NZ Level 5, Residential Property Lending Strand - Completed Assignment Two

This assignment discusses the financial situation of clients and appropriate lending products and services for them. It also covers legal and taxation implications and impact of lending on the legal structure of the borrower.

Running head: NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
NZ Level 5, Residential Property Lending Strand
Residential Property Lending Strand- Completed
Assignment Two
Candidate’s Details
Name: Sushant Yadav
Address: 5/7 Inverary Avenue, Epsom, Auckland
Phone: [phone]
Email: [e-mail]
Assessor’s Details
Name:
Address: C/- Strategi Institute, 17e Corinthian Drive, Albany, Auckland 0632
Phone: [phone]
Email: [e-mail]

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NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Contents
Task 1:.............................................................................................................................................2
Financial situation of clients:.......................................................................................................2
Julie Cook’s financial situation:..............................................................................................2
Appropriate and suitable lending products and services for the client:...................................5
Legal and taxation implications:..............................................................................................7
Impact of lending on the legal structure of the borrower:.......................................................7
Demonstration of different ratios:...........................................................................................7
Financial situation of Jing Tao and Bai Tseung:.........................................................................9
Appropriate and suitable lending products and services for the client:.................................11
Legal and taxation implications:............................................................................................11
Impact of lending on the legal structure of the borrower:.....................................................12
Demonstration of different ratios:.........................................................................................12
Bill Gray’s financial situation:...................................................................................................13
Appropriate and suitable lending products and services for the client:.................................16
Legal and taxation implications:............................................................................................17
Impact of lending on the legal structure of the borrower:.....................................................17
Demonstration of different ratios:.........................................................................................17
Task 2:...........................................................................................................................................19
Part 2a:.......................................................................................................................................19

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NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Part 2b:.......................................................................................................................................20
Task 3:...........................................................................................................................................20
References:....................................................................................................................................33

3
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Task 1:
Financial situation of clients:
Julie Cook’s financial situation:
Julie Cook is a 41 year old solo mother having a dependent 9 year old son. She currently
holds the position of manager in JoLo Courier Drivers. She is in this position for last five years
with good track record in savings without any current debt except the credit card due of $500 on
master card. The gross annual salary of Julie from her employment is $88,0001.
In order to evaluate the financial situation of Julie at present it is important to state the amount of
assets and liabilities of her at present as well her current monthly income and expenditures. The
table below contains the financial position of Julie Cook ate present. 
Assets Amount
($)
Liabilities Amoun
t ($)
ASB 65,000.0
0
Credit Card 500.0
0
KiwiSaver 15,000.0
0
Car 5,000.0
0
Personal effects 75,000.0
0
1 Barrow, Rochelle, and Tobias Irrcher. "Capturing loan-to-value data in New Zealand–
challenges and opportunities." IFC Bulletins chapters 39 (2015).

4
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
TOTAL 160,000.0
0
TOTAL 500.0
0

By deducting the total current monthly expenses of Julie from her monthly income the monthly
savings of Julie has been calculated below.
Particulars Amount
($)
Amount
($)
Current annual gross salary 88,000.0
0
(A): Current monthly gross salary (88000/12) 7,333.33
Monthly expenses at present
Hire purchase costs
-
Rent payable per month 1,680.0
0
Medical and life insurance payable each month 100.0
0
Insurance for house

5
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
-
Insurance for contents payable at each month 60.
00
Expenses on motor vehicles 100.0
0
Expenses on power, gas and phone per month 300.0
0
Current monthly rates
-
Monthly living expenses 400.0
0
Cost of education at month 50.
00
Superannuation costs 100.0
0
Mortgage payments per month at present
-
Monthly payments for other loans at present
-

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NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Other monthly expenses
-
(B) Total monthly expenses 2,790.00
(C) Current monthly savings (A-B) 4,543.33
Appropriate and suitable lending products and services for the client:
Taking into consideration the financial position and monthly income and expenditure of
Julie Cook the following lending products and services are recommended to her to acquire the
property at 21a Masters Avenue, Hamilton.
Star Pack and premium:
The objective of this loan product is to provide financial assistance to property buyers to
acquire or refinance of investment property or owner occupied property. In addition such loan is
also suitable for construction of residential property (new), repay home equity loans and
renovation of existing properties. Minimum loan amount under the loan product is $50,000 with
loan terms varying between 5 years and 30 years. Interest is payable on the closing balance at the
end of each day with monthly payable schedule of interest and principal2.
100% offset home loan:
2 Morgan, Peter J., Paulo José Regis, and Nimesh Salike. "LTV policy as a macroprudential tool
and its effects on residential mortgage loans." Journal of Financial Intermediation (2018).

