FNSFMB403 Broking Options Assessment 1 - Knowledge

F NS40 8 1 5 C e r t ifi c a t e IV in F IN AN CE & M O R T G A GE B R O K IN G
FNSFMB403 Present broking options to client
As se ssm e n t 1 - K n o w l e d ge

A c t iv it y 1
Identify and explain the benefits of having a finance or mortgage broker advise clients of available loan
products.
(Identify and categorise key lending products available in the finance and mortgage industry).
Ac t iv it y 1 Answ e r
There are many benefits of having finance and mortgage broker as they provide wide variety of mortgage
loans from numerous lenders (Meredith and Darroch, 2018). They search for good deals by having
access to wide variety of mortgage products which provides additional facilities which is meant for
higher value to the customers such as repayment terms, interest rates and loan products. Key lending
products are:
 Fixed rate mortgage loan
 adjustable mortgage loan
 home equity loans
 jumbo mortgage
 Refinancing mortgage

A c t iv it y 2
Explain the difference between a comparison interest rate and the average annual percentage rate.
(Explain accounting and mathematical formulas to calculate: interest rates; mortgage repayments; term of a
loan).
A c ti v ity 2 A ns w e r
A comparison rate indicates such interest rate which includes charges and fees associated with the loan
which is helpful in determining the actual cost of the loan and facilitate comparison among loan services
offered by many mortgage providers (Smith, 2019). On the other hand, average annual percentage rate is
the rate of interest charged to the borrowers for the whole year.
Accounting and mathematical formula
Interest rate = Interest expenses / principal amount * 100
Mortgage repayment = Principal * Rate (1 + Rate)n / (1 + Rate)n – 1
Term of a loan = ln (future value / present value) / ln (1 + r)

Activity 3
Explain how a potential first home buyer would determine if they were eligible for a first home owner
grant.
(Identify and describe current government assistance for: first home buyers; disadvantaged or low income
earners).
Activity 3 Answer
Under the scheme, homebuyer if satisfies the eligibility criteria gets quality for $10000 for buying and
$20000 for building a new home in regional Victoria.
 The applicant must be 18 years or older.
 The home that the buyer is buying must be valued less than $750000.
 The applicant should be a permanent resident and Australian citizen.
 The property should not be used earlier as a place of residence.