Clinton and/or accomplice may loose their job.
2. Construction industry is directly relative to monetary conditions in Australia. With back off in
development industry, Clinton's business has great shot of getting influenced and income may
reduce.
3. Clothing industry is chiefly retail. It is likewise focused industry. Most assembling is being sent
to abroad to diminish the expense. Expecting that Pretty Clothing as of now fabricates the item
in Australia, in vain Jennifer's activity could be affected with conceivable rebuilding. In any case,
the odds are less.
4. Property remain empty for long time without inhabitant. This would reduce their income and
their capacity to pay the home loan reimbursement.
5. In that case lease should be diminished to pull in occupant.
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6. Possibilities of sudden family costs which were not arranged for example sickness.
7. Possibilities of sudden episode that can confine the capacity of Clinton or Jennifer to have the
capacity to work fulltime.
8. Interest rates can ascend higher than considered for diminishing their functionality of home
loan.
9. Family circumstance can change for instance another child conceived, separation , supporting
old parents and so forth.
10. Unexpected property fixes or cost of settling any damages caused by tenant, with scenario
landlord insurance is not in place.
Assessor feedback: Resubmission required?
No
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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
Assets from balance record can be utilized to lessen LVR to 80% consequently sparing LMI, as they have
adequate finances accessible in counterbalanced record.
To keep LVR to 80%, they can obtain $360000.00 and pay staying 20% ($90,000) on top different expenses
from their counterbalance account. Hense, spare them LMI premium of $8627.00
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
A)
Estimation of their house is $850,000
Home loan balance is $190,000
Equity is $660,000 in their home.
Clinton and Jennifer can setup a Line of Credit of $90,000 to pay for the 20% of the advance and obtain
80%. The interest paid on credit extension can be deducted as expense and will decrease the assessment
on pay.
They are equipped for administration this Line of Credit, as they have the usefulness as to serviceability
calculation done before.
B)
They can utilize the equity from their home to get 100% on the venture advance.
Asset Value $850,000+$450,000 = $1,300,000
Loan $190,000+$450,000 = $640,000 (100%borrowing for investment property)
LVR = 49.23%
They have the usefulness according to the functionality estimation.
B is the better choice for them as the financing cost on LoC is higher than home loan.
Assessor feedback: Resubmission required?
No
Page 14 of 69

Page 15 of 69

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
Following are the reasonable enquiries which determine Clinton and Jennifer’s objectives, requirement and
financial situation:-
 PAYG – Clinton and Jennifer both are working.ThereforePAYGevidence to gather. It incorporates 2
most recent pay slips, duplicates of assessment forms for most recent two years. Additionally
affirmation of work status by calling the employer.
 Assess record from credit organization. This will demonstrate their capacity and promise to keep up
a decent record as a consumer by paying bills and different installments on time.
 Sparing history and use structures. Need to ask for copies of bank enunciations, for instance,
venture reserves, charge card and home advance records. Regardless of the way that they have
made sense of how to save resources in offset account, see that their expenses are planning with
their projections. Also check for any costs that are not articulated or missed by them.
 Current residential situation to study for number of wards or any plans that can influence their
ability to profit the development in future.
 Income delivering action, age and dialect aptitudes. To show signs of improvement comprehension
of their activity circumstance, industry situation and their capacity to continue in the activity or in
the event that they have plan to change employment or industry.
 Their data of fund market and the sum they comprehend the features of an explicit credit item and
hazard related with it, for their conditions.
 Additional affirmation may be required where the information outfitted is clashing with the
information recently gave, or outside the extent of satisfactory benchmarks.
 These enquiries are crucial for NCCP consistence as NCCP act powers careful pending duty that
requires credit provider to ensure that a credit office is ' not inadmissible' for the borrower. It is the
credit provider's commitment to make an authentic and sensible evaluation that results in a
decision that they can ensure.
A credit supplier must
 Make sensible enquiries about the customer's cash related situation, necessities and goals.
 Take sensible steps to affirm the customer's present cash related situation
 Decide whether the credit get the customer is requesting is 'not unacceptable' for that customer.
Credit help gives e.g. Home loan Brokers, must make a starter examination and Credit provider must make
a last assessment of the credit contract before credit is promoted.
Page 16 of 69

Assessor feedback: Resubmission required?
No
Page 17 of 69

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
By Email
Subject: Loan Proposal for Clinton and Jennifer Andrews
Dear Clinton and Jennifer,
I am writing this email to state thank you for the opportunity.
It has been a joy working with you to comprehend your prerequisites and intent for an suitable loan for
your investment property. In light of your prerequisites and destinations I am satisfied to present a
proposition with two alternatives that are suitable. If you don't mind review the two choices cautiously
before choosing which one you need to continue with.
To continue with, You have to give your acknowledgment by marking a duplicate of the proposition and
returning back to me by email.
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If it's not too much trouble don't hesitate to get in touch with me should you have any inquiries.
Loan Proposal for Clinton and Jennifer Andrews
Requirements and Objectives:
Clinton and Jennifer are trying to buy another investment property. The property is another four-bedroom
home in external Brisbane situated at 29 Pacific Drive, Ipswich, Queensland 4305.
Property purchase price: $450000.00
Proposed settlement: 6 weeks time from date of sale.
Looking to borrow: 90% of the purchase price with LMI.
Remaining 10% and other purchasing cost will be supported from customer's counterbalanced record.
Offset account balance: $180,000.
They are looking at a resident investment loan, P&I for 30 year term with ability to make additional
payments from timt t time without any penalty redraw facility, internet banking and fortnightly repayment
options.
Applicant Details
Applicant One Applicant Two
First Name Clinton Jennifer
Surname Andrews Andrews
Date of Birth XX/XX/XXXX XX/XX/XXXX
Number & Age of Dependants 2 (12, 10) 2 (12, 10)
Relationship to other Applicant Husband Wife
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 at ACM
Construction
Accounts Assistant at Pretty
Clothing Pty Ltd
Basis Salary (Gross) $85000.00 pa $74000.00 pa
Proposed Property:
Address: 29 Pacific Drive, Ipswich, Queensland 4305
Type of property: Four bed room house
Purchase price: $450000.00
How much do you wish to borrow: $405000.00 +$8627.00 (LMI)
First Home buyer: No
Deposit Available: $45000.00/-
Estimated Settlement date: 6 weeks time
What is your proposed purpose for the loan proceeds? Buying an investment property
Branch access available Yes
Internet banking available Yes
Phone banking available Yes
Lenders not to be considered Big Bank
Type of loan sought P&I Investment loan
Interest rate 4.78%
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Payment frequency Monthly with option for Fortnightly
Redraw Yes
Offset No
Salary crediting No
Low fees and charges Yes
Financial Position:
Assets:
Item Details Value(in $) Owner
Property 17 Moss Ave, East Hills,
NSW 2213
850000.00 Clinton & Jennifer
Motor Vehicle Ford Falcon G6, 8 years
old
15000.00 Clinton
Motor Vehicle Holden Barina, 10 years
old
5000.00 Jennifer
Cash at Bank Big Bank offset savings
account
180000.00 Clinton & Jennifer
Investment Little Bank Fixed Deposit 10000.00 Clinton & Jennifer
Superannuation MPA Insurance 82000.00 Clinton
Superannuation CLM Insurance 54000.00 Jennifer
Household effects Insured value 80000.00 Clinton & Jennifer
TOTAL ASSETS $1276000.00
Liabilities:
Item Details Monthly
Payments
Balance Owning Borrower
Home Loan Big Bank,
Variable P&I, no
fees
1020.00 190000.00 Clinton & Jennifer
Credit Card
(Limit $5,000)
Big Bank Visa
Card
150.00 800.00 Clinton
Credit Card
(Limit $3,000)
Little Bank Visa
Card
90(3% monthly
– thought she
pays $500.00
p.m.)
1200.00 Jennifer
TOTAL LIABILITIES 1260.00 192000.00
Household Expenditures:
Item Monthly Quarterly Annually
Insurance, Car, House etc 250.00 750.00 3000.00
Car- Registration, Fuel, Maintenance 400.00 1200.00 4800.00
Groceries 1500.00 4500.00 18000.00
Utilities 350.00 1050.00 4200.00
Entertainment 100.00 300.00 1200.00
Dependent Support(Childcare etc) 300.00 900.00 3600.00
Education 300.00 900.00 3600.00
TOTAL 3200.00 9600.00 38400.00
Property Purchase details:
Page 20 of 69