7
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
This is one of the most suitable loan products for the borrowers as this puts the borrowers
in 100% control of their loans. The loan can be used for any of the following purposes by a
borrower:
I. Acquisition of owner occupied property.
II. Acquisition of investment property.
III. Refinance of owner occupied or investment property.
IV. Consolidation of debt.
V. Investment and personal purposes home equity loans.
VI. For bridging finance.
VII. Construction and renovation of residential property.
The loan is allowed 100% offset with 1 year to 5 year term choice for variable or fixed interest
rate. No application fees are needed to be paid for such loan with minimum amount of loan under
the product is $10,000. The period of loan term can vary from 5 to 30 years. The repayment is to
be made per month3. Considering the loan requirements of Julie the features of 100% offset loan
will allow Julie to offset her liabilities to 100% by following the terms and conditions of the
loan. Hence, it is suitable for Julie. (Please discuss why this is suitable for Julie’s situation).
The legal advisors and tax consultants shall help borrowers at the time of taking loans by stating
the tax implications of interest to be paid. Also impact of repayment of principal amount of loan
on the taxable income of the borrower shall also be outlined by the tax consultant. Legal advisor
will outline the legal implications of defaulting in repayment of loan. Accordingly a borrower
will be in better position to determine his position with the services from different specialists.
(Legal and taxation implications: what other specialists need to eb involved & why?)
3 Morgan, Peter J., Paulo José Regis, and Nimesh Salike. "LTV policy as a macroprudential tool
and its effects on residential mortgage loans." Journal of Financial Intermediation (2018).

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NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
The client is required to pay monthly repayment amount as and when falls due. In case of
default in repayment of loan the financial institutions or banks have the liberty to take
appropriate actions against the borrower including recovering the loan by capturing and selling
the mortgage property4.
The interest included in the amount of annual repayment of loan will be allowed as
deduction while computing the taxable income of the borrower. Thus, the interest on loan will
reduce the tax liability of the borrower.
Impact of lending on the legal structure of the borrower:
The legal structure of the borrower would remain unchanged even after taking the loan
however, in case the liability of the borrower exceeds his assets and the borrowers fails to
discharge his liabilities then the borrower, in this case Julie Cook will be adjusted insolvent5. The
lender will consider the financial state of Julie before determining whether to give loan to her or
not. The monthly income of Julie along with monthly savings shall be specifically considered by
the lender to determine whether to accept the loan application of Julie and is yes then the amount
of loan shall be dependent on the ability of the applicant tp make monthly repayment from her
savings. (What else will the lender consider if Julie is taking out the loan as an individual &
wwho is responsible for the loan?)
4 Barrow, Rochelle, and Tobias Irrcher. "Capturing loan-to-value data in New Zealand–
challenges and opportunities." IFC Bulletins chapters 39 (2015).
5 Kelsey, Jane. The New Zealand experiment: A world model for structural adjustment?. Bridget
Williams Books, 2015.

9
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Demonstration of different ratios:
Net operating income (4165.81 x 12)
49,989.72
Annual debt
22,256.28
Debt servicing ratio in times (Net operating income / Annual debt)
2.25
Net surplus ratio
Net operating income (4165.81 x 12)
49,989.72
Less: Annual debt repayment
22,256.28
Net surplus
27,733.43
Net surplus ratio in %(27733.43 x 100/49989.72)
55.48
Uncommitted monthly income (Monthly savings)
4,165.81

