FNS40815 Certificate IV in Finance Assignment 1: Dowell Scenario

This document presents a completed finance assignment based on a provided scenario involving a couple, the Dowells, seeking to refinance their existing mortgage and purchase an investment property. The assignment includes a completed fact find document, a product recommendation with justification, a list of supporting documents, a loan costing sheet, a loan servicing calculation (NSR), and a completed ANZ loan application form with accompanying documents. The scenario provides detailed information about the clients' financial situation, including income, assets, debts, and investment goals. The assignment requires the student to apply their knowledge of mortgage broking principles to assess the clients' needs, recommend a suitable loan product, and complete the necessary documentation for a loan application. The solution demonstrates the practical application of financial concepts and loan origination processes.

ASSI
© 2017 The National Finance V
To be completed by the
Trainee
You must include this page with your Assignment 1
submission
Alternatively you can retype the details as a front page to your
Assignment
Trainee name
Trainee Postal Address
Trainee Daytime Phone numbers
Trainee Email address
I state that this Assignment contains no material which has been written by another person.
I make this statement with the understanding that my assessment may be compromised if
found to be otherwise. Signed Date
Submissions can be mailed to NFI, P.O. Box 1354, Capalaba B.C. Qld 4157 OR
Email to [e-mail] (if emailing you must adhere to the emailing
size rules)
OFFICE USE ONLY BELOW
HERE
Date received by NFI Date received by Assessor
Name of Assessor
Date assessed
Competent

Not Yet Competent

Mark
Assessor’s Comments:
.................................................................................................
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Further action required (if applicable)

ASSI
© 2017 The National Finance V
T
ask
Using the information contained in the Scenario below, please complete the following 6
tasks. You must complete each task for your submission to be assessed. Omission of any of
these 6 tasks will be regarded as ‘Working Towards Competency’ and you will then be
required to resubmit in full.
1. Complete the Fact Find document on these clients – using the form in
Appendix 14. We have not included all supplementary information on these clients so you
will need to
create your own “improvised” answers for inclusion in the Fact Find
document.
Trainees who already have access to their own version of a Fact Find template
may use
their own form as an alternative to that provided in Appendix 14.
2. Recommend a product for the clients and explain your reasons for
recommendation
3. List the supporting documents that would be needed to support the loan
4. Complete loan costing sheet *
5. Complete a loan servicing calculation (NSR) *
6. Complete a loan application form (an ANZ loan application form has been
provided for you, which you must use) and complete all of the
accompanying documents as provided for you. Your answer to this
Activity should be prepared as if you were
submitting a real full loan application to the
lender.
Please note: If there is information required on the ANZ application form that is not
supplied, please improvise. The application should be completed as neatly as
possible to ensure ease of review. It is to be submitted to NFI as if NFI is the lender
and you were an accredited broker (but you do not need to make up “dummy”
supporting documents eg. rates notice, etc.). If you do not submit in a professional
manner, your assessment will not be marked.
* The fees and charges required in order to complete this assignment correctly (ie.
Estimate of
Costs worksheet) can be found in Unit 7 (use your own state-specific section at the
back of Unit
7) and the instructions for how to complete the NSR form are in Unit 8. A Lenders
Mortgage
Insurance Chart (for your LMI calculation if applicable) is found in Unit 7. Trainees
should ensure they source their fees and charges from these units. There are also
sample documents to follow in Units 7 and 8.
S
cenario
Clients: Mary Jane
Dowell
DL No.: 4167384
DOB: 06/06/65 Australian Passport No.: L93214773
John James Dowell
DL No.: 4378691

ASSI
© 2017 The National Finance V
DOB: 03/05/67 Australian Passport No.: L8078972
Current Address: 46 Collins Street, North Ryde
NSW 2113
Time there, 2.6 years
Phone [phone]
Previous Address: 37 Maple Street, Gladesville
NSW 2111
Time there, 4 years.
Children: 2 children aged 7 and 9 Scenario Continued overleaf
….