Purchase Price 450000.00
Stamp Duty 16023.00
Solicitor/Conveyancer 1500.00
Rates & Taxes 1000.00
Pest Inspection 250.00
TOTAL COST 468205.00
Finance Required:
Loan Amount 405000.00
LMI 8627.00
TOTAL LOAN 413627.00
Total required 468205.00
Loan (before LMI) 405000.00
Shortfall/Surplus 63205.00
Estimated Repayments:
Loan Type P & I Monthly
Premium option variable home loan with offset
facility
$2120.00
Rate of Interest 4.78% pa
Term of Loan 30 years
Significant changes in the Future:
Applicant 1 (yes/no) Applicant 2 (yes/no)
Temporary change in Income No No
Permanent change in Income No No
Anticipated large Expenditure No No
Is there anything else that may reasonably be expected to have a bearing on your application for credit,
knowing that if you leave such information out it may create problems in the future?
Please specify:
NO
Are you comfortable with your ability to make repayments under the proposed loan without difficulty?
Please specify:
YES
Is there anything else that we should be aware of?
Security:
The loan will be secured by the property at 29Pcific Drive, Ipswich, Queensland 4305.
This will be subject to the valuation of the property by the bank’s authorised valuers.
Product Options:
Clinton and Jennifer are looking for Premium option home loan with the ability to make additional
payment from time to time without penalty and having redrawn facility. They also want to opt the
fortnightly repayment facility.
ASSESSMENT
This assessment is valid for 90 days from the date below. Having regard to the information above, I make
Page 21 of 69

an assessment that the following product is suitable and is appropriate finance for Clinton & Jennifer
Andrews:
Option A Option B
Lender: National Australia Bank Lender: XYZ Bank
Product: NAB Tailored Home Loan Variable Rate –
Choice Package – Residential Investment
Product: XYZ Simplicity Plus Home Loan
Interest Rate: 4.95% Interest Rate: 4.78%
Comparison Rate: 5.59% Comparison Rate: 5.16%
Recommendation:
Option B - XYZ Simplicity Plus Home Loan
Current Interest Rate: Special offer rate of 4.78%
Option B is recommended due to special offer on interest rate and features that match the
requirements. This product also offers the flexibility to make extra payments without penalty and the
redraw option. Fortnightly payment option is also available.
Extra funds can be deposited in the account and available to redraw at a later date when the need arise.
The current Interest rate applicable on the variable home loan is 4.78% which is a special offer for you.
When the interest rates change your discount level will continue to be the same off current variable
rates.
Disclosures:
Broker’s details XXX Pty Ltd XXX XXXXXX
Licensee’s name and address: Amit Patel
4/144, Oakleigh road, Carnegie, Vic 3163
Credit Licence Number 123456
External Dispute Resolution Scheme COSL (Credit Ombudsman Services Limited)
Credit representative’s name and address: Amit Patel
4/144, Oakleigh road, Carnegie, Vic 3163
Credit representatives Phone Number 0430231232
External Dispute Resolution Scheme If you have any complaints about our services, contact us.
If we are unable to resolve your problem, you may contact
our external dispute resolution scheme. External dispute
resolution is a free service established to provide you with
an independent mechanism to resolve specific complaints.
Our external dispute resolution provider is COSL (Credit
Ombudsmen Services Limited) phone [phone],
www.cosl.com.au.
Nature and range of services We will help you choose a loan which is suitable or
appropriate for your specific requirements. We will provide
you with information on a range of lenders and loans. Once
you have chosen a loan that is suitable for you, we will help
you obtain an approval.
If you have already chosen a lender and a loan, and we will
assist you in obtaining an approval (where possible)
We distribute a range of loans marketed by Vow Financial,
and only offer you a limited choice of lenders.
List of panel lenders We source loans from a panel of lenders. Our current panel
comprises the lenders listed in the Schedule. Subject to
meeting the lenders credit criteria, we are able to obtain
credit for you from these lenders. These lenders do not
necessarily represent all the lenders who offer credit of the
nature you seek.
Page 22 of 69