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NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
What about mortgage repayments? Included in annual debt repayment.
Financial situation of Jing Tao and Bai Tseung:
Current monthly income and expenditures
Particulars Amount
($)
Amount ($)
Current annual gross salary 132,000.00
(A): Current monthly gross salary
(132000/12)
11,000.00
Monthly expenses at present
Medical and life insurance payable each
month
200
Insurance for house 45
Insurance for contents payable at each
month
60
Expenses on motor vehicles 200
Expenses on power, gas and phone per 300

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NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
month
Current monthly rates 120
Monthly living expenses 600
Cost of education at month 0
Superannuation costs 200
Mortgage payments per month at present 1922
Monthly payments for other loans at
present -
Other monthly expenses
-
(B) Total monthly expenses 3647
(C) Current monthly savings (A-B) 7,353.00
Financial position:
Assets Amount Liabilities Amount
$520,000 Mortgage $230,000
ASB $50,000

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NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
KiwiSaver $15,000
Motor vehicles $10,000
Personal asserts $75,000
TOTAL $670,000 TOTAL $230,000

Appropriate and suitable lending products and services for the client:
Conventional mortgages: Conventional mortgage loans are significantly cheaper than hard
money and investment property loans. Long term loans with low interest rates are available for
the borrower under conventional mortgages6.
Investment property loan: The requirements to be fulfilled to get an investment property loan is
much harder than the requirements for owner occupied property. However, the relevant terms
and conditions once the loan is approved are significantly beneficial to the borrower. Generally
long term loans with loan term of 10 to 30 years are available under the loan product7.
Thus, conventional mortgage loan is the most suitable loan product for the borrowers here to take
the loan to fulfill their requirements. This is specifically sue to the comparatively less strict
6Brown et. al. . "Regulatory change in Australia and New Zealand following the global financial
crisis." In The First Great Financial Crisis of the 21st Century: A Retrospective, pp. 219-248.
2016.
7 Curtis, Bruce, and Cate Curtis. "Neoliberalism and racist debt practices in New Zealand:
Pasifika peoples as the working poor." In Refereed Proceedings of TASA's 2015 Conference, p.
185. 2015.

13
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
requirements of the loan product as compared to investment property loan. (The purpose of this
is for you to demonstrate what type of loan is suitable for the client & why?)
Legal and taxation implications:
Payment of loan as per the terms and conditions of loan agreement is the legal requirements and
the borrower will be allowed to set off the interest expenditures against the rental income. Thus,
tax liability will be significantly lower with the reduction in rental income after reducing interest
expenditure.
Tax consultant will help the borrowers to understand the implications of loan repayment, both
interest and principal amount on the taxable income. The services of legal advisor shall be used
to understand the liability of the borrower in case they default in repayment of loan in the future.
(Please discuss what other specialists need to be involved & why?)
Impact of lending on the legal structure of the borrower:
The financial liability of the borrowers will increase subsequent to the borrowing however, the
amount of assets will also increase resulting in setoff of liabilities against the asset. In case there
is any default in repayment of loan the lender will be able to take legal action against the
borrower by filing a default suit against the borrower apart from that there will be no impact on
the legal structure of the borrowers however, inability to pay the debt will render the borrowers
status to insolvents8. (Please see my comments in the previous case study)
8 Murray, James S. "Equity crowdfunding and peer-to-peer lending in New Zealand: The first
year." (2015).

14
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Demonstration of different ratios:
Expected ratios:
Debt servicing ratio (Net operating income /
Annual debt)
Net operating income (12740 x 12) 152,880
.00
12,74
0.00
Annual debt 42,89
2.03
Debt servicing ratio (Net operating income /
Annual debt) 3.56
Net surplus ratio
Net operating income (12740 x 12) 152,88
0.00
Less: Annual debt repayment 42,89
2.03
Less: Annual leaving expenses (5299 x 12) 63,58
8.00
106,48

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NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
0.03
Net surplus 46,39
9.97
Net surplus ratio in %(46399.97x 100/152880) 3
0.35%
Uncommitted monthly income (Monthly savings) 7,44
0.66 
Bill Gray’s financial situation:
Monthly savings at present:
Current monthly income and expenditures
Particulars Amount
($)
Amount ($)
Current annual gross salary 92,000.00
(A): Current monthly gross salary
(92000/12)
7,666.67
Boarder fees 866.666666

