DIPLOMA OF MORTGAGE BROKING AND FINANCE

The couple have rented out five shops and the value is $96,000 and the last shop is utilised by Mr Bisset for their own business and for the use, the company pays a rent of $42,000 annually in the family trust.

Running head: DIPLOMA OF MORTGAGE BROKING AND FINANCE
Diploma of Mortgage Broking and Finance
Name of the Student:
Name of the University:
Author’s Note:

1
DIPLOMA OF MORTGAGE BROKING AND FINANCE
Table of Contents
Assignment 1...................................................................................................................................2
Assignment 2...................................................................................................................................8
Part A...........................................................................................................................................8
Part B.........................................................................................................................................14
Assignment 3.................................................................................................................................18
Assignment 4.................................................................................................................................23
Assignment 5.................................................................................................................................33

2
DIPLOMA OF MORTGAGE BROKING AND FINANCE
Assignment 1
This form in relation to the loan submission gives out all the precise information that is
vital for the applicants in order to make an apply for the loan so that precise assessment can be
done after which the loan application can either be sanctioned or can be disallowed. All the
aspects in relation to the loan application for Mrs and Mrs Bisset is presented as follows:
Borrower Details
Name Andrew Mark Bisset Jane Elizabeth Bisset
Salutation Mr Bisset Mrs Bisset
Age 52 50
Marital status Married Married
Home address Currumbin Close,
Carindale QLD 4152
Currumbin Close, Carindale QLD 4152
Health Good Good
Smoker No No
Occupation Business Business Partner
Projected retirement age Not thought about it Not thought about it
The phone number of the appointed accountant for the couple who is Ainslie and Partners
is 07 3349 9999.
Background of the Client
Andrew Bisset is known to be a real estate agent and has been in this profession for over
20 years and on the other hand his wife has been working with him. They have 6 shops in
Belmont. They even have a shopping centre that is registered under Bisset Family Trust. The

3
DIPLOMA OF MORTGAGE BROKING AND FINANCE
overall value of the property is $1,450,000 and this value has been taken 2 years ago. The couple
have a mortgage at ANZ Bank with a value of $ 625,000. The couple have rented out five shops
and the value is $96,000 and the last shop is utilised by Mr Bisset for their own business and for
the use, the company pays a rent of $42,000 annually in the family trust. The rent paid by the
company has been paying higher than the actual fair market rental value as the rent amount is
$20,000. Mr Bisset is a specialised real agent and is expertise in the field of commercial and
industrial properties. Mr Bisset draws a gross salary of $78,000 from the company and further
more withdraws $55,000 from the partnership business with Joseph Hooper.
The business was founded in the last financial year and their aim had been to acquire the
real estate market. This business was previously operated with the help of the partnership
between Mr Bisset and Joseph Hooper. Bisset Real Estate took over the business after Joseph
retired and therefore at the current time period, Andrew Bisset is the only director for the
existing business.
On the other hand, Mrs Jane Bisset had earlier been a property manager and she had been
working as a property manager since the partnership agency was taken over by Bisset Real
Estate Pty. She on the other hand withdraws a salary of $43,000.
Purpose of the loan
The couple are having the idea of applying for the loan as the couple as well as the
company has the intention of buying a property of 3000 m2 because of the fact that this land is
closer to their shopping centre and the couple have a plan holding into the land for the next 2
years and thereafter wait for the purpose of rezoning. The value of the land is $600,000 and it is
seen that is land was previously under the State Government Dental and Health Care Centre but

4
DIPLOMA OF MORTGAGE BROKING AND FINANCE
this centre became obsolete after the building was destroyed. The land has been marked under
the “Special Purpose” but it is seen that the local municipal council has declared the land to be
made use of for the purpose of future use commercially and it is due to the fact that this land has
been declared within the Town Planning Scheme. The land has an address of 43 Belmont Road
and the feature of the land is that there are two frontages and the traffic frequency has been high.
The client has made the contract of buying the property as the trustees of their trust and the
settlement amount to be due within 60 days. The client even wants to gain 100% of the property
value from the loan and an extra $25,000 in order to pay out the financing amount, stamp duty
and the conveyance expenses. A guarantee for the loan that they want to undertake comprises of
the shopping centre and the land they want to purchase. The client has the idea of paying
additional $20,000 in order to pay for the cost for the purpose of re-zoning of the land and
thereafter receiving the approval to build the shopping centre on that land. This is the real plan
for the client in order to take the loan from the desired bank.
Details of the Facility
The land in accordance to which the client is looking forward to take the loan is
discovered to be that the land was in use previously by the State Government for their Dental
Health Care services. The land has been marked for “Special Purpose” by the state government
but on the other hand the local council has declared the land for the purpose of future
commercial property use and therefore has been named as Town Planning Scheme.
Fund position
Fund is one of the significant factor by taking assistance of which the client will be
capable of buying the property which has a value of $600,000 and it is due to this fact that they