Fees payable by you We do not charge you for our services as we are paid
commission by the lender. However, you may need to pay
the lender's application fee, valuation fees, or other fees
depending on how your loan is structured.
How are we paid? Lenders/funders pay commissions for arranging loans. The
range of commissions is:
Upfront (payable one month after the settlement): Up to
1% of the loan amount
Trail (i.e. payable throughout the term of the loan): Up to
0.50% per annum (paid monthly) of the loan balance.
The exact amount paid by each lender is included in the
lender schedule provided
Commissions payable for the loan you
have selected (this information may be
completed later)
When paid:
Shortly after the loan is made *
Up to $ 150
Monthly **
Up to $ 600
* This is a percentage of the principal sum advanced on
Settlement. This is a percentage of the amount outstanding
each month
External parties sharing in remuneration We have paid or will pay a referral fee of $100 to for
referring you to us.
Please note the following:
• Before you accept your loan offer, make sure you read the credit contract/loan agreement carefully to
find full details of the loan.
Warning: You should check the loan agreement/credit contract to ensure that the terms of the loan do not
vary from what you require. If they do, please inform us immediately so that we can assist you.
• We represent lenders and have obligations to them, in particular not to provide any information we know
is misleading or deceptive. We also have obligations under the law to report any fraud, forgery, or other
illegal activities. By signing this agreement you confirm that you understand that we have these obligations
to the lender and under the law. If you have any questions about our role, ask before you sign.
• We are required to ensure that the finance we arrange for you is appropriate. Accordingly we will make
reasonable enquiries in relation to your needs, objectives, and financial circumstances.
Warning: The proposed loan arrangements will be based on the products available from our panel lenders
and the information provided by you. If the information you provide is incomplete or inaccurate, before
entering the loan you should consider its appropriateness having regard to your relevant personal
circumstances and if necessary seek independent financial advice.
• We do not provide legal or financial advice. Accordingly, it is important you ensure you understand your
legal obligations under the loan, and the financial consequences. If you have any doubts, you should obtain
independent legal and financial advice before you enter the loan contract.
• We do not determine or recommend the conditions of the credit contract (such as interest rates, fees, or
the term of the loan).
• We and nobody else will receive any financial or other benefit or have any other interest or relationship
which could reasonably be expected to influence our recommendation other than as disclosed in this
agreement.
• We undertake to inform you if (if not already stated in this document), after recommending a particular
product and prior to you entering into a contract for that product:
– The commission payments differ from those described in this agreement or lender schedule;
– If we determine or recommend conditions of the credit contract, the effect of any such condition on the
amount of commission we receive from our panel lenders/ funders;
– Any other person will receive any benefit if that person could reasonably be expected to influence our
recommendation; and
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– Any interests or relationships we have that could reasonably be expected to influence our
recommendation.
Borrowers Please Note:
1. If you repay your loan early you may have to pay fees. Before you sign your loan contract, make sure you
understand what fees are payable on early repayment, as sometimes these fees are quite large.
2. This contract does not provide for a disclosure of any direct or indirect interest in the loan transaction,
any property or services being purchased using any part of the loan, any property offered as security, or
any other commercially relevant transaction – e.g. budget coaching services. If there are any such interests,
we recommend that it is in the borrower's best interests to obtain independent advice in relation to the
merits of the transaction.
For use by broker
We are required to make "reasonable inquiries in relation to the needs, objectives, and financial
circumstances of the borrower, including existing loans", and to document that information in writing. That
information may be recorded below.
Item Response (Where appropriate, tick box)
Borrower(s)' requirements and objectives □ Purchase property for $ 450000.00
□ Refinance debts - NA
□ Other (describe):
Enquiries about the borrower(s)' financial situation □ Broker has retained a copy of the client data/fact
find form setting out this information
□ Other (describe)
DATE
Signature of Broker Name of Broker
Amit Patel
INSURANCE
I confirm that I have been offered the opportunity to have my insurance reviewed, however have declined
this.
I understand that I may not have the appropriate cover should I/We suffer from an unexpected/adverse
event.
Borrower 1 Borrower 2
Signature Signature
Print full name : Clinton Andrews Print full name: Jennifer Andrews
Assessor feedback: Resubmission required?
No
Page 24 of 69

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)
 As per the situation in New South Wales, the firs home buyer would be eligible for concession or he
can be give home buyer granst from the government.
 There is an exemption of duities which are applixcable differently on existing anf vacants lands and
the same is $ 650,000 and $ 350,000 respectively.
 The valuation for the existing and vacant land for computing the exemption of duty is within the
range of $ 650,000 to $ 800,000 on existing land and $ 350,000 to $ 450,000 for vacant land.
 In case the value of the new home is lower than $ 600,000 or in situation where the buyer enters into
a comprehensive contract or the owner builder for which the value is less tham $ 750,000, then $
10,00 grant can be made available for ist grant buyer.
Assessor feedback: Resubmission required?
No
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 Clinton and Jennifer needs to be aware of are as
follows:
 Pest Inspection- $ 300
 Building inspection- $ 300
 Establishing fee- $ 600
 Stamp duty- $ 15,241
 Mortgage Stamp duty: $ 175.
Assessor feedback: Resubmission required?
No
Page 25 of 69

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
Clinton and Jennifer may wish their agent to keep the following parties informed of the progress of their
finance application
1. Real estate agent – agent is associated with the property purchase cycle and might want to know if
fund is arranged and settlement will advance as plannned. Agent may likewise need to keep the seller
informed of the status.
2. Accountant – So the person in question knows about the tax assessment suggestion and some
other effect
3. Solicitor/transport – for arranging and planning settlement
Assessor feedback: Resubmission required?
No
Page 26 of 69

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
1. When conducting meeting with Clinton and Jennifer, it is require to identify their purpose and
objective, financial needs, lifestyle goals etc. Then assess their needs, gather and analyse require
data with clear clarification. Explain realistic situation with challenges if any instead fake promise.
2. Calculate their borrowing capacity, requirements, and preferences and identify solution that is best
for Clinton and Jennifer. Submit Credit proposal and get their acceptance of the solution.
3. Prepare, review and submit the application to lender.
4. Lender receives the application, collects and verifies data. Lender will assess application and either
approve within DCA or submit to relevant DCA holder with mitigant’s recommendations.
5. The lender will provide conditional approval while they determine suitable collateral, obtain
property valuation, negotiate suitable security/collateral and conditions and conduct a credit check.
I will keep Clinton and Jennifer informed of the progress.
6. Lender will prepare and send the unconditional or full approval letter of offer with terms and
conditions, which is a formal acknowledgement that Clinton and Jennifer’s loan has been approved.
7. Clinton and Jennifer will sign the letter of offer and credit provider’s security /collateral documents.
I will be available to help them with any queries or for completing the document signing. They will
return the documents back to lender to organise settlement. Their solicitor will organise settlement
directly with the lender, according to settlement date on the contract for sale.
8. Solicitor/conveyancer (of both seller and buyer) and credit provider will attend the settlement on
the settlement date and negotiate the money and documents.
9. Solicitor/Conveyancer will organise to stamp the mortgage documents and register the mortgage
and notify other parties, such as body corporate, owner’s corporation and utility providers of the
change in ownership.
I will keep in touch with Clinton and Jennifer throughout this process and keep them posted on the
progress and help with any queries. I will continue to be in touch with them post settlement to ensure that
the loan continues to be the right solution for them as their needs or market changes.
Assessor feedback: Resubmission required?
No
Page 27 of 69