16
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
7
8,53
3.33
Monthly expenses at present
Medical and life insurance payable each
month
200.00
Insurance for house 45.00
Insurance for contents payable at each
month
60.00
Expenses on motor vehicles 200.00
Expenses on power, gas and phone per
month
300.00
Current monthly rates 120.00
Monthly living expenses 500.00
Cost of education at month -
Superannuation costs 200.00
Mortgage payments per month at present 1,270.00

17
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Monthly payments for other loans at
present
120.00
Other monthly expenses
-
(B) Total monthly expenses 3,01
5.00
(C) Current monthly savings (A-B) 5,518.3
3
Financial position of Bill Gray:
Assets Amount
($)
Liabilities Amount
($)
Property $950,000 Mortgage loan $200,000
ASB $10,000 Credit card (Limit of
$15,000)
$2,450
paid in
full each
month
KiwiSaver $75,000 Car loan $120 per

18
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
month (6
months to
run)
Car (1) $30,000
Personal effects $105,000
TOTAL $,
1,170,000
TOTAL $203,170
Appropriate and suitable lending products and services for the client:
Conventional mortgage: Conventional mortgages allow borrowers to take loan at relatively low
rate with suitable documentation and other requirements.
Investment property loan: Investment property loan is specifically suitable for those who are
investing in a property with the objective of earning rental or any other kind of income from such
property.
100% offset loan: This is a loan product that allows the borrower to set off his or her loan
liabilities to the extent of 100% by adhering to the terms and conditions of loan9.
9 Celia, James, and Farley Grubb. "Non‐legal‐tender paper money: the structure and performance
of M aryland's bills of credit, 1767–75." The Economic History Review 69, no. 4 (2016): 1132-
1156.

19
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
FHA mortgages:
A perfect starter kit for first time investors in rental properties. The loan product allows
borrowers to borrow at relatively low rate of interest to finance acquisition of rental properties.
Considering the requirements of the borrower it would be suitable for his requirements to take
100% offset loan to reduce the liabilities of the borrower by complying with the terms and
conditions of loan. All the borrower needs to do is to maintain a specific amount of balance with
the lender.
(This does not make sense!!Please relate to services & products in NZ. You need to
demonstrate that as an adviser you can provide advice that meets the clients’ needs ie
specifically what type of loan would you recommend & why?)
Legal and taxation implications:
The borrower is under obligation to repay the loan as per the repayment schedule. Interest
included in annual installment is allowed as deduction from rental income to assess the
taxable income of the borrower from such rental property.
Impact of lending on the legal structure of the borrower:
The lender has the right to recover the loan amount from borrower thus, in case of default
in repayment of loan by the borrower the lender can file a law suit against the borrower to
recover the loan. In fact the lender can also apply to the court to adjudge the borrower as
insolvent to sale his all properties to recover the loan amount.
(See my previous comments)
Demonstration of different ratios:
Expected ratios:

20
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Debt servicing ratio (Net operating income /
Annual debt)
Net operating income (11133.33 x 12) 133,600
.00
11,13
3.33
Annual debt 53,61
5.04
Debt servicing ratio (Net operating income /
Annual debt) 2.49
Net surplus ratio
Net operating income (12740 x 12) 152,88
0.00
Less: Annual debt repayment 53,61
5.04
Less: Annual leaving expenses 74,31
5.04
127,93
0.08
24,94

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NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
9.92
Net suplus 24,94
9.92
Net surplus ratio in %(24949.92x 100/152880) 1
6.32
Uncommitted monthly income (Monthly
savings)
4,94
0.41
Task 2:
Client’s name: Julie Cook.
Part 2a:
Concept
Explanation of the meaning attached to
the concept
Application of the concept to
the client
Your Duty of
Care
The responsibility of the financial
advisor or loan expert to carefully
analyse the financial situation of a client
to provide appropriate advice to improve
The responsibility of the
financial advisor or loan
expert to carefully analyse
the financial situation of the