5
DIPLOMA OF MORTGAGE BROKING AND FINANCE
are looking forward to take the loan. The overall loan amount that they are looking to take is
$625,000 as the additional money would be used in order to pay for the stamp duty and the other
related expenses. They are looking forward to keep the shopping centre and the purchased land
as the guarantee for the loan. On the other hand, it is seen that the couple have an existing
mortgage from ANZ Bank and this has a value of $625,000 and after assessing the financial
scenario of the couple, one can say that annual income of the couple is sufficient in order to get
their loan sanctioned. It is seen that they have the capability to pay out the loan within the
stipulated time and therefore they are financially sound.
Servicing Capacity
Security
As the security of the loan, the client has the idea of keeping their existing shopping
centre land and the land that would be purchased with the help of the loan. The value of the land

6
DIPLOMA OF MORTGAGE BROKING AND FINANCE
where the shopping centre is situated has been $1,450,000 two years earlier and hence, this will
be adequate as collateral in order to pay for the loan in case the couple is unable to pay for the
same.
Risk Assessment
The extent of risk for the client has been low mainly because of the fact that they have
their own business and being a business that is acquired from a well established business it is
seen that the level of profit earned and the income received is high. The risk related to them has
been the health factor for the couple as they are middle aged now and anything in their health can
have an impact on their business and their activities as well. The changes in the tax regulations or
unprecedented economic events can have an impact their business. Therefore, the recognition of
these risks would be helpful in the reduction of risks and thereby have a peaceful future life
ahead. This would be helpful in the pay out for the loan and the mortgage that are existent to
them and even maintain their level of income.
Recommendations
The client need to purchase an insurance for their business and individually so that this
insurance would compensate for the any kind of unexpected events. All the documents related to
the client need to be presented in an orderly manner and all financial documents of the collateral
provided needs to be submitted beforehand. The couple need to increase their profit level and
income and should even assess their financial condition from time to time in order to maintain
balance in their portfolio.
Attachment

7
DIPLOMA OF MORTGAGE BROKING AND FINANCE
 Address Proof of the client
 Financial and income statement of the applicant
 Documents of the collateral

8
DIPLOMA OF MORTGAGE BROKING AND FINANCE
Assignment 2
Part A
List of Questions
Question 1: What are the annual income and the present age of Ray and Steve?
Question 2: What are the key income sources of two of you?
Question 3: Why are you interested in growing your business?
Question 4: What sort of income do you expect to create from the business?
Question 5: What is the present budget you need to start the business?
Question 6: What are yearly expenses?
Question 7: Please cite the aims and objectives for developing your business
Question 8: Please explain the need of the investments you are looking forward to
Question 9: What is your present bank balance?
Question 10: What is the basic capital required to assist the expansion?
Question 11: What is the role you want us to perform?
Question 12: Have you followed the investment rules that are disclosed by the Australian government?
Question 13: What would be your actions if the investment amount reduces in next 40 years?
Question 14: Explain the current demands of going into new investment for the business
Question 15: What is the actual source of the income for your business?
Question 16: What do you desire; short-term gains or long-term returns?
Question 17: Does any sort of short-term risk have an impact on the development of the business portfolio?
Question 18: Specify the actions taken during the investment loss
Question 19: Explain your investment strategy, which is being that is currently being undertaken during the
procedure of making decisions in order to mitigate risk
Question 20: How much effectively do you have knowledge about the demands in the investment market?
Question 21: Kindly specify the past decisions associated to investment and its effect on profit

9
DIPLOMA OF MORTGAGE BROKING AND FINANCE
Question 22: Please identify the conciliation priority level of you have
Question 24: Kindly explain the criteria you desire to gain success
Question 25: Highlight the procedure of borrowing undertaken from your side for growing the business
Question 26: Explain investment method of your business
Question 27: Identify the present financial scenario of the business
Question 28: What are the other investments that you may undertake in future?
Question 29: What qualities and qualifications are demanded by you from the consultants?
Question 30: Are there any geographical limitations of your business?
Question 31: What are the geographical advantages of your business?
Question 32: Do you have the ability to maintain the extent of income till the time of loan?
Question 33: What is your risk tolerance?
Question 34: Address your current disposable income
Report
This document is given to the customer to gain knowledge of their actual position, the
demand for taking the loan in order to develop their business and thereby raise their extent of
profit.
The case study is related to approval of the loan for Steve and Ray who are entrepreneurs
for a transport company and have been having a good business in the Australian economy. They
are in the intention of growing their business and therefore has been looking to start a new
business where trailers would be given out as rent and other tools would even be provided to the
current firm of Steve and Ray, which would be helpful in the development of the business
performance for both the companies and thereby there would be a rise in the extent of income as

