FNSFMB501 Settle Applications and Loan Arrangements

FNSFMB501 SETTLE
APPLICATIONS AND
LOAN ARRANGEMENTS

ACTIVITY: 1
There is a potential financial risk first for the buyers in overseas as there is a need to obtain
second mortgage to finance the deposit made for the purchase price of Australian property. But
due to non-approval of the remaining 70% financing of the purchase price, these overseas buyers
are at risk of losing their deposits in full (Diploma of Finance and Mortgage Broking
Management. 2019). Due to no availability of finance, the deposited amount gets forfeited one
the settlement date become due. Also, in Australia, one cannot move out from the contact if it is
unconditional to do so, and this condition leads to not only losing of deposits but demands for
potential court actions for the recovery of the loss suffered by the vendor for the sale of the
property. And the buyers needs to make dual payment one for loss and the other for second
mortgage.
ACTIVITY: 2
Events that leads to incorrect provision of pre-settlement evidence by the borrowers are:
 Returning unsigned document of land transfer.
 Witness of transfer of land document is a non-independent person.
 No provision of application form with sign and stamp duty.
 No appropriate provision of identity proof for qualifying as a 100 points for ID.
 Unsigned loan contract.
 No provision of income evidence
ACTIVITY: 3
The primary benefits of LMI to the home loan applicants are:
 Ability to obtain loan at a deposit of less than 20%.
 Helps in entering into real estate market with a comparatively less savings for small
deposit.
 Assists in getting out of the rental market by investing into a property and thus equity can
be grown.
ACTIVITY: 4
Benefits of family guarantee are as follows:
 Ability to obtain loan at a deposit of less than 20%.
 Avoidance of additional cost incurred for LMI.
 Helps in obtaining loan at a lower interest rates as there is a lower risk associated with a
family guarantor.
 Easier approval of loan by the lender in the presence of family guarantor.
Drawbacks of family guarantee are:
 In the event of default on repayment, the family member guaranteed the loan has been
called upon for making the payment to the lenders (The mortgage broking process.
2020).