22
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
the financial situation of the client.
Assisting the borrower to in using
appropriate loan product is also included
in the duties of Financial advisor. (Please
reread your manual )
borrower to assist her in
using appropriate loan
product to purchase the
owner occupied property in
Hamilton required a loan of
$308,000.
Contract
Obligations
These are the terms and conditions of
loan agreement which must be complied
by both the borrower and the lender.
Once the loan application has been
approved by a financial institution an
agreement shall be entered into by the
two to form a contract. How can
contracts be formed?
The loan amount of $308,000
must be repaid along with
interest as per the terms and
conditions as and when fall
due10. The loan agreement
shall be fully understandable
by Julie. What contracts
does Julie need to
understand?
Part 2b:
10 Lu, Timothy Jun, Olivia S. Mitchell, Stephen P. Utkus, and Jean A. Young. Borrowing from
the Future: 401 (k) Plan Loans and Loan Defaults. No. w21102. National Bureau of Economic
Research, 2015.

23
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Concept
Explanation of the meaning attached to
the concept
Prevention of negligence by
taking appropriate steps.
Tort of
negligence
It is when the borrower fails to act as a
reasonable person. However, these are
not deliberate actions by the borrower.
Complying with the terms and conditions
of a loan agreement as a reasonable
person is essential to avoid tort of
negligence. (Please reread your manual)
Providing all relevant
information to the client to
let her (Julie Cook) know the
terms and conditions to be
fulfilled by her to act as a
reasonable person to repay
the loan properly. The terms
and conditions of the
proposed loan agreement
shall be effectively
communicated to Julie to let
her understand the terms
and conditions properly.
(Please discuss how you
would do this)
Task 3:
Mortgage application cover sheet:
Mortgage Deed

24
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Residential Property at 21a Masters Avenue, Hamilton
Executed by Julie Cook.
Legal description: The residential property is mortgaged with the ANZ bank for the loan amount
of $308,000 taken to acquire the property.
Return document to ANZ Bank.
(Signature of Julie Cook)
Date:
Place:
Loan application form:
To,
The Loan Manager,
ANZ Bank.
Ref: Loan application to finance acquisition of a residential property at Hamilton.
Respected sir, please use the correct documents, as would be sent to a lender
This letter is in reference to the above underlined subject matter. For your kind perusal the
financial position at present along with current income and expenditures of Julie Cook is
provided below.
Financial position of the applicant at present:

25
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Assets Amount
($)
Liabilities Amoun
t ($)
ASB 65,000.0
0
Credit Card 500.0
0
KiwiSaver 15,000.0
0
Car 5,000.0
0
Personal effects 75,000.0
0
TOTAL 160,000.0
0
TOTAL 500.0
0
Income and expenditure position of Julie Cook at present:
Particulars Amount
($)
Amount
($)
Current annual gross salary 88,000.0
0
(A): Current monthly gross salary (88000/12) 7,333.33

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NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Monthly expenses at present
Hire purchase costs
-
Rent payable per month 1,680.0
0
Medical and life insurance payable each month 100.0
0
Insurance for house
-
Insurance for contents payable at each month 60.
00
Expenses on motor vehicles 100.0
0
Expenses on power, gas and phone per month 300.0
0
Current monthly rates
-
Monthly living expenses 400.0
0

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NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Cost of education at month 50.
00
Superannuation costs 100.0
0
Mortgage payments per month at present
-
Monthly payments for other loans at present
-
Other monthly expenses
-
(B) Total monthly expenses 2,790.00
(C) Current monthly savings (A-B) 4,543.33
Authority and declaration:
The above declaration is true and correct as per the available proof of income and expenditures
of the client.
Proof of income:
As a proof of income the salary slip of the client has been obtained and attached with this
application.

28
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Proof of identity:
The international passport and the driver license of the client have been attached as identity proof
in this application.
Key dates:
The approval of loan shall be considered the date of loan taken with the final repayment shall be
the date of settlement. It is expected that the loan will be approved on 1st July, 2019 and the
monthly payment shall be made to repay the loan with final repayment date shall be on 30t June
2049 as the loan period is for 30 years11.
Professional to be involved:
Client shall use the professional services of solicitor and accountants to ensure that all relevant
provisions of legislation are fulfilled and the repayment of loan can be made as per the terms and
conditions of the loan.
Important notes to be forwarded to the lender:
In order to provide important information about the ability of the client to repay the loan the
following notes shall be referred by the lender.
Debt servicing ratio (Net operating income / Annual debt)
Net operating income (4165.81 x 12)
11 Lu et. al. Borrowing from the Future: 401 (k) Plan Loans and Loan Defaults. No. w21102.
National Bureau of Economic Research, 2015.