10
DIPLOMA OF MORTGAGE BROKING AND FINANCE
the money would remain within the two businesses. This is even helpful for the existing
company to reduce their reliance on the external suppliers. The issue that is to be taken into
consideration that there are numerous lending companies from where they can take the loan but
the selection of the company would be based on the objectives of the customers.
Security
The transport company has been operational for over 34 months and therefore gains
significant amount of returns. The financial statement of the company has been appreciable and
the profit attained is ideal for them to get their loan sanctioned. The security that would be given
out by the clients will be their entire transpiration business and even the property over which the
company is established. The overall income and the value of property will be sufficient to be the
collateral for the loan.
Facility
The customers have the aim of growing their business and in order to develop their
existing business and in order to do the same is looking to start a trailer renting business and the
rent will be given to the existing company of the customer. This in a way will be helpful in the
rise in the extent of profit for the business as it is seen that the external suppliers will not be
dependent on by the current business. In order to start the business they are looking to take a land
on lease and the rent will be $6000 per month.
Lender Details
The details for the precise lender are given as follows:

11
DIPLOMA OF MORTGAGE BROKING AND FINANCE
Loan Providers Commercial equipment finance
ANZ  Rate of interest at 7.00%
 No Application Fees
 No Annual Fees
 5 to 30 years minimum term loan
 $10,000 to $100,000,000 loan amount provided
 LVR 80%
BOQ  Interest rate 5.00%
 No Application Fees
 No Annual Fees
 5 to 15 years minimum term loan
 $200,000 to $100,000,000 loan amount provided
 LVR 65%
Commercial Bank  Interest rate 7.80%
 No Application Fees
 No Annual Fees
 Maximum 15 years term loan provided
 $25,000 to $100,000,000 loan amount provided
 LVR 85%
Client’s Requirement
The client is in the need of a commercial finance for the tools and the vehicles that is
essential for the couple in order to initiate the new company with the help of which they can
develop their entire business operation. They are in need of a loan which would be helpful in the
development of an effective business process with the help of lower extent of risk and interest,
which is ideal for the customers. The customers are in need of an additional finance of $500k for
the purpose of future development of the business. The client has generated a new business in the

12
DIPLOMA OF MORTGAGE BROKING AND FINANCE
name of Henman Holdings Pty Limited. The tools that are needed would be used up internally in
the existing company and the income that would be received as rent will be utilised for the
repayment of the loan. In this manner, the loan can be repaid from the profit without any
additional expense to the external parties and thereby the tools can be attained from the lender
and the profit for the business would increase as well.
Personnel
The owners in order to complete their business in an effective and orderly manner would
be in need of a solicitor and an accountant, who would provide advice and suggest the process of
payment of the loan and the purpose of finance structuring in accordance to the income of the
client. The solicitor has the role of reviewing and preparing the contracts in order to get into
agreement with the lender and thereby the aspect of the client would be safe as well.
Process timing
The process timing is dependent on the degree and the efficiency with the help of which
all the documents that are required by the lender will be submitted by the client. The address
proof, the income statement and the other related documents of the company would be helpful in
the determination of an idea for the client with the help of which the lender would have an idea
whether the client is competent enough to pay for the loan.

13
DIPLOMA OF MORTGAGE BROKING AND FINANCE
Part B
Details of the Borrower
Name Ray Henley Steve Manning
Salutation Mr Henly Mrs Manning
Age NA NA
Marital status Married Single
Home address NA NA
Health Good Good
Smoker No No
Occupation Business Business Partner
Projected retirement age Not thought about it Not thought about it
Ray and Steve are partners and have been operating a transportation company for a long
time. They are financial controllers for transportation companies earlier and it is seen that Steve
has a marketing degree and on the other hand Ray has a MBA degree. Steve is currently pursuing
a HR degree as he feels that this degree would be helpful in the operational activity of their
current business.
Background
The client Steve and Ray have been partners for a transport company and their business
has been productive in the economy. The company has been looking to expand their business
with the advent of new orders and contracts. Therefore, in order to reduce their dependency on
the external suppliers and thereby reduce their cost, the partners have decided to start a new
business by the name of Henman Holding Pty Ltd and this company would be providing trailers
to their existing company on behalf of a rent. The income on behalf of the rent would be used for