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
Clients develop a relationship and rapport with mortgage broker, who becomes their trusted partner in
their journey to secure the loan and the property. Broker becomes their go to person for most queries.
So it is good customer service and important part of maintaining the relationship that broker remains
informed of the development in lending process and keep the clients updated.
Clients do not fully understand the lending process and rely on mortgage broker to explain to them the
process at every stage. They may also have anxiety till settlement is done hence broker can help to address
it.
Being informed also demonstrates to the client that mortgage broker is professional in their dealing and
this is likely to result in future business and referrals.
Assessor feedback: Resubmission required?
No
Page 28 of 69

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)
1(a):
The Reserve Bank of Australia (RBA) is Australia’s central bank with responsibility for monetary, financial
system and payments system policies and other financial matters.
The RBA’s main functions are:
 Conduct monetary policy
 Work to maintain a strong financial system
 Issue the nation’s currency
 Develop policy
 Provide selected banking and registry service to a range of Australian government agencies and to a
number of overseas central banks and official institutions
 Manage Australia’s gold and foreign exchange reserves.
The Reserve Bank of Australia (RBA) is responsible for monetary policy. Monetary policy involves setting the
interest rate on overnight loans in the money market (the cash rate). The cash rate influences other
interest rates in the economy, affecting the behaviour of borrowers and lenders, economic activity and
ultimately the rate of inflation.
1(b):
The RBA has a duty to maintain price stability, full employment, and the economic prosperity and welfare
of the Australian people. To achieve these statutory objectives, the Bank has an inflation target and seeks
to keep consumer price inflation in the economy to 2-3 percent, on average, over the medium term.
Controlling inflation preserves the value of money and encourages strong and sustainable growth in the
economy over the longer term.
Substantial interest rate rises designed to restrain inflationary booms which traditionally result in
contractions in demand and a reduction in inflation.
Substantial interest rate reductions designed to encourage growth which traditionally results in periods of
significantly faster growth.
With rate rises lenders increase the mortgage interest rate. Similarly with decrease in interest rate by the
RBA, lenders tend to decrease the mortgage interest rates. The amount of increase may or may not be
equal to the amount of increase or decrease.
1(c): Banks are not obliged to follow the RBAs interest rates when determining their mortgage lending
rates. They can independently increase or decrease the interest rate they charge on loans. Banks may have
their own justification for fixing their interest rates for the loans depending on their loan book size, how
Page 29 of 69

aggressively they want to increase their loan books/market shares and their cost of borrowing funds.
Assessor feedback: Resubmission required?
No
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
For Clinton and Jennifer, the advantages and disadvantages of fixing a loan are as follows:
Advantages:
- Couple is clearly aware ofregular payments that how much it will be so they have an opportunity to
set or decide next goal.
- At the time of rateinclination, they are guaranteed of their interest rate, and consequently their
repayments will remain same and not increase for at least during the duration of the fixed term
Disadvantages:
- In the event of variable rates drop, their interest rate will not drop and remain same.
- It may not be possible to pay extra repayment without a financial penalty(though the products I
have chosen for Clinton and Jennifer allow extra payments, but most lenders do not allow it)
- There may be financial penalty for changing from fixed rate to a variable loan
There may be penalty for changing credit provider, before the fixed term is over
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
Clinton and Jennifer can consider splitting their loan to fixed and variable. This will be a combination loan
consisting of a variable interest component and a fixed interest component which will have advantage of
both variable and fixed investment loans.
This would allow them to make additional payments in variable part of the loan and also get the benefit of
any reduction in variable interest rates. And if the interest rates go up then they have the fixed rate part of
loan that will stay at the fixed rate.
Using this strategy they can manage their risk associated with fixing a loan.
Assessor feedback: Resubmission required?
No
Page 30 of 69

Task 9 — Settlement
Outline in detail the steps a Lender should take post-approval in order to document, settle the loan and
administer the loan post-settlement. (300 words)
Student response to Task 9
The Loan Offer:
Once an application has progressed through the verification, credit analysis and where necessary, the
valuation and negotiation stages, and approval has been granted, a formal offer is made to the customer.
The following are the key details in the loan contract:
 Credit provider
 Borrower
 Disclosure and offer lapse dates
 Financial tables - Fees and charges, term of loan, amount of credit, annual percentage rate,
repayments
 Purpose of loan
 Commission
 Credit related insurance financed by this product
 Security
 Disbursement instructions
 Conditions precedent
 Special conditions
Documentation:
Once the customer has formally agreed to the loan offer set out in the T&C letter by returning a signed
copy of the document, preparation and checking of other loan documentation is required before funds are
made available.
The type and extent of documentation required and the exact process that occurs to settle the loan
application and disburse funds will vary depending on factors such as the type of loan, the particular
borrower, the involvement of third parties such as guarantors, and lender’s processes and procedures.
All documentation associated with the loan must be thoroughly checked to ensure it is correct and has
been correctly executed, in accordance with the lender organisation’s guidelines.
Settlement:
Settlement occurs when the purchaser pays the full purchase price to the vendor. Once this is done, the
purchaser takes possession of the goods or property.
Transfer documentation:
The relevant state department of lands must be informed of the change of registered owner of the
property. The notification process involves lodging a transfer of land document with the department.
The preparation and lodgement of the document is the responsibility of the purchaser and this is ultimately
executed by their solicitor/conveyancer. It must be lodged as soon as possible after settlement. The
purchaser must also pay other applicable costs such as stamp duty. Stamp duty is usually shown on the
front of the document and is paid immediately before settlement.
The transfer document identifies the exact owners of the property, as well as whether it will be joint
ownership or shared ownership.
Statement of Adjustment:
In preparation for settlement, the final purchase price of the property is adjusted to allow for expenses
that:
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 Have already been paid by the current owner and for which credit must be allowed
 Are owing and payable by the new owner after settlement
Once calculated, a statement of adjustment is issued to the vendor who must approve the amount. Until
the adjustments are made and accepted, cheques cannot be written and settlement cannot take place.
Post Settlement:
After settlement the purchaser, or their solicitor or conveyancer, must:
 Pay stamp duty to the relevant state government department or authority, if it has not already been
paid
 Lodge documents regarding the change in ownership with the relevant state government department
or authority
Notify other parties, such as body corporate, owners corporations and utilities providers of the change of
ownership
Assessor feedback: Resubmission required?
No
Page 32 of 69

