FNS40815 Certificate IV in Finance and Mortgage Broking Assignment 2

This document presents a comprehensive solution to the FNS40815 Certificate IV in Finance and Mortgage Broking Assignment 2. The assignment focuses on providing financial product recommendations for clients, specifically the IBA housing loans for Indigenous Australians, and justifying those recommendations. It includes detailed lists of supporting documents required for loan applications, such as personal identification, income verification, and expense details. Furthermore, the solution outlines loan costing, and loan servicing calculations. The assignment also involves completing an FHOG application form and a Westpac loan application form, providing a practical approach to loan processing. The solution is well-structured and includes references to support the recommendations and documentation requirements.

Running head: FNS40815
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Name of the student
Name of the university
Student ID
Author note

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Table of Contents
Answer 1....................................................................................................................................2
Answer 2....................................................................................................................................3
Reference....................................................................................................................................5

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Answer 1
Recommendation of the product for clients and reasons for recommendation
The client is recommended to apply for IBA housing loans indigenous Australians for
purchasing their 1st home who are not able to borrow entire required amount through other
lender. It offers to provide loan as per the need of the purchaser and it offers the housing loan
products to the eligible purchaser to purchase – (i) residential established property (ii) land
and constructing new home (iii) upgrading and establishing residential property (Indigenous
Business Australia 2018). Further, the costs apart from the purchase price of the house like
valuation report for property, costs of conveyance, fees for mortgage registration and building
inspection shall be be paid by the buyer. This product is recommended for various reasons as
mentioned below –
 loan products – when the buyer is ready for applying the IBA housing loan the buyer
can register the interest in less than 10 minutes through using of the online
“Expression of interest form” or checking out “housing loan tools” for estimating
the amount available to borrow. Further, if the buyer is not eligible to borrow the loan
from another source like Bank of credit union he may become eligible for any
assistance from IBA. IBA offers housing loan to the customers with combined gross
income up to $ 190,932. As total income of Mr. Grimms is less than that amount he is
eligible to apply for this loan (Jacob 2018).
 Amount of loan – amount of loan that can be lent by IBA depends on various factors
lie savings and income of borrower, capacity of meeting the repayment of loan, other
costs of housing involved with the loan, value of the property intended to buy, loan
term and interest rates. Hence, Mr Grimms will be able to borrow as per his
requirements and ability.

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 Deposit – deposit requirement for IBA is lower as compared to other commercial
lenders for home purchase. Further, the minimum deposit amount required to be
contributed is depended on the income of borrower. Minimum required amount as
deposit for purchasing 1st home is only $ 3,000 that is significantly low as compared
to other loan products (Indigenous Business Australia 2018).
 Rate of interest – it offers the housing loans at the interest rate that is based on the
borrower’s individual circumstances and the requirement of loan. Rate of loan from
IBA is comparatively low as against various standard rates of mortgages from other
lenders. Further, the 1st home buyers are eligible for standard introductory rate of
interest that has low rate of interest at the commencement.
 Terms of loan and repayment – terms of IBA loans are depended on borrower’s
capacity to make the repayments for housing loan. Generally, the term of loan are
designed to enable the maximum contribution that can be afforded by the borrower
towards loan repayments (Ellis and Littrell 2017).
Answer 2
List of the supporting documents required for supporting loan application
 Personal identification – the borrower is required at least 2 forms for identification,
one of which is the photo ID such as passport or driver’s licence. The borrower may
provide any 2 of the following documents –
 Citizenship or birth certificates
 Medicare card
 Centrelink pension card
 Rates notice that is not less than 3 months old
 Utilities bill that is not less than 3 months old

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 Notice for tax assessment that is not less than 12 months old (Sweeney 2017)
 Information of income –
 Bank statement for last 3 months showing details of salary credits and most recent
payslip for 1 month, or,
 bank statement of last 6 months showing details of salary credits
 Bank statement that is not less than 60 days old showing the following –
 Account name
 Account number
 History of full transaction
 Information regarding other expenses including –
 Regular bill of utilities including various expenses like payment towards power,
water, gas, TV subscription and mobile phone expenses
 Other household expenses including the ongoing maintenance, if any, body corporate
and council rates (Home Loan Experts 2018).
 Transaction account or statement of credit card that helps in estimating the monthly
expenses on things such as eating out, groceries, insurance premiums and gym
membership.
 Other financial information including the following –
 Recent evidence for the assets including shares, term deposits and savings
 If any other loan instalment is ongoing with any other lender, last 3 months loan
statement. The statement shall include the details regarding repayments and balances,
loan account number, account name regarding debt ownership (Jefferson et al. 2017).

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Reference
Ellis, L. and Littrell, C., 2017. Financial Stability in a Low Interest Rate Environment: An
Australian Case Study. In RBA Annual Conference Volume. Reserve Bank of Australia.
Home Loan Experts., 2018. Applying for a home loan: Cutting through the paperwork.
[online] Available at:
https://www.homeloanexperts.com.au/home-loan-documents/documents-loan-application/
[Accessed 27 Nov. 2018].
Indigenous Business Australia., 2018. Loan Products - Indigenous Business Australia.
[online] Available at: http://www.iba.gov.au/homes/iba-housing-loans/loan-products/
[Accessed 27 Nov. 2018].
Jacob, M., 2018. Housing Finance-A Study on Customers’perception. Scholars Association
of Kerala, 8(4-A), p.32.
Jefferson, T., Austen, S., Ong, R., Haffner, M.E. and Wood, G.A., 2017. Housing equity
withdrawal: Perceptions of obstacles among older Australian home owners and associated
service providers. Journal of Social Policy, 46(3), pp.623-642.
Sweeney, N., 2017. Loan application checklist. [online] Your Mortgage. Available at:
https://www.yourmortgage.com.au/home-loan-guide/loan-application-checklist/79349/
[Accessed 27 Nov. 2018].

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