14
DIPLOMA OF MORTGAGE BROKING AND FINANCE
the purpose of paying for the loan and in this manner profit would increase and the cost would
reduce as well. The required loan amount is $500k.
Purpose of the loan
The loan that would be taken will be used in order to purchase trailers, trucks and
transport gadgets that would be put out for rent to their parent company and in this manner an
income would be created that would be used to pay for the loan. The loan amount will even be
used for the purpose of paying for the land that would be used in order to maintain office for the
new company.
Facility Details
The facilities that is required from the loan comprises of lower level of interest rate and
minimum amount of risk that would safeguard the operational activity of the business. The loan
needs to have a higher payment tenure and thereby needs to have flexible payment value so that
one can pay higher when required and pay less when the business is not doing ell.
Fund Position
The company is need of a loan amount of $500k that would be used for the purpose of
buying the trailers, trucks and other goods and even paying for the land. This would assist the
client to bring in new orders and contracts within their business and lowering their external costs
with the help of which the business would develop and accordingly new agreements and orders
can be taken into account.

15
DIPLOMA OF MORTGAGE BROKING AND FINANCE
Servicing Capacity
Security
The client is in the idea of keeping collateral for the loan and therefore the documents of
the existing business would be kept for the loan. The value of the property that would be used for
the purpose of collateral is equivalent to the amount of loan that would be taken and therefore the
security will be adequate.
Risk Assessment
The risk associated to the business has been the liquidity scenario and the changes in the
external factors for the business. The rise in the price of oil and other market risks can reduce the
extent of income and thereby can hamper the payment for the loan.

16
DIPLOMA OF MORTGAGE BROKING AND FINANCE
Recommendations
The client has to assess their operational activities on a frequent basis in order to
understand the extent of profit and losses for the company. In order to maintain effective level of
business, it is seen that the client need to assess the market in order to understand the risks that
are existent so that plans and actions can be taken in order to mitigate the same.
Attachment
 Address Proof of the client
 Financial and income statement of the applicant
 Documents of the collateral

17
DIPLOMA OF MORTGAGE BROKING AND FINANCE
Assignment 3
Answer to Question No 1
In order to gather the information in accordance to the information that is essential for
understanding the complex requirement of the client, it is primarily essential to conduct a
meeting with the client. Once the meeting has been fixed, all the services and the consultancies
that would be provided to the client is properly explained so that the client has proper idea about
the services they would receive and thereby dissatisfaction reduces. The clients are even made
aware of the post consultation services so that the client can take their assistance even when they
are having issues even after making the investment.
In order to understand the requirement of the client, one has to say patient and therefore
would look forward to the understanding all the demands and the desires of the client. The
questioning technique used would be in some cases can be direct and in certain instances would
be indirect and indirect questions are asked with respect to the personal information of the client.
The indirect questions provide answers that advisers can understand thereby better results can be
given. An informal relationship should be maintained with the client so that they feel relaxed and
do not hesitate to share their actual concerns.
The language that would be used should adhere to a common aspect and would not be
based on some sort of culture. The questions as well as the behaviour will be in a neutral sense so
that the customers feel that they are intolerant to the cultural issues and look at everyone to be
the same.

18
DIPLOMA OF MORTGAGE BROKING AND FINANCE
The interpersonal skills play a significant role because of the fact that this helps in the
development of a better relationship with the client. The interpersonal skills make the client more
relaxed and comfortable and therefore assist them in answering in a comfortable manner. This is
done with the help of understanding the feelings of the client and the attitude.
Rapport is created with the client with the help of soft talks and light snacks to the client
with the help of which the client can gain trust on the adviser. The extent of professionalism is
understood with the help of the understanding the desire of the client and accordingly meet their
demands and requirements. The complex broking process will be delivered in a simple and
logical way to the client so that they understand in a very effective manner and this is done with
the help of the communication skill.
Answer to Question No 2
The process of recording the information is done with the help of a pre-designed template
and the questions within the template are asked in the initial interview and the answers are
recorded within the template as well. In case the meeting is done through telephone or video
chat, then all the information is recorded with the help of a recording device and thereby the
conversations can be looked upon by the adviser at any future point of time. A distinctive
process is created with the help of which an effective timing and the sorting according to the
priority is created. In this manner the information can be sorted according to the priority and
thereby can be incorporated in the planning process accordingly. There are several kinds of
electronic technologies used for the purpose of recording the information and one of them is
saving the data in the hard drive as it would be safeguarded and will not be available for use by
the external parties. The company has their own software that are used so that all the information