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 33 of 69

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 34 of 69

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
I will be using verbal communication i.e. face to face meeting with Tony and Lorraine to confirm their
understanding about credit and finance, their current position and establishing their requirements and
objectives with refinance.
As they are struggling to manage their debt and have lost a major contract, it is important to understand
how they are going to increase their income. I may have to look at a short to medium term solution to get
them in control of their debts and then a long term solution when their income is back to normal level.
I would like to use ‘Open questions/ technique to encourage them to provide a detailed answer. I will also
be using reflective questions to firm up my understanding of their response.
Some examples of the questions I would ask are as follows:
What is your current situation?
What is your priority in terms or paying off your loans?
Do you see any change in your income in next 3- 6 months i.e. signing new contract or possibly losing a
contract?
Are you aware of the interest rate on each of your debt and how it affects your repayment or paying off the
loan?
What do you know about debt consolidation? Have you considered it?
Are you making any life style changes to reduce expenses to free up funds to pay off the loans faster?
Are there any other financial issues that are not listed i.e. any credit default?
Assessor feedback: Resubmission required?
No
Page 35 of 69

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 objective of the responsible lending obligations is to ensure that the credit contract or lease is ‘not
unsuitable’ for the consumer. The National Credit Act defines situations where a contract will be unsuitable
to include where:
 the consumer is unable to meet the repayments or can only comply with substantial hardship
 the contract does not meet the consumer's requirements and objectives.
The responsible lending obligations also require that credit assistance is not provided to a consumer by:
 suggesting they remain in an unsuitable credit contract
 assisting them to enter into, or increase the limit on an unsuitable credit contract
 suggest the consumer apply for, or remain in an unsuitable consumer lease
 assisting the consumer to enter into a consumer lease that will be unsuitable for them.
The compliance processes that need to be implemented to comply with these obligations will depend on
the business model and credit activities the licensee is undertaking.
This section has been developed to help you understand the responsible lending obligations for credit
assistance providers.
The key responsible lending obligations have been broken down into three steps:
1. Make reasonable inquiries about the consumer
2. Make a preliminary assessment whether the proposed credit contract is not unsuitable for the
consumer
3. If requested, provide a written assessment that the credit contract is not unsuitable
Chapter 3 of the National Credit Act also requires a number of obligations relating to documents that must
be provided to the consumer at particular times during the credit process.
It should be noted that the National Credit Act does not define ‘substantial hardship’ nor does ASIC provide
any guidance. Rather, ASIC have advised that they expect the law about the meaning of ‘substantial
hardship’ will develop as cases come before the courts.
Assessor feedback: Resubmission required?
No
Page 36 of 69

2. What are the benefits of debt consolidation for Tony and Lorraine? (100 words)
Student response to Task 11: Question 2
For Tony and Lorraine debt consolidation will provide several benefits as follows:
- debts with higher interest rates e.g. credit cards, furniture purchase contract can be consolidated in
low interest rate debt
- If consolidated in Mortgage then repayment period is much longer
- Due to lender repayment period monthly repayment is reduced
- A single repayment for consolidated debt will result in better finance management
- Account keeping fees & charges for various accounts can be eliminated by rolling debts in a single
consolidated account
With reduced number of debts you decrease the chances to default and can protect yourself from adverse
credit rating
Assessor feedback: Resubmission required?
No
Page 37 of 69

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
New Bank Loan
(split 1 – existing home loan
P&I 30 years)
4.5% $1368.00 $270000.00
New Bank Loan(split 2 – P&I
30 years)
4.5% $152.00 $30000.00
Big Bank Visa Card(Tony)
Limit $8,000
18.95% 0 0
Little Bank Visa
Card(Lorraine) Limit $3,000
21.5% 0 0
Cleaning Contract Supplies n/a $1000.00 $1800.00
Total $2520.00 $301800.00
Assessor feedback: Resubmission required?
No
Page 38 of 69

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
They will save $1597.00 in monthly repayments
Previous monthly repayment $4117.00
New Monthly repayment $2520.00 (see the table in Q3 above)
Difference is $1597.00 as saving
PS: Cleaning contract supplies has been taken in both calculations. Tony and Lorraine did not want to
consolidate that debt as they pay if in full every month.
Assessor feedback: Resubmission required?
No
Page 39 of 69

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
- Final account statements signed by the directors/partners for all borrowers and related entities
covering a period of two consecutive periods plus
- The personal taxation return for each director/partner/guarantor and trustee for the same two
years
- ATO’s notice of assessment relating to the years’ tax return is mandatory because this allows the
lender some comfort that the returns being used to assess an applicant’s ability to repay a loan are
legitimate
- If the most recent final annual financial statements are older than 18 months, in some instances
the lender may accept accountant prepared interim financial statement or internal management
accounts supported by BAS since the last full year of financial statements.
Company search documents including ACN and ABN numbers, certificate of incorporation.
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
1. Low-doc declaration fully completed and signed by all applicants i.e. Tony and Lorrain in this case.
Separate declaration required for unregulated small business low-doc loans. Most lenders still
operating in this space also require a letter from the client’s accountant confirming the client can
afford the loan.
2. Last 12 months Business Activity Statements (BAS) with the most recent statement no older than 4
months.
3. Documents confirming how the funds are to be utilised.
4. Bank statements for the business working account covering previous 6 months with the most recent
statement being no older than 30 days.
Assessor feedback: Resubmission required?
No
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
Mortgage broker and lender are required by the NCCP Act to only offer a loan product to the borrower that
is ‘not unsuitable’.
Page 40 of 69

ASIC deems a loan to be ‘not unsuitable’ if:
 It meets Clients requirements and objectives, and
 Customer have the ability to repay the loan without experiencing substantial hardship.
A credit provider must:
 Make reasonable inquiries about the customer’s financial situation, requirements and objectives
 Take reasonable steps to verify the customer’s financial situation
 Decide whether the credit contract the customer is requesting is ‘not unsuitable’ for that customer.
What is meant by reasonable will depend on the borrower’s individual situation.
Low doc loan, which normally require minimal or no evidence of income, may present difficulties when
applying the responsible lending principle. This is because NCCP Act imposes an obligation to make
reasonable enquiries about a borrower’s financial situation and take reasonable steps to verify that
situation.
In some cases, minimal inquiries and verification will be sufficient when all of the circumstances of the
borrower’s case are taken into account, such as the availability of guarantors or extra collateral.
Even if a loan is not regulated by the NCC, the loan agreement can still be varied or set aside by a court of
law. Therefore, it is advisable that sufficient inquiries are made to satisfy the ‘not unsuitable’ test even for
non-standard loans.
Assessor feedback: Resubmission required?
No
Page 41 of 69