ASSIGNMENT 1
© 2017 The National Finance V
Existing Property: Own Home valued at
$995,000
Current outstanding loan balance $180,000
(with CBA) Loan Repayments $1,080 per month
Cash: The clients have $12,000 cash in the
bank. Credit Cards: CBA Visa - $5,000 limit
(balance $2,000)
Westpac MasterCard - $5,000 limit (balance $1,500)
Mr Dowell works at the Parramatta Council as the tourism manager and earns $115,000
p.a. He has worked there for 8 years.
Mrs Dowell is a primary school teacher at Ryde Primary School and earns $64,000 p.a. She
has worked there for the past 3 years after having several years of home duties.
The Dowells own two cars – a 2014 Ford Falcon worth $18,000 unencumbered and a 2015
Land Cruiser worth $30,000 subject to finance of $20,000 ($450 per month).
The Dowells have a 36 month Interest Free loan from GE for a sound/movie system for
$3,000. The minimum monthly payment is 5%.
You interviewed Mr and Mrs Dowell at your office after some initial telephone conversations
previously. They both spoke good English as they are permanent Australians for 20 years
and they expressed their excitement at buying their second property. They are aware they
will need to visit the new lender branch to complete a Customer Identification Procedure
prior to finance approval from the lender. They have not yet enquired into an exact payout
figure from CBA.
The clients wish to refinance their current loan and purchase an
investment property.
The investment property is an established 2 bedroom unit in a residential block of 4 at 45
(Lot 4) Jones
Rd, North Ryde and is valued at
$685,000.
Rental Income of $650 per week is expected and the body corporate expense will be just
$35 per week. They have made an offer on the unit at the asking price, have put down a
$1000 cash deposit, and the offer has been accepted with settlement in 60 days.
Title particulars: Lot 4, Folio 3871, Vol.
1821.
The solicitors they will be using are Henderson & Partners, ph
1234 567 890
Scenario Continued overleaf ….

ASSIGNMENT 1
© 2017 The National Finance V
Assumptions:
o Assume this is a cross collateralised loan
o Due to the client’s request below, assume this structure will
be a Split facility
o Your clients have told you: that they want to keep the repayments on
their home separate from their investment property. They would like to
keep the repayments on their home as principal and interest but want
to pay interest only on their investment property. (Note: all lenders will
use the entire loan amount calculated at P&I, even if the loan is
provided as Interest only). They also wish to pay out their personal
loan on the car to rationalise their loan repayments. They have
agreed that ANZ will be a suitable lender for their circumstances.
o Although addresses show NSW, for the purpose of duty and
other cost calculations, assume that the clients live in the same state
as you (the broker).
o You should assume a Standard Variable Rate of 5.5% and a Qualifying rate of
2%
above the Standard Variable Rate (for your NSR form).
o Assume the current car loan will be paid out by the refinance of the home.
o Assume the clients will be “full-doc”.
Please note: The table of living allowances on the NSR sheet is based on the Henderson
poverty index and may be used in these assignments as we are not using a real client.
However, in real life ASIC has ruled that a budget must be completed for each client to
assess living expenses (we provide a sample budget form at the
back of Appendix B20 for interest).

© 2017 The National Finance V
ASSIGNMENT 1
Continued
1. Complete the Fact Find provided in Appendix 14 or your own company’s
Fact Find document (and improvise any information that has not been
provided in the scenario).
2. Recommend a product for the clients and explain your reasons for the
recommendation
3. List the supporting documents that would be needed to support this
loan application. Even though there is a checklist in the lender’s
application form, you must list the documents separately below.
Primary documents
Birth certificate
Name change certificate
Present passport
Citizenship documentations
Secondary documents
Driver’s licence
Mortgage documents
Photo ID card (Given out by state or territory)

© 2017 The National Finance V
Photo ID (given out by tertiary training institute) Public service ID card (with photo and signature)
Credit card (with name and signature)
Notice of Council rates
Medicare card
Photo card (given out by your bank)
Credit card statement
4. Complete the loan costing sheet below
Estimate of Costs Worksheet – Purchase/Refinance
Client/s Name: JOHN JAMES DOWELL, MARY JANE DOWELL
Owner Occupier:  Yes  No Lender (if chosen): CBA
Estimated Costs:
Lender’s Loan Establishment/Application Costs $ 35
Valuation cost (if not included above) $ 0
Property Transfer Stamp Duty $ 0
Solicitor/Settlement Agent/Conveyancing Charge $ 10
Registration of new Mortgage $ 0
Register of Transfer of Title $ 138.80
Title Search $ 0
Discharge of old Mortgage $ 0
Old Lender’s Settlement fee $ 0
Miscellaneous Costs (if applicable):
- Other ……………………………………………… $
- Other ………………………………………………… $
- Other ………………………………………………… $
==
=================
SUB TOTAL $ 173.80
Lenders Mortgage Insurance (if applicable) $
==
=================
TOTAL COSTS $ 173.80
Summary
Purchase price (if applicable) $ 685,000
Current Loan Amount/s $ 203,000
Plus 2 months interest on Current Loan (ie. 2 x monthly repayment) $ 3,360
Plus Total Costs (from above) $ 173.80
Plus Total Other Debt Consolidations (if applicable) $6500
==
=================
Equals Total Funds Required $ 898,033.80
LVR: Total Funds Required $898,033.80 ÷ Client’s Total Security Value $ 1,043,000

