FNS40815 Certificate IV in Finance and Mortgage Broking Assignment 1

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Page 1FNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING –
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Assessor’s
Comments: ...................................................................................................
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

Competent
Not Yet
Competent
Date assessed Mark
ASSIGNMENT 1
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
Further action required (if applicable)

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ASSIGNMENT 1
Task
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 (if you determine LMI is applicable) is found in Unit 7.
Trainees should ensure they refer to Units 7 and 8.
Scenario
Clients: Mary Jane
Dowell DL No.:
4167384
DOB: 06/06/65 Australian Passport No.: L93214773
John James
Dowell DL No.:
4378691
DOB: 03/05/67 Australian Passport No.: L8078972
Current Address: 46 Collins Street, North Ryde NSW 2113
Time there, 2.6
years Phone 0411
123 456

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Previous Address: 37 Maple Street, Gladesville NSW 2111
Time there, 4 years.
Children: 2 children aged 7 and 9 Scenario Continued overleaf ….

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ASSIGNMENT 1 Continued
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 ….

Assume this is a cross collateralised loan
Due to the client’s request below, assume this structure will be a Split facility
Your clients have told you: that they want to keep the repayments on their home separate
Although addresses show NSW, for the purpose of duty and other cost calculations, assum
You should assume a Standard Variable Rate of 5.5% and a Qualifying rate of 2% above th
Assume the current car loan will be paid out by the refinance of the home. Assume the clie
o o
o
o o
o
o
Assumptions:
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ASSIGNMENT 1 Continued
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).

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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
Client applying for the loan is a middle-class family, seeking home loan from
the bank.
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The couple is earning handsomely, such that they are in a sound financial
condition
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to pay back the loan on an installment basis. They will be able to cover the
installments
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with their current income. For obtaining the loan, they will have to provide
collateral
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security for the same. The client will have to convince the bank that they will be
able to
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pay back the loan, even in the adverse of the situations. This will ensure that the
loan is
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paid in an amortized manner and will not create burden on the client’s income
and ensure
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Timely receipts of installments for the bank.
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ASSIGNMENT 1 Continued
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.
A loan requires certain documents to be submitted by the client to the bank, for
the loan
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to be sanctioned and approved by the bank. Such documents beibg:
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Collateral arrangements such as the security and other formalities
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Identification procedure for the Client such as Personal Identification Number
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Income Proof documents (Salary Slip etc.)
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Residential Proof documents
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Loan Closure formalities
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A duly signed and attested letter of hypothecation
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ASSIGNMENT 1 Continued
4. Complete the loan costing sheet below
Estimate of Costs Worksheet – Purchase/Refinance
Client/s Name: Mary Jane Dowell & John Dowell
Owner Occupier:  Yes  No
Lender (if chosen): NFI
Estimated Costs:
Lender’s Loan Establishment/Application Costs $1200
Valuation cost (if not included above) $ 600
Property Transfer Stamp Duty $685000
Solicitor/Settlement Agent/Conveyancing Charge $100
Registration of new Mortgage $ 100
Register of Transfer of Title $ 50
Title Search $ 20
Discharge of old Mortgage $ 2900
Old Lender’s Settlement fee $1000
Miscellaneous Costs (if applicable):
- Other ……………………………………………… $
- Other ………………………………………………… $
- Other ………………………………………………… $
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SUB TOTAL $ 689970
Lenders Mortgage Insurance (if applicable) $ 30
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TOTAL COSTS $ 691000
Summary
Purchase price (if applicable) $685000
Current Loan Amount/s $180000
Plus 2 months interest on Current Loan (ie. 2 x monthly repayment) $2160
Plus Total Costs (from above) $ 867160
Plus Total Other Debt Consolidations (if applicable) $
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Equals Total Funds Required $ 867160
LVR: Total Funds Required $ 861760 ÷ Client’s Total Security Value $ 995000
Equals LVR 86.609 %
Client Signature: ………………………………………………………………. Date:
………………………………..

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ASSIGNMENT 1 Continued
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.

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NET SURPLUS RATIO (NSR)
Manual Serviceability Calculation
N a me o f C li e n t / s
Self-Employed - Annual
Profit & Loss Statement (year) 2017-18 (year) 2018-19 (year)
Net profit $25000 $27000
Director’s salary (if applicable) $ $
Depreciation $500 $500
Interest on debt being refinanced $2000 $2100
Other $ $
Net Profit $22500 $24400
Average Adjusted Net Profit (then transfer to table below) $23450
Individuals - Annual Gross Annual Income Taxation Net Annual Income
Applicant 1 $115000 $33930 $113100
Applicant 2 $64000 $18810 $62700
Applicant 3 $ $ $
Average Adjusted Net Profit (from above if applicable) $87900
Total Net Income $ A
Outgoings – Annual Loan Amount Annual Payment
Loan (loan being applied for) $180000 $12960
Personal loans $ $
Other property loans $ $
Credit cards $5000 $
Other $ $21970
Total Commitments $34390
Less 80% annual rental income $27040
Total Commitments $7890 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) $1820
Total Commitments (from B above) $7890
Total Outgoings (C) $9710 C
C (Total Outgoings) as a % of A (Total Income). [ C÷A x 100 = ] NSR equals 2.99 %
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.
Living Allowances – Annual (Dec 2014)
1. Mary Jane Dowell
2. John James Dowell
3.
Loan Amount $861760
Security Value $995000
LVR 86.609%

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Institute
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ASSIGNMENT 1
Continued
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 (if required) 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:
 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