Finance Mortgage Broking: Loan Suitability Report for Basil and Daisy

This report provides a comprehensive analysis of a mortgage loan application for Basil and Daisy, a couple seeking to purchase a property. The report assesses their financial position, including income, assets, and liabilities, to determine their eligibility for a mortgage. It calculates their monthly income, expenses, and savings, evaluating their ability to make loan repayments. The report recommends a loan amount of $445,000, considering the property price and the couple's financial capabilities. It also outlines the terms of the loan, including an interest rate of 6% per annum and a 30-year term, and suggests the necessary documentation for the loan application. The report concludes that the couple is in a good position to secure the loan and make repayments, providing a detailed justification based on their financial situation and the terms of the loan.

Running head: FNS40811 FINANCE MORTGAGE BROKING CERTIFICATE 4
FNS40811 Finance Mortgage Broking Certificate 4
Name of the Student:
Name of the University:
Authors Note:

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FNS40811 FINANCE MORTGAGE BROKING CERTIFICATE 4
To,
Basil and Daisy
Ref.: Loan application requirements.
Dear Basil and Daisy,
This is in reference to the above subject matter. The suitability of a loan product depends on the
requirements of the loan applicant / applicants. Basil Butler and Daisy Manhattan are a couple
who are expecting their triplets in next six months live in Fitzroy. However, the couple will
return to Melbourne where they have an old warehouse apartment. As the couple’s neighbour is
looking to sell her property, Basil and Daisy are quite interested in acquiring the property. The
property has been priced by their neighbour at $510,000 however, the neighbour has agreed to
sale the property to the couple at $495,500 provided the settlement is made within 30 days.
Basil and Daisy both are self-employed with annual incomes of $200,000 and $130,000
respectively. The financial position of the couple is also quite stable as can be understood from
the following assets and liabilities position at present.
Basil Butler’s financial position:
Applicant 1
Assets Liabilities
Owner occupied property $550,000 $280,000
Bank account $127,000

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FNS40811 FINANCE MORTGAGE BROKING CERTIFICATE 4
Superannuation $200,000
Motor Vehicle $90,000 $60,000
Household contents $2,000
Total Assets and Liabilities $969,000 $340,000
Net asset position $629,000
Daisy Manhattan’s position:
Applicant
2
Assets Liabilities
Owner occupied
property
$650,000
Bank account $50,000
Superannuation $400,000
Motor Vehicle $80,000 $10,000
Household contents $2,000

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FNS40811 FINANCE MORTGAGE BROKING CERTIFICATE 4
Total Assets and
Liabilities
$1,182,000 $10,000
Net asset position $1,172,000
Both the couples have considerable amount of annual income and with significant ability of the
couple to make savings in each month after incurring household expenditures and making
payment towards the loan obligation for the property at Fitzroy and the luxury cars there are
number of options available for the couple to take the loan and purchase the neighbour’s
apartment in Melbourne.
The couple at present have an annual combined income of $330,000 which approximates to a
monthly income of $27,500. The current monthly household living expenditure has been
assumed to be 20% of monthly income for Basil and 25% of monthly income for Daisy (assumed
as no information regarding the same was provided in the document). Thus, the monthly
household living expenditure of the couple is assumed to be as following:
Applicant Amount ($)
Basil Butler (16666.67 x20%) 3333.33
Daisy Manhattan (10833.33 x 25%) 2708.33
Total 6041.67

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FNS40811 FINANCE MORTGAGE BROKING CERTIFICATE 4
The current loan repayment include annual payment of $9,333.33 and $7,000 towards the
property at Fitzroy and luxury cars of the couple. Taking into consideration the above
repayments the monthly savings of the couple at present is expected to be as following:
Per Month
Employment Income (Net) $27,500.00
Rental Income
Total Income $27,500.00
Living expenses – HEM $6,041.67
Body Corporate fees
Credit Card expenses
Payments on residential loans $16,333.33
$22,375.00
Total Expenses
Surplus before new loan $5,125.00
The neighbour has offered to sale her property at $495,500 and assuming that the couple has
necessary cash to meet the current expenditures and finance up-to $50,000 of the purchase price
the amount of loan required to finance the apartment is around $445,000. Use of mortgage loan

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FNS40811 FINANCE MORTGAGE BROKING CERTIFICATE 4
will help the couple to quickly process the loan amount as the requirement for the coupe is to
make settlement within 30 days (Milligan, Pawson, Williams & Yates, 2015).
It has been assumed that the rate of interest for the loan is 6% per annum and will stay constant
at that rate. The loan term is expected to be 30 years and thus, the monthly instalment required to
repay the loan will be $2,694.08 (calculation attached in the excel sheet). Since, the couple at
present has a monthly surplus of $5,125 after meeting all expenditures thus, the couples are in
good position to receive the loan and make repayments as per the terms and conditions of the
loan agreement (Connolly, La Cava & Read, 2015, June).
Taking into consideration the above it is recommended to submit all necessary documents
including the income tax returns, income proofs, driving licenses, proof of property including
luxury cars, bank account details, and other essential document to the appropriate bank to finance
the acquisition of the apartment in Melbourne.
Regards,
(Name of the student)

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FNS40811 FINANCE MORTGAGE BROKING CERTIFICATE 4
References:
Connolly, E., La Cava, G., & Read, M. (2015, June). Housing prices and entrepreneurship:
Evidence for the housing collateral channel in Australia. In Small Business Conditions
and Finance, Proceedings of a Conference, Reserve Bank of Australia, Sydney (pp. 115-
144).
Milligan, V., Pawson, H., Williams, P., & Yates, J. (2015). Next moves? Expanding affordable
rental housing in Australia through institutional investment. City.