FNS40815 Certificate IV in Finance and Mortgage Broking Assignment 2

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Assessor’s
Comments: ...................................................................................................
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

Competent
Not Yet
Competent
Date assessed Mark
ASSIGNMENT 2
To be completed by the Trainee
You must include this page with your Assignment 2 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
Further action required (if applicable)

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ASSIGNMENT 2
Task
Using the information contained in the Scenario below, please complete the following 6
tasks. You must complete each task in order for your submission to be assessed. Omission
of any one of these 6 tasks will be regarded as Not Yet Competent and you will then be
required to resubmit this assessment in full.
1. Recommend a product for the clients and explain your reasons for
recommendation
2. List the supporting documents that would be needed to support the loan
3. Complete a loan costing sheet *
4. Complete a loan servicing calculation (NSR) *
5. Download and complete the FHOG application form that is relevant to your
state/territory, from the internet (or print from Appendix 15)
6. Complete a loan application form (a blank Westpac loan application form
has been provided for you which you should use) and complete all of the
accompanying documents as provided for you.
Your answer to this Task should be prepared as if you were submitting a real loan application to
the lender.
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. It is to be submitted to NFI as if NFI is the lender and you were an accredited broker.
If you do not submit in a professional manner, your assessment will not be marked.
* Important: 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 table (for your LMI
calculation if applicable) is found in Unit 7. Trainees should ensure Units 7 and 8 are
used to source correct figures for this assignment.
Scenario
Clients: Lynette Mary
Grimms DL No.:
417392 DOB:
16/02/70
Gordon George
Grimms DL No.:
421814
DOB: 17/09/71
Current Address: 28 Elmslie Street, North Parramatta NSW 2151
Time at address 32 months (Rent $380 per week)
Previous Address: 42 Grant Street, Tweed Heads NSW 2485
Time at address 2 years
Children Two children aged 6 and 8
Credit Cards: ANZ credit card - $6,000 limit (balance $3,200)
Scenario Continued overleaf ….

Although addresses show NSW, for the purpose of duty/cost calculations, assume that the
You can assume a Standard Variable Rate of 5.5% and a Qualifying rate of 2% above the S
Assume the clients will be “full-doc”.
o o
o
Assumptions:
TIPS
LVR and LMI: To work out the LVR you first have to decide how much money your client can afford to b
One method would be to determine if they could do a 95% loan so you would simply work out what 95%
Another method would be to work out the total funds available to the clients e.g. $55,000 savings plus F
Keep in mind that first home buyers tend to want to do things with their first house, such as carpets, furn
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ASSIGNMENT 2 Continued
The clients are looking to purchase their first home which is a small, newly built 2
bedroom unit at 2/12 Garden Grove Bankstown NSW 2200, for $485,000. The property has
never been occupied before.
They have funds of $55,000 of which $35,000 were genuinely saved. The remaining
$20,000 was a redundancy payment to Mr Grimms from his previous employer.
Mr and Mrs Grimms are eligible to apply for the FHOG. They are aware there will be a body
corporate fee in the new unit complex which they have been told is $75 per week per unit.
Mr Grimms works as a carpenter with a major construction company in Bankstown and has
been there for 32 months. His salary is $72,000 p.a. plus he has earned an average of $500
per week in regular overtime over the previous 18 months. He previously worked for a
Tweed Heads Joinery company for 4 years before being made redundant when the business
was bought out.
Mrs Grimms works as a receptionist/admin assistant with the BB Real Estate company and earns
$47,000
She has been there for 30 months. She previously worked for another Real Estate
company in Tweed Heads for 4 years.
The clients own 2 cars – a 2010 Holden Ute worth $12,000 and a 2011 Nissan Xtrail worth
$20,000 with Nissan finance of $15,000 with repayments of $343 per month over 48
months.
Please note: The table for 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

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interest).