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
Tony and Lorraine have made a wise decision to go ahead with debt consolidation. This shows that they are
sincere about managing their finances sincerely and keep them under control in future to achieve their
financial goals.
My advice to Tony and Lorraine regarding loan and debt management strategy tools would be as follows:
1. Prepare a budget for all expenses including house hold expenses, utilities, transport,
entertainment, insurance and other expenses. They need to then track the expenses to ensure that
they are within budget. If any expense is over budget then they need to find out the reason and
take corrective action. For example if utility bills are higher than be prudent and take extra care
with switching off devices, electricity when not needed.
I would suggest they download TrackmySPENDmobileapp and use it to track the expenses. They
should also visit ASIC’s moneysmart web site to further explore the idea son budgeting and tracking
expenses.
https://www.moneysmart.gov.au
2. Tony and Lorraine should look at opening an offset account to park any surplus funds to save
interest charges on their loans. They can use the offset account as transaction account. Any balance
in offset account will save them interest on the loan as offset amount is reduced when calculating
interest on daily basis.
3. Moneysmart web site also has other calculators that the can use or download as app
- Savings calculator to save for big purposes or big spends
- TrackMyGOALS to set, plan, track and manage savings goals and visualise your progress towards
achieving your goals.
- Mortgage Calculator – It shows the repayment and you can calculate impact of interest rate
changes
4. Any extra payments should be used to pay off the debt. Redraw facility allows the funds to be re-
drawn if required. This is much better than putting funds in savings account as the interest saved on
mortgage payment is much higher.
5. Credit card can be used, if it is paid in full on time without incurring any interest rates. This allows
you to get up to 55 days of interest free use of funds. This way the funds could be sitting in offset
account or as redraw for 55 days and on the due date are paid in credit card account in full as per
the statement.
6. Seek financial counselling, free legal advice or urgent money help if required. Details are on
Page 42 of 69

Moneysmart web site.
Be prepared for some unforeseen expenses (e.g. major breakdown in car) and provision for it.
Assessor feedback: Resubmission required?
No
Page 43 of 69

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?
Page 44 of 69

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
Three major credit reporting agencies are as follows:
1. Equifax( previously Veda Advantage)
2. Dun & Bradstreet
3. Tasmanian Collection Service
Information on Credit files:
Credit report holds information relating to credit history and it helps credit providers, such as banks,
financial lenders, telco and utility companies, get a clear picture of credit worthiness when one make an
application for a loan or credit contract.
If you’ve ever applied for a credit card, personal or home loan, store finance, mobile phone or an electricity
or gas contract it is likely that you will have a credit report held with one of the credit agencies.
A credit report includes information such as:
Personal details including full name, date of birth, driver's licence, gender and residential addresses and
employer information.
Consumer credit information which may include:
 Credit applications you have made for personal use
 Credit account information including type of credit account, the credit limit and the dates accounts
were opened or closed
 Monthly repayment history on credit accounts such as mortgages and credit cards. This will reflect
whether you paid the minimum amount required on your financial commitments each month on time
or not.
 Details of overdue debts like payment defaults
Publicly available information can also be included as part of your consumer credit information. This
includes court judgements and court writs, directorship details, proprietorship details and bankruptcy, debt
agreement and personal insolvency information.
Commercial credit information which may include:
 Credit applications for credit for commercial purposes
 Details of overdue commercial credit accounts
1. Payment default: A consumer payment default is debt of $150 or more that is 60 days or more
overdue.
2. Serious credit infringement or clear-out: A serious credit infringement where a person owes a credit
provider money but has left or appears to have left their last known address without paying that debt
and without providing the credit provider with a new address.
3. Payment status current: At the time the account was updated, the person’s payments were up-tp-date
and the account was still open.
Late payment: If a person pays their credit card or loan repayments more than 14 days past the due date, it
can be recorded on their credit report as a late payment part and a part of the person’s repayment history
kept on file for two years.
Assessor feedback: Resubmission required?
No
Page 45 of 69

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
There are a number of ways to find out what is in your credit report. You have the right:
 To obtain a free copy of your credit report. A credit reporting body cannot charge for this, unless
you obtained a copy of your credit report from them in the previous 12 months;
 To obtain a free copy of your credit report within 90 days of having an application for credit
rejected;
 To be informed by a credit provider the reason for a loan refusal.
Veda Advantage:
Procedure:
Step I: Complete the Veda credit Report Form with all the required details
Step II: Make the payment of required fee
Step III: Get the Veda Score which is a credit rating between 0-1200
Costs:
There are four packages available at the following costs:
Veda Starter - $79.95 per year – Get 1 credit report and Veda score per year with access to online
membership, resolution entre and knowledge area.
Veda Access - $89.95 per year - Get 2 credit report per year with monthly Veda score with access to credit
alerts, score tracker, online membership, resolution centre and knowledge area.
Veda ID - $104.95 per year - Get 2 credit report per year and 2 Veda score per year with access to credit
alerts, Identity watch, credit and identity guard insurance up to $15,000, online membership, resolution
centre and knowledge area.
Veda Plan - $119.95 per year - Get 4 credit report per year and monthly Veda score per year with access to
credit alerts, score tracker, Identity watch, credit and identity guard insurance up to $15,000, online
membership, resolution centre and knowledge area.
Free Copy:
There are certain circumstances under which you can get a copy of your credit report for free.
 You can request a copy where a credit application was declined. You must apply within 90 days of
the date you were declined
 You can request a copy if you have lodged a correction request and been advised that information
on your file has been corrected
 You can request a copy once every 12 months
If you request a free copy of your credit report because you have been declined for credit, you might be
asked to supply a copy of this decline notice with your application.
Dun & Bradstreet:
Procedure:
 You can request a copy of your personal credit report online. Your identity will need to be verified, so
please ensure that the details you provide are complete and accurate. You are entitled to request your
credit report for free once a year.
 Alternatively, you may complete our Application for Personal Credit Report form to receive a copy of
your credit report in the mail. In addition to completing the form, you will need to provide the
following documents to verify your identity
1. A copy of Driver’s Licence or passport or Birth certificate or proof of Age card, and
2. A copy of a document issued by an official body (such as utility bill or bank statement)
Costs:
Credit Report: $30 or Free - The credit report displays information including identification details, credit
Page 46 of 69