19
DIPLOMA OF MORTGAGE BROKING AND FINANCE
is recorded within the company and no leaks are done outside in accordance to the information.
All the suggestions and advices that are given to the client are provided according to the structure
laid down by the company and these advices are even recorded so that in case of any discrepancy
comparison can be made with the same.
Answer to Question No 3
The complex features of the situation of the client are understood in accordance to the
objectives of the research and all these aspects are reviewed in accordance to the past documents
of other clients and making a comparison with the financial condition of the client and their
desire for an effective portfolio. These aspects are clarified and in case there are any issues, these
elements are discussed with the client in order to resolve them. The opportunities and the
constraints that are seen in the scenario of the client needs to be understood with the help of
which effective level of advices can be given to the client. After the assessment of the condition
of the client, an assessment is done so that suitable loan structure for the client can be
constructed. The structuring of the loan process is done with the help of the taxation, economic,
legislation and other factors are even taken into consideration with the help of which the
financial issues existent with them would be understood and thereby a better loan process would
be understood. In case it is seen that the financial scenario of the client is unstable then they are
asked to refer to a One Tier advisor so that they can construct a precise financial statement for
the client. The loan structure is assessed in comparison to the benchmarking structure with the
help of which the effectiveness of the structure can be recognised. The checks with the
compliance policies are done after they are found to be inappropriate then the options that are
found to be unsuitable are rejected. The assessment is done by comparing with the objectives of

20
DIPLOMA OF MORTGAGE BROKING AND FINANCE
the client and assessments are made in order to discover the fact that all the aspects have been
covered. Once all the aspects are attained then this option is incorporated.
Answer to Question No 4
In order to recognise the risks that are related to the client, it is essential to primarily
discover the risks that are related to the client. After the various kinds of risks that are related to
the client are discovered, then they categorically segmented into high, moderate and low. In this
manner, advises can be given by the adviser to the client. There are several risk assessment tools
that are available but generally the valuation practices are undertaken with the help of which the
extent of risk with the portfolio of the client can be understood. A direct face to face discussion
is generally done with the client in order to communicate the aspect and the results of the
valuation of the risk to the client. The chances of risk are even explained so that the client would
be ready for these consequences. A risk related questionnaire is constructed with the help of
which the risk taking ability of the client is understood and thereby the capability of the facing
the risks can be understood as well. The information regarding the risk would be portrayed on a
frequent basis so that betterment of the client can be attained. Any new controlling mechanism
for the extent of risk would be addressed to the client so that their extent of risk can be reduced
by a significant margin.
Answer to Question No 5
The presentation of the loan option to the client is done with the help of a precise and
effective structure that would be useful for the betterment of the business. The benefits and the
limitations of the loan options are discussed with the client in order to provide them with the
understanding of the reason the concerned loan option has been given to them. The brokerage

21
DIPLOMA OF MORTGAGE BROKING AND FINANCE
fees and charges that are associated to the risk is even addressed so that no issues related to the
fees structure would be existent among the client. The scenario of the lender is even addressed to
the client so that they would have an understanding of the policies and the regulations that the
companies need to comply with in order to stay in line with the rules of the government. This
would be helpful for the lending company to perform in an effective manner and maintain ethics
within their organizational framework. The documentation is given to the client after proper
scrutiny and in a proper way with the help of which the clients can have a better understanding of
the documents provided to them. The client are even informed about the services they would
require from other parties like the accountants and the solicitors so that all their policies and
plans will maintained in an effective manner. A consent form is provided to the so that sign the
same as an evidence that all the advices provided to them are understandable and they agree to
the same. in case of any issue related to the advice the advisers would provide further assistance.
All the information related to the complaints resolution procedure is even given to the client with
the help of which all the information in accordance to the external and the internal matters and
this is forwarded with the help of a form.
Answer to Question No 6
There are several kinds of concerns that can be raised by the client and therefore it is
essential to prepare plans and strategies in order to discover with the same. It is due to the fact
that the documents that are gathered from the client are assessed comprehensively so that
recommendation that would be given would be precise and accurate for the client. In some cases
alternate plans and recommendations are even constructed in order to provide the same if the
client is not satisfied. The financial guidelines and regulatory limits are even addressed to the
client so that they abide by the same and maintain effective financial portfolio.