29
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
49,989.72
Annual debt
22,256.28
Debt servicing ratio in times (Net operating income /
Annual debt) 2.25
Net surplus ratio
Net operating income (4165.81 x 12)
49,989.72
Less: Annual debt repayment
22,256.28
Net surplus
27,733.43
Net surplus ratio in %(27733.43 x 100/49989.72)
55.48
Uncommitted monthly income (Monthly savings)
4,165.81
Other requirements in support of the loan application:

30
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Apart from the income and identity proof of the borrower the proof in respect of savings
and other assets shall be provided. This will help the lender to correctly verify the financial
position of the borrower to decide whether to approve the loan application of the borrower.
The forecasting income and expenses statement, the statement of assets and liabilities, the
proof of income shall be attached with the loan application form. (Where are these?)
Disclosure statement:
The details of the loan applicant is provided below:
Julie Cook Age: 41
years old
Particulars Amount ($)
Savings in a deposit to acquire a property in
Hillcrest 65,000.00
KiwiSaver
15,000.00
Current monthly income and expenditures
Particulars Amount
($)
Amount ($)
Current annual gross salary 88,000.00

31
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
(A): Current monthly gross salary
(88000/12)
7,333.33
Monthly expenses at present
Hire purchase costs
-
Rent payable per month 1,680.00
Medical and life insurance payable each
month
100
Insurance for house
-
Insurance for contents payable at each month 60
Expenses on motor vehicles 100
Expenses on power, gas and phone per
month
300
Current monthly rates
-
Monthly living expenses 400
Cost of education at month 50

32
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Superannuation costs 100
Mortgage payments per month at present
-
Monthly payments for other loans at present
-
Other monthly expenses
-
(B) Total monthly expenses 2,790.00
(C) Current monthly savings (A-B) 4,543.33
Financial position
Assets Amount
($)
Liabilities Amount
($)
ASB
65,000.00
Credit Card
500.00
KiwiSaver

33
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
15,000.00
Car
5,000.00
Personal effects
75,000.00
TOTAL
160,000.00
TOTAL
500.00
Expected future monthly income and
expenditure schedule
Particulars Amount
($)
Amount ($)
Current annual gross salary
88,000.00
(A): Current monthly gross salary (88000/12)
7,333.33
Monthly expenses at present
Hire purchase costs

34
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
-
Monthly loan repayment amount
1,854.69
Medical and life insurance payable each
month 100.00
Insurance for house
-
Insurance for contents payable at each
month 60.00
Expenses on motor vehicles
100.00
Expenses on power, gas and phone per
month 300.00
Current monthly rates
-
Monthly living expenses
400.00
Cost of education at month
50.00

35
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Superannuation costs
100.00
Mortgage payments per month at present
-
Monthly payments for oher loans at
present -
Other monthly expenses
-
Monthly rates payment
112.42
Monthly insurance payment
90.42
(B) Total monthly expenses
3,167.52
© Expected monthly savings (A-B)
4,165.81
Expected financial position:
Financial position

36
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Assets Amount
($)
Liabilities Amount
($)
Property
385,000.00
ASB
3,000.00
Credit Card 500.00
KiwiSaver - Property
Loan 308,000.00
Car
5,000.00
Personal effects
75,000.00
TOTAL
468,000.00
TOTAL
308,500.00
The above information is true and correct to the best of my knowledge. In case any
information provided above subsequently found to be false then the loan application shall
be eligible to be cancelled and the client shall not have any right against the bank or the
financial institution. (Where is your disclosure statement?)
Client’s financial history:

37
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
As per the records the client has a very positive financial history with no current debt except
$500 on credit card which is paid off at the end of the month.
Financial calculations:
The financial calculations have already provide above shows the surplus amount of fund after
meeting monthly expenditures from monthly salaries of the client. However, to provide the
lender with expected future financial position and ability of the client to repay the loan the
following calculations shall be helpful12.
Proposed purchase details of property
Address 21a Masters Avenue, Hamilton
Proposed purchase price of
the property
385,000.00
Other expenditures
Per annum rates 1,349.00
Per annum insurance 1,085.00
Attorney details
12 Lees, Gavin, Maxwell Winchester, and Sidath De Silva. "Demographic product segmentation
in financial services products in Australia and New Zealand." Journal of Financial Services
Marketing 21, no. 3 (2016): 245.