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ASSIGNMENT 2 Continued
1. Recommend a product for the clients and explain your reasons for
the recommendation
Considering the financial position, it can be said that the taking personal loan will
be ............................................................................................................................
...
suitable for the Grimms family. This is because taking personal loan is much
easier as compared to home loan. Thus, it can be said that there are less formalities involved
in personal loan as compared to home
loan. ...............................................................................................................................
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ASSIGNMENT 2 Continued
2. List the supporting documents that would be needed to support the
loan application. Even though there may be a checklist in the
lender’s application form, you must list the documents separately
below.
Documents such as address of proof as well as identification proof will be needed
to
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support the loan application form. In addition, collateral related documents will
act as
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Supporting documents.
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ASSIGNMENT 2 Continued
3. Complete the loan costing sheet below
Estimate of Costs Worksheet - Purchase
Client/s Name: Lynette Mary Grimms and Gordon George Grimmss
Owner Occupier: Yes  No Lender (if chosen): Broker
Estimated Costs:
New Lender’s Loan Establishment/Application Costs $ 500
Valuation cost (if not included above) $ 100
Property Transfer Stamp Duty $ 485000
Solicitor/Settlement Agent/Conveyancing Charge $ 1000
Registration of new Mortgage $ 700
Register of Transfer of Title $ 1200
Title Search $ 300
Miscellaneous Costs (if applicable):
- Rates adjustment $
- Home/contents insurance $
- Progress inspection (construction loan) $
- Other ………………………………………………… $
- Other ………………………………………………… $
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SUB TOTAL $ 488800
Lenders Mortgage Insurance (if applicable) $ 1200
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TOTAL COSTS $ 490000
Summary
Purchase Price $ 460750
Plus Total Costs (from above) $ 5000
Equals Total Purchase Funds Required $ 4 9 0 0 0 0
Less Loan Requested $
Equals Client Contribution $
LVR 495.43 %
Client Signature: ………………………………………………………………. Date:
……………………………..

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ASSIGNMENT 2 Continued
4. Complete a loan servicing calculation (NSR) by completing the form
overleaf.
TIP: You should calculate your loan repayments based on the qualifying rate
that we have provided, Principal and Interest over 30 years.

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NET SURPLUS RATIO (NSR)
Manual Serviceability Calculation
N am e o f Cli e n t / s
Self-Employed - Annual
Profit & Loss Statement (year) 2017-18 (year) 2018-19 (year)
Net profit $ 90000 $ 85000
Director’s salary (if applicable) $ $
Depreciation $ 1000 $ 1000
Interest on debt being refinanced $ 4116 $ 4116
Other $ $
Net Profit $ 84884 $ 79884
Average Adjusted Net Profit (then transfer to table below) $ 82384
Individuals - Annual Gross Annual Income Taxation Net Annual Income
Applicant 1 $ 98000 $ 28165 $ 93884
Applicant 2 $47000 $ 14100 $ 47000
Applicant 3 $ $ $
Average Adjusted Net Profit (from above if applicable) $ 93886
Total Net Income $ 140884 A
Outgoings - Annual Loan Amount Annual Payment
Loan (loan being applied for) $ 460750 $ 34556
Personal loans $ $
Other property loans $ 20000 $ 4116
Credit cards $ $
Other $ $
Total Commitments $ 38672
Less 80% annual rental income $ 15808
Total Commitments $ 22864 B
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) $ 32360
Total Commitments (from B above) $ 22964
Total Outgoings (C) $ 55324 C
C (Total Outgoings) as a % of A (Total Income). [ C÷A x 100 = ] NSR equals 39.27 %
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.
1. Lynette Mary Grimms
2. Gordon George Grimms
3.
Loan Amount $ 460750
Security Value $ 93000
LVR 495.43%
Living Allowances – Annual (Dec 2014)

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ASSIGNMENT 2
Continued
5. FHOG – Your client is eligible for the FHOG. Log into the website of the
Office of State Revenue in your own state and download the application for
a First Home Owner Grant. Complete this application form and include with
your Assignment submission. Any information within the FHOG form that
you are unsure of can be improvised. Remember to read the FHOG questions
carefully when it comes to signing or initialling. The FHOG form can also be accessed
from your Appendix 15 (specific to your own state/territory).
6. Complete a loan application form [a blank Westpac loan application form
has been provided for you which you should 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 loan application to the
lender.
Please note: If there is information required on the application that is not supplied
then 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
- Westpac Application form

PageFNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING –
ASSESSMENT TASKS
© Copyright 2019, The National Finance
Institute
V.11031
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