© 2017 The National Finance V
Equals LVR 86 %
Client Signature: ………………………………………………………………. Date:
………………………………..
5. Complete the loan servicing calculation (NSR) by completing the form
overleaf.
TIP: Remember this NSR calculation is based on 2 security properties, but
you use only one NSR form. You should calculate your loan repayments
based on the qualifying rate. Even though the clients have requested Interest
Only for their investment property, your loan repayment calculations in this
NSR form should be calculated at Principal and Interest over
30 years.

PageFNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING –
Profit & Loss Statement (year) 20 (year) 20 (year)
Net profit $ $
Director’s salary (if applicable) $ $
Depreciation $ $
Interest on debt being refinanced $ $
Other
Net Profit
$
$
$
$
Average Adjusted Net Profit (then transfer to table below) $
Gross Annual
Income
Taxation Net Annual Income
Applicant 1 $115,000 $32,482 $82,518
Applicant 2 $64,000 $13,587 $50,413
Applicant 3 $ $ $
Average Adjusted Net Profit (from above if applicable) $
$132,931Total Net Income A
Loan (loan being applied for) $685,000 $157,011.6
Personal loans $ $
Other property loans $203,000 $20,160
Credit cards $3,500 $760.9
Other $ $
Total Commitments $177,932.5
Less 80% annual rental income
Total Commitments
$24,960
$152,972.5 B
© 2017 The National Finance V
NET SURPLUS RATIO
(NSR) Manual
Serviceability Calculation
Name of Client/s
1. John James Dowell Loan Amount $685,000
2. Mary Jane Dowell Security Value $1,043,000
3. LVR 86%
Self-Employed - Annual
Individuals - Annual
Outgoings – Annual Loan Amount
Annual Payment
Living Allowances – Annual (Dec 2014)
Single income $17,906 Joint income $26,033
Single income plus 1 $24,593 Joint income plus 1 $32,360
Single income plus 2 $30,920 Joint income plus 2 $38,687
Single income plus 3 $37,248 Joint income plus 3 $45,014
Single income plus 4 $43,575 Joint income plus 4 $51,272
Summary
Annual Living Allowance (from above table) $26,033
Total Commitments (from B above) $152,972.5
Total Outgoings (C) $126,939.5
C
C (Total Outgoings) as a % of A (Total Income). [ C÷A x 100 = ] NSR equals
95.4 %
We have created this form for practice purposes only. Each lender will have their own assessment
criteria and their own Serviceability
Calculators, which may or may not be similar to this practice sheet.

PageFNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING –
© 2017 The National Finance V
6. Complete the lender’s application form (a blank ANZ loan application form
has been provided for you) and the other documents as provided for you.
Your answer to this Activity should be prepared as if you were submitting a
real full loan application to the lender. Remember you must treat this as a
cross-collateralised loan structure.
Please note: If there is information required on the application that is not
supplied please improvise. The application should be completed as neatly as
possible to ensure ease of review. Tax charts, an LMI table and sundry forms can
be found in your course content. You do not need to create any “dummy”
supporting documents (eg. documents that your client would typically provide to
you in a real submission, eg. rates notices), just ensure you list them where
required.
For this question you must include the following 5 completed forms (all
have been provided for you):
- Lending Checklist
- Summary of product choice
- Privacy Act, Disclosure and Consent
- Loan Application Cover Sheet
- ANZ Application form
TIPS: Use the LMI table provided in Unit 7 to calculate your LMI and don’t forget
LMI stamp
duty. Page 6 of the ANZ form is where you show your split facility structure On page 9 of the ANZ form Assets and Liabilities should be shown as
current / pre-
settlement but Income and Expenses are to be shown as proposed / post
settlement