38
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Name John Liu
Address Boulevard Buildings 52 Victoria Street, Hamilton
Expected Future Financial Position after acquiring the property:
Financial position
Assets Amount ($) Liabilities Amount ($)
Property 385,000.00
ASB 3,000.00 Credit Card 500.00
KiwiSaver - Property Loan 308,000.00
Car 5,000.00
Personal effects 75,000.00
TOTAL 468,000.00 TOTAL 308,500.00
Expected future monthly income and expenditure schedule:
Expected future monthly income and expenditure schedule
Particulars Amount Amount ($)

39
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
($)
Current annual gross salary 88,000.
00
(A): Current monthly gross salary (88000/12) 7,33
3.33
Monthly expenses at present
Hire purchase costs
-
Monthly loan repayment amount 1,854
.69
Medical and life insurance payable each month 100
.00
Insurance for house
-
Insurance for contents payable at each month 6
0.00
Expenses on motor vehicles 100
.00

40
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Expenses on power, gas and phone per month 300
.00
Current monthly rates
-
Monthly living expenses 400
.00
Cost of education at month 5
0.00
Superannuation costs 100
.00
Mortgage payments per month at present
-
Monthly payments for other loans at present
-
Other monthly expenses
-
Monthly rates payment 112
.42
Monthly insurance payment 9

41
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
0.42
(B) Total monthly expenses 3,16
7.52
(C) Current monthly savings (A-B) 4,16
5.81
Authority and declaration:
The declaration shall be signed by the Julie Cook, the solicitor and the accountant.
The Task is assessing you on your ability to put a loan application together. Please use the
documentation provided in the workshop & put together a loan application as would be
submitted to the lender. You will need to simulate bank statements, D, Sale & Purchase
agreement, income etc. Please reread the assignment instructions as to what is required.

42
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
References:
Barrow, Rochelle, and Tobias Irrcher. "Capturing loan-to-value data in New Zealand–challenges
and opportunities." IFC Bulletins chapters 39 (2015).
Brown, Christine Ann, K. T. Davis, and D. G. Mayes. "Regulatory change in Australia and New
Zealand following the global financial crisis." In The First Great Financial Crisis of the 21st
Century: A Retrospective, pp. 219-248. 2016.
Celia, James, and Farley Grubb. "Non‐legal‐tender paper money: the structure and performance
of M aryland's bills of credit, 1767–75." The Economic History Review 69, no. 4 (2016): 1132-
1156.
Curtis, Bruce, and Cate Curtis. "Neoliberalism and racist debt practices in New Zealand: Pasifika
peoples as the working poor." In Refereed Proceedings of TASA's 2015 Conference, p. 185.
2015.
Kelsey, Jane. The New Zealand experiment: A world model for structural adjustment?. Bridget
Williams Books, 2015.
Lees, Gavin, Maxwell Winchester, and Sidath De Silva. "Demographic product segmentation in
financial services products in Australia and New Zealand." Journal of Financial Services
Marketing 21, no. 3 (2016): 240-250.
Lu, Timothy Jun, Olivia S. Mitchell, Stephen P. Utkus, and Jean A. Young. Borrowing from the
Future: 401 (k) Plan Loans and Loan Defaults. No. w21102. National Bureau of Economic
Research, 2015.

43
NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND
Morgan, Peter J., Paulo José Regis, and Nimesh Salike. "LTV policy as a macroprudential tool
and its effects on residential mortgage loans." Journal of Financial Intermediation (2018).
Murray, James S. "Equity crowdfunding and peer-to-peer lending in New Zealand: The first
year." (2015).

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NZ LEVEL 5, RESIDENTIAL PROPERTY LENDING STRAND