applications, repayment history, account information, defaults and bankruptcies. You can opt to pay a fee
for our Fast Track service, which provides your report in one business day or you can opt to wait 10 days
and receive your credit report for free.
Credit Alert: $60 per year - The credit alert service notifies you when information on your credit report
changes. An alert service is the most effective way you can protect yourself against identity theft and
fraud, giving you peace of mind by keeping you updated on where you stand with your credit history. It
also includes the delivery of your credit report at no extra cost.
ID Alert: $30 per year - An id alert notifies you of changes to your personal identification details and new
credit applications, allowing you to verify that the information is correct.
ID Report: $15 - The id report displays only personal identification details and credit application
information. It is a quick and easy way to verify your information as correct. You can view your id report
online within one business day.
Free Copy: You can opt to pay a $30 fee for our Fast Track service, which provides your report in one
business day or you can opt to wait 10 days and receive your credit report for free.
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 Tony believes that credit report contains any inaccurate, out-of-date, incomplete, irrelevant or misleading
information, Tony can take the following steps to have it corrected.
Step 1: complain to current credit provider, the listing creditor or credit reporting body
Credit reporting bodies and creditors are required to deal with complaint and cannot refer it to someone
else. Even if Tony doesn’t know who has put the information on credit report, he can complain to any credit
reporting body or creditor.
If Tony send a complaint to a credit reporting body, make sure he also send a copy to any relevant creditor.
Remember to date, sign and keep a copy of letter. If Tony is not happy with the result of step 1, he can take
step 2.
Step 2: complain to the Ombudsman scheme or the Commissioner
Credit reporting bodies and creditors are required to be a member of a free and independent dispute
resolution service called an Ombudsman service. Ombudsman schemes include the Financial Ombudsman
Service, Credit and Investments Ombudsman, Energy and Water Ombudsman Victoria and the
Telecommunications Industry Ombudsman.
Tony can make a complaint to the relevant ombudsman scheme to which the credit reporting body or
credit provider is a member.
A complaint can be made to the Commissioner if Tony is not satisfied with the response of a credit
reporting body, credit provider or Ombudsman scheme. However, the Commissioner can refuse to hear a
complaint if it has already been heard by an industry ombudsman scheme, or, if haven’t first complained to
a credit reporting body or creditor.
Assessor feedback: Resubmission required?
No
Page 47 of 69

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 a lender or other institution declined an application due to the content of the credit agency report, it’s
required to:
 Tell you in writing that it denied your application
 Provide you the numerical credit score it used in taking the adverse action and the key factors that
affected your score
 Give you the name, address, and telephone number of the credit reporting company that provided the
report
 Tell you about your right to get a free copy of your credit report from the credit reporting company
that provided it.
 Explain the process for fixing mistakes or adding missing items to your report
This requirement is provided for in the Privacy Act.
All lenders and credit providers are legally obliged to tell you in writing the reason for the denial of
finance. The law also requires two important pieces of information that must be included in this letter.
The reasons why were they denied credit. Note that these reasons must be specific, not vague. or,
The letter may contain information on how you can obtain those reasons.
If a credit report was used in making the decision of turning down application for a loan, the lenders are
obliged to give the name and address of the credit reporting agency that supplied the report.
Sometimes, borrower may not understand the reasons given for turning down application. If so, ask for
more information using the contact numbers provided in the letter.
In addition to the reasons and the name of the credit reporting agency, the letter or notice will also tell
you which agency to contact if you believe the lender or the mortgage broker has illegally discriminated
against you.
All financial organisations need to have customer complaints policies and procedures.
As per ASIC RG 165 all AFS licensees, credit licensees and credit representatives are required to have in
place a dispute resolution system that consists of
 Internal dispute resolution (IDR) procedures that meet the standards or requirements made or
approved by ASIC – This is the first step to resolve the dispute. This allows a financial service provider to
hear client concerns, complaints and disputes and to address them in a genuine, efficient and effective
manner.
 Membership of one or more ASIC approved external dispute resolution (EDR) schemes – If resolution
cannot be achieved using IDR, EDR is the next step. Currently there are two ASIC approved EDR
schemes in the AFS industry:
 Financial Ombudsman service Limited (FOS)
 Credit Ombudsman Services Limited (COSL)
Assessor feedback: Resubmission required?
No
Page 48 of 69

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
Options available to Tony and Lorraine are as follows:
1. If Tony believes that his loan application has been unfairly denied then he can access
lender’s Internal Dispute Resolution system(IDR)
2. If IDR is unable to solve the issue Tony can access EDR (External Dispute Resolution)
scheme. Two approved EDR from ASIC are
 Financial Ombudsman service Limited (FOS)
 Credit Ombudsman Services Limited (COSL)
If the loan is still not approved than Tony can work with mortgage broker to look at other lenders who may
have different criteria of evaluating credit report and can offer loan to Tony & Lorraine.
Assessor feedback: Resubmission required?
No
Page 49 of 69

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 Investments Ombudsman (CIO) offers consumers a free service to resolve their disputes
with financial services providers.
It is authorised by the Australian Securities and Investments Commission (ASIC) and the Office of the
Australian Information Commissioner (OAIC) to deal with financial services and privacy-related complaints.
There are a number of stages in the process of complaint handling.
Before making a complaint to CIO
 Before making a complaint to us, the consumer should first give the financial services provider (FSP)
an opportunity to resolve the complaint.
 The consumer should contact the person they originally dealt with or the FSP’s customer
complaints area to discuss their complaint.
 If the complaint remains unresolved, or if the FSP does not respond, the consumer can lodge their
complaint with CIO.
Validation
 Within 48 hours, most complaints will be registered into our complaints handling database. Notices
are sent to the FSP and consumer confirming receipt of the complaint.
 The FSP has 7 days to provide us with a copy of its IDR response. The FSP can also use this time to
try to resolve the complaint before we progress it.
 If the complaint is not resolved, or if the information received does not indicate that the complaint
should be closed under our Rules, the complaint will be moved to the Initial Review stage.
 For complaints where the consumer is seeking less than $3,000 or the complaint is about a credit
listing or enquiry, we may decide to deal with the complaint using our Expedited Process. If so, the
complaint will not be moved to the Initial Review stage.
Initial review
 The Initial review stage is CIO’s first round of information gathering.
 Our first step is to obtain information from the FSP. The information request will be relevant to the
consumer’s claims and any information already received from either party (such as the FSP’s IDR
response).
 Any subsequent response received from the FSP will be referred to the consumer to give them an
opportunity to reply. Further information may also be requested from the consumer.
Page 50 of 69