22
DIPLOMA OF MORTGAGE BROKING AND FINANCE
Assignment 4
Answer to Question No 1
Part A
RATIO 2016 2017 Risk Grade
1. Current Ratio 1.01 1.10 Low
2. Quick Ratio (Acid Test) 0.84 0.91 Low
3. Return on Equity (ROE) 0.71 0.69 Moderate
4. Return on Assets (ROA) 0.32 0.37 Low
5. Debt to Equity Ratio 1.19 0.84 Moderate
6. Debt to Assets Ratio 0.04 0.04 Low
7. Leverage Ratio 2.18 1.84 High
8. Interest Cover Ratio (ICR)
–
Existing Debt/s
7.50 9.59 High
9. Debt Servicing Cover
Ratio
(DSCR) – Existing Debt
NA NA
Part B
30 June 20 16 30 June 20 17
Net Profit Before Tax (Note 1) 32778 35825
Potential Add Backs
Interest 4372 3735
Depreciation / Amortisation (Note 2) 9500 8150
Directors Salaries / Superannuation (Note 3) 32000 35000
Other non-cash items NA NA
Extraordinary / Non recurring expenses (may be
Plus or Minus) (Note 4)
NA NA
Earnings Before Interest, Taxation, Depreciation,
and Amortisation (EBITDA)
78650 82710
Taxation allowance on Net Profit (Note 5)** 30% 30%

23
DIPLOMA OF MORTGAGE BROKING AND FINANCE
Available for Debt Service 23595 24813
Interest Cover Ratio 7.50 9.59
Proposed Deductible Interest Costs:
Existing $ k @ % * 9% 9%
Plus Proposed $ k @ %* 2% 1.5%
Total Proposed Interest Costs 4459 3791
Proposed Interest Cover (Note 6)
(EBITDA divided by Proposed Interest Cost)
17.63 21.81
Debt Service Cover Ratio
Existing O/D or Credit Card assumed fully drawn
at
prevailing interest rate interest only*
80,000 57800
Existing Loan Repayments 7200 5202
Proposed Loan Repayments 6000 5000
Total Commitment Proposed 13200 10202
DSCR (Note 7) (Available for Debt Service
divided by Total Commitment Proposed)
Part C
The serviceability analysis addresses the fact that the client needs to maintain effective
level of income in order to pay the loan in an effective manner. The financial scenario of the
client is not effective and therefore careful assessment and a proper streamlining advice towards
the channelling of their income would improve their financial scenario and their ability to make
payments.
Answer to Question No 2
A : TRUSTS
What is a Unit Trust?

24
DIPLOMA OF MORTGAGE BROKING AND FINANCE
A unit trust can be defined as an unincorporated mutual fund structure that permits funds
to hold assets and gives profits that goes straight to owners of the individual unit, instead of
reinvesting them back into the fund.
What is a Discretionary Trust?
A Discretionary Trust can be defined as a trust in which the number of shares of each and
every beneficiary are fixed by the discretion of the trustees and not by the settlor in the trust
deed.
What is a Hybrid Trust?
A cross between a Discretionary and a Unit Trust is called as a Hybrid Trust, it is quite
appealing as it includes the benefits of both and is an extremely useful structure.
What is a Discretionary Family Trust?
The term family trust is referred to as a discretionary trust set up to hold a family's assets
or to conduct a family business. In this the beneficiaries do not have a fixed entitlement or
interest in the trust funds and the trustee has the full discretion to determine which of the
beneficiaries are to get the capital and income of the trust and how much.
What is a Trustee?
A Trustee is an individual person or member of a board, who has got the full control or
powers of administration of property in trust with a legal obligation to administer it exclusively
for the specified purposes.
Define the differences of each type of Trust, including the obligation/s of the Trustee

25
DIPLOMA OF MORTGAGE BROKING AND FINANCE
Each of the trust has their own functions and therefore they are different from each other
and each one of them has been addressed in the earlier questions.
Provide an example of when each type of Trust would be used.
Unit Trust- Stock of a company
Discretionary Trust- Will of an individual
Hybrid Trust- Low risk assets
Family Discretionary Trust- Family trust any trust deed for a religious property
B COMPANY
What are the legal requirements of a company?
Following are the legal requirements of a company:
 To have a registered office
 To have a principal place of business
 To disclose the personal details of the directors
 Always to keep financial and other records
 Payment of relevant fees to ASIC
 Keep ASIC notified for any changes
 Always to check annual statements
 To ensure that the company is solvent
 Always to act in companies best interest
 Appropriate use of information

26
DIPLOMA OF MORTGAGE BROKING AND FINANCE
What are the personal obligations of directors by law (please summarise)?
There are many and important legal responsibilities executedby directors under the
Corporations Act 2001 and other laws, including the general law. Among these duties, some
which are the most significant are as follows:
 To act in the best interest and good faith of the company having a proper
purpose
 To implement care and diligence
 To avoid conflicts between the interests of the company and one’s personal
interests
 To avoid the company trading while insolvent (i.e. unable to pay its debts as
they fall due)
 If the company is being wound up, then to:
o Report to the liquidator about the affairs of the company
o Help the liquidator (e.g. by giving the company books and records in your
possession to the liquidator).
Can anyone be a director of a company?
For a person to be eligible to become a director of a company, s/he must be:
 Be at least 18 years of age and
 Have consent to taking on the role and responsibilities of a director.
What is the minimum number of directors required?
Based on the type of the company the minimum numbers of directors are as follows:

27
DIPLOMA OF MORTGAGE BROKING AND FINANCE
 In case of a proprietary company there have to be at least one director, who must live in
the country.
 Where as in case of a public company there have tobe at least three directors (not
counting alternate directors), among whoat least two of the directors must live in the
country.
Answer to Question No 3
What is a Balance sheet?
A Balance sheet is a statement of the assets, liabilities, and capital of a business or other
organization at a particular point in time, briefly detailing the balance of income and expenditure
over the preceding period.
What is a Profit and Loss statement?
A profit and loss statement is basically a financial statement that sums up all the
revenues, costs and expenses incurred during a specified period, which is usually a fiscal quarter
or year.
What is Depreciation?
Depreciation is an accounting process which allocates the cost of a tangible asset over its
beneficial life and is also used to account for the declines in value over time.
What is Liquidity Ratio?

28
DIPLOMA OF MORTGAGE BROKING AND FINANCE
A liquidity ratio is a calculation that is used to measure a company's ability to pay its
short-term debts. It is basically the ratio between the liquid assets and the liabilities of a bank or
other institution
What is Current Ratio?
The current ratio is a liquidity ratio that finds a company's capability to pay short-term
and long-term obligations.
What is Debt to Equity Ratio?
The debt-to-equity ratio (D/E) is a financial ratio which shows the relative share of
shareholders' equity and debt used to finance a company's assets.
What is a Cash flow Statement?
A cash flow statement, which is also known as statement of cash flows, is a financial
statement that indicates the different changes in balance sheet accounts and income and how this
changes affects cash and cash equivalents, and breaks the analysis down to operating, investing
and financing activities.
What is an Asset?
Anything of value which can be converted into cash is known as an Asset.
What is Liability?
An obligation which is also reported on to a company's balance sheet is known as
Liability.

29
DIPLOMA OF MORTGAGE BROKING AND FINANCE
How is a Net Profit determined?
Total Revenue -Total Expenses = Net Profit
How would you define Equity?
Equity can be defined as the amount of capital contributed by the owners or the
difference between a company's total assets and its total liabilities.
Under Australian taxation conditions, what are allowable expenses (provide 3
Acceptable examples)
 Gifts and donations
 Self-education expenses
 Home office expenses
Answer to Question No 4
Commercial Bank Bill
A commercial bill helps to raise the finance that is needed for investment purposes
through negotiable bank bills.
Invoice or Factoring Finance
Invoice or Factoring Finance can be defined as the selling of invoices of a company to a
third party company to improve cash flow and reduce bad debt.
Chattel Mortgage

30
DIPLOMA OF MORTGAGE BROKING AND FINANCE
It is a commercial finance product by the help of which a customer takes ownership of
the vehicle (chattel) at the time of purchase of that vehicle.
Asset Finance product or Equipment Finance
It is a type of lending that provides the access to business assets such as equipment,
machinery and vehicles, or permits to discharge cash from the value in assets owned.
Answer to Question No 5
Principle Outline of Principle
Creation and protection of
value
Assists in the attainment of the objectives of the company with the help
of frequent review of their systems.
Be an integral part of the
company process
The risk management process need to be incorporated with the
governance structure and be part of the process of planning
Be a part of making decisions Helpful in making informed choices and recognize the priorities choose
the suitable action
Address any kind of
uncertainty
Recognize the potential risks so that the company can incorporate the
controlling method in order to maintain profit and reduce the extent of
loss
Be timely, systematic and
structured
The method of management of risk need to be stable among the company
in order o maintain consistency and effectiveness of the outcome
Be transparent and inclusive This is done with the help of engaging the stakeholders within the overall
risk management process.
Answer to Question No 6
It is essential to categorise risk mainly because of the fact that there are several kinds of
risks that are related to the business and industrial activities. It is essential for the companies to
understand the kind of risks that can have adverse impact on their operational process and
understand the risks that can have an impact but the impact will be low or may affect at a latter
point of time. The risks have to be categorised based on the priority of the company and
therefore it is essential for the companies to categorise the risks based on the impact they would

31
DIPLOMA OF MORTGAGE BROKING AND FINANCE
have and the time of impact of the risks. In this manner, better plans and policies can be
constructed with the help of which these issues can be mitigated and the company can have an
effective operational activity. The companies categorise the risk on the basis of high, moderate
and low grades and takes plans and actions on the risks that are high as these risks would have
adverse impacts and after taking care of these risks, they plan and strategise in order to take care
of the other risks. This leads to the development of an effective risk management process so that
all the risks can be resolved within a timely manner.