 After this first round of information gathering, if the complaint is not resolved, or if the information
received does not indicate that the complaint should be closed under our Rules, the complaint will
be moved to the Investigation stage.
Investigation
 The Investigation stage is CIO’s final round of information gathering, where more detailed
information may be requested from, or targeted questions can be asked of, both parties.
 CIO may give a preliminary assessment to assist negotiations.
 If the complaint cannot be resolved, based on the information we have we will either issue a
Recommendation on how the complaint should be resolved, or close the complaint if it is not one
that we can continue to deal with under our Rules.
 If the parties do not accept the Recommendation, then the complaint will be moved to the
Determination stage.
Determination
 The Ombudsman will issue a Determination that sets out how the complaint should be resolved.
 If the consumer does not accept the Determination, the complaint is closed and the consumer is
free to pursue their complaint elsewhere.
 If the consumer accepts the Determination, the FSP is bound by it. Once the FSP has given effect to
the Determination, the complaint is closed.
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 51 of 69

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
We can use cloud storage to forward the documents to Tony and Lorraine. Dropbox offers file storage on
cloud and we can securely store the documents there and send the link to Tony and Lorraine by email. They
can download the documents, sign and upload them again or post/courier them back.
Docusign can also be used as a method to secure their signature electronically (if vendor supports this and
has the facility to provide it)
Assessor feedback: Resubmission required?
No
Page 52 of 69

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 17 MOSS AVE, EAST
HILLS, NSW, 2213 17 MOSS AVE, EAST HILLS, NSW,
2213
02 7061 2111
02 6051 2121
02 9940 3677
02 60512121
[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) Maximum amount is $11,68,697 and minimum amount will
be $892,341
Page 53 of 69

Assets and liabilities
Assets Liabilities
Details Market value Details Monthly payments Amount owing
Owner Occupied Property
at: $850,000 Mortgage with: $1,020.00 per
month
$190,000
Investment Property at: None Mortgage with: N/A N/A
Investment Property at: None Mortgage with: N/A N/A
Cash at bank
(includes fixed deposits) $10,000 Car leasing None None
Other cash
(includes offset accounts) $180,000 Personal loans
1.
2.
None None
Deposit paid on property None Overdraft None None
Motor vehicles:
1.
2.
$15,000
$5,000
Other loans:
1.
2.
None None
Personal effects $80,000 Credit card limit:
$
$150 $800
Business value Credit card limit:
$
$90 $1,200
Shares and investments None Other: None None
Superannuation $82,000
$54,000
Other: None None
Other assets (give details) None Other: None None
Total assets $1,276,000 Total liabilities $1,260 $192,000
Surplus/deficiency: $
Page 54 of 69

CURRENT MONTHLY LIVING EXPENSES (Provide a breakdown of the total amount listed in the case study – use your discretion)
Food/housekeeping $1,500
Insurance (e.g. motor vehicles, home contents/ building, medical, life/income protection) $250
Utilities (e.g. rates, gas, electricity, transport) $350
Transport (e.g. public transport, petrol, registration, repairs) $400
Education (e.g. school, college, university) $300
Dependents support (e.g. childcare, child maintenance) $300
Entertainment $100
Other (detail below:
$3,200
MONTHLY LIVING EXPENSES $1,500
Page 55 of 69

Needs analysis
1 Name of your current lender? Big Bank
2 What type of mortgage loan do you have? Standard Home Loan (P&I, Variable, no fees)
3 Why did you choose this particular loan and lender? This loan offers flexibility of having an offset
account and has no fees.
Big Bank was running special promotion of low
interest rate for honeymoon period of 2 years.
4 What is the interest rate? 5.0%
5 What are your payments? Amount $1,020
6 Frequency Per month
7 Do you know the fees and charges? No fees and charges
8 What is your proposed purpose for the loan you are
applying for? To purchase an investment property
9 Branch access available with current lender Yes
10 Internet banking available with current lender Yes
11 Phone banking available with current lender Yes
12 Lenders not to be considered Big Bank – Customer has requested not to
consider current Lender
13 Type of loan sought Residential Investment Loan
P & I for 30 years term
14 Preferred Interest rate range 5.68%(5.82% comparison),special offer rate of
4.78%(5.16% comparison )
15 Payment frequency Monthly but need fortnightly repayment option
16 Redraw Yes
17 Offset No
18 Salary crediting Yes – need option to make additional payments
from time to time without penalty
19 Low fees and charges No fees and charges
Page 56 of 69

Notes
Page 57 of 69

NB: Providing substantive notes is a compulsory part of your assessment.
Clinton and Jennifer Andrews live in Sydney with their two school-age children. They are both employed
full time and have been with their current employers for several years.
They have generated substantial equity in their family home and have decided to purchase an investment
property. They have identified a property, a new four-bedroom house, in outer Brisbane as an investment
property to generate rental income. Their medium term plan is to buy another investment property.
They have saved enough funds in offset account to pay for the deposit. Their objective is to get a loan for
investment property with an LVR of 90%. Other features they are looking for an the loan are as follows
 P & I Loan with 30 year term
 Special offer on interest rate
 Low fees
 Redraw facility
 Internet Banking
 Ability to make additional payments from time to time without penalty
Based on their current income and expenses they have the capacity to borrow the required amount and
to service the loan.
I am proposing two loan products that would meet their requirements:
Page 58 of 69

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 59 of 69

Funds to complete
PURCHASE AND LOAN COSTS: AVAILABLE FUNDS:
Purchase price: $450,000 Deposit paid $65,000
Lender application / valuation fees: $600 Cash savings: $7,113
Transfer stamp duty $15,241 Sale proceeds: NIL
Legal and registration fees: $1500 Gift: NIL
FHOG: NIL
Other: NIL
LMI: 1. 2. No Add to Loan? $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 60 of 69

Loan interview diary
Name(s) of client(s) present at interview
Clinton Andrews
Jennifer Andrews
Date of interview:
Location of interview
Sydney, New South Wales
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 benefit 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 61 of 69

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.
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Appendix 2: Serviceability calculator
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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) Interest-only period
LVR 90%
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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-taxable income $
Applicant 1: Total net income $ 5,476
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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) 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-taxable income $
Applicant 2: Total net income $ 74,000
Total net income for all applicants $ 159,000
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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
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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
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Actual rate serviceability calculations
NDI ratio 2.02:1 Monthly repayment $2,120
Actual interest rate 4.78% Maximum loan amount $1,168,697
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