32
DIPLOMA OF MORTGAGE BROKING AND FINANCE
Assignment 5
Sustainability Plan
A sustainability plan and policy is essential for any company to construct in order to
maintain the goals and objectives in accordance to which the company would move ahead with
their operational activities and thereby maintain competitive edge in the economy. This
sustainability plan is constructed for Joe and Wilson Mortgage Broking Ltd, which is a mortgage
broking company that has been functional in the market for more than a year.
The scope of the sustainability policy has been to provide quality and the most effective
services to their customers and thereby maintain competitive edge and at the same time earn
desired profit. Customers are the key source of the business and therefore satisfying and
fulfilling the needs of the customers have been their priority. On the other hand, the most
effective and quality services can be provided with the help of satisfied employees and therefore
taking care of the needs and desires of the employees have been the goal for the company as
well.
The policy that has been constructed is prepared by taking assistance from several
sources and the key source that has been used has been looking into the policies that have been
disclosed by the rival companies. This is helpful in the determination of the aspects and the
elements that would be taken into consideration so that these aspects can be incorporated in their
plans as well. The policy is prepared by taking feedback from the employees and even from their
existing customers in order to have an idea about the aspects that are desired from their side. This
is helpful in the development of the plan that would satisfy the factors for whom this plan has
been constructed. It is due to this fact that all the stakeholders are made aware of the policy and

33
DIPLOMA OF MORTGAGE BROKING AND FINANCE
thereby their perspective and point of view is considered in order to generate an effective plan
for the company.
The policy constitutes of the incorporation of several plans and strategies and the
significant ones out of them have been taking care of the environment. The company in their
plan has looked to minimise the use of any kind of toxic materials and minimising the use of the
non-renewable resources. In this way, taking care of the awareness is done and in the same way
the safeguard of the natural environment can be maintained and in this way the society where
they are operational can be satisfied as well. The other aspect that has been taken into
consideration has been complying with the rules and the regulations that have been constructed
by the government so that ethical standards can be maintained. In order to provide quality
services, the company even has the plan of providing training to their employees on a timely
manner in order to keep them updated to the changing working environment and thereby
assisting the employees to stay competent in order to take care of the desires of their customers.
Providing rewards and recognition to the potential employees would even motivate them and
their peers as they would give out their best effort in order to gain these recognitions and
rewards.
The incorporation of these strategies would be helpful in the development of the business
due to the fact that employee training would be lead to better services from their part and hence
all the aspects desired by the customers can be satisfied. In order to provide training a cost would
be incurred and therefore the company has maintained a contingency for the same as well in
order to meet these expenses. The training process would be given during the lean season that is
during the month of Christmas as the extent of customers is less at that point of time.

34
DIPLOMA OF MORTGAGE BROKING AND FINANCE
The policy is even constructed in order to create an understanding of the commitment of
the firm towards sustainability and this is seen with the help of the regulations and plans that
have been laid down by the company, which asks the employees as well as the management to
comply with the same. This would lead to the creation of better business opportunity. The
sustainability report is in compliance with the performance indicators and therefore the
effectiveness of the plan would be understood.
The development of workplace sustainability can be attained with the help of the
motivating the employees and keeping proper supervision over the workplace activities. All the
outcome of the company and their operational activities need to be disclosed to the stakeholders
so that they would have knowledge about the same and accordingly provide feedback if required.
The stakeholders are informed about the policies that have been incorporated so that they are
aware of the result and are even aware about their accountabilities. The communication process
is a to way one as the feedback of the employees are even taken into consideration and the
decisions of the management are even conveyed to the employees. This leads to a better working
environment and the development of trust. The assessment of the market is even done on a
frequent basis in order to have an understanding of the changes that are taking place and
accordingly make changes in their policies in order to maintain resource efficiency sustainable
development of their business. The responsibilities are distributed among the employees and the
management and each one of them are allocated with a job in order to perform them in an
effective manner. Feedbacks would even be taken from the customers and the employees in
order to understand the changes that are essential in order to enhance their business activities. It
is seen that all the aspects that are recorded in the sustainability policy need to be assessed and
monitored in order to have an understanding how the performance has been improving and what

35
DIPLOMA OF MORTGAGE BROKING AND FINANCE
actions can be taken further in order to improve their business performance and activities. The
sustainability plan even acts as a trend for the business that can be taken into consideration at any
future course of time in order to discover certain aspects that are essential for the development of
the business in an effective manner.