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 _______________________________________________________________
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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 assessments@financeinstitute.com.au (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 ____________________________ Mark ____________________
Competent ?
Not Yet Competent ?
Assessor’s Comments: ...................................................................................................
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Further action required (if applicable) ______________________________________________________
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)
Other: Mr and Mrs Grimms each have $45,000 in superannuation
Scenario Continued overleaf ….
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 p.a. 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.
Assumptions:
o Although addresses show NSW, for the purpose of duty/cost calculations, assume that the clients live in the same state as you (the broker).
o You can assume a Standard Variable Rate of 5% and a Qualifying rate of 2.5% above the Standard Variable Rate (for your NSR form).
o Assume the clients will be “full-doc”.
o Assume this lender would accept 50% of overtime income and assume
overtime forms part of the applicant’s total gross income
TIPS
LVR and LMI: To work out the LVR you first have to decide how much money your client can afford to borrow.
1. One method would be to determine if they could do a 95% loan so you would simply work out what95% of the purchase price would be. The purchase price is $485,000 x 95% = $460,750 (loan amount) LVR 95%. The LMI is worked out on $460,750 and the clients pay the fees from their own funds or some lenders will allow them to capitalise it into their loan.
2. Another method would be to work out the total funds available to the clients e.g. $55,000 savingsplus FHOG. After working out costs and taking these away from their available cash you would then know how much is left for a deposit. Once you know how much deposit they have you would then know the loan size and from there work out the LVR. The LMI is worked out on the loan amount that you end up with. Don’t forget to add the LMI stamp duty.
Keep in mind that first home buyers tend to want to do things with their first house, such as carpets, furniture, fittings, etc. and if they have some funds left over after settlement, they wouldn’t need to rely so heavily on credit cards, etc.
Pleasenote:ThetableforlivingallowancesontheNSRsheetisbasedontheHendersonpovertyindex andmaybeusedintheseassignmentsaswearenotusingarealclient.HoweverinreallifeASIChas ruledthatabudgetmustbecompletedforeachclienttoassesslivingexpenses(weprovideasample budgetformatthebackofAppendixB20forinterest).
ASSIGNMENT 2 Continued
1. Recommend a product for the clients and explain your reasons for the recommendation
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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.
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3. Complete the loan costing sheet below
Estimate of Costs Worksheet - Purchase
Client/s Name: _______________________________________________________________________
Owner Occupier: •?Yes •?No Lender (if chosen): ________________________
Estimated Costs:
New Lender’s Loan Establishment/Application Costs $ _______________________
Valuation cost (if not included above) $ _______________________
Property Transfer Stamp Duty $ _______________________
Solicitor/Settlement Agent/Conveyancing Charge $ _______________________
Registration of new Mortgage $ _______________________
Register of Transfer of Title $ _______________________
Title Search
Miscellaneous Costs (if applicable): $ _______________________
- Rates adjustment $ _______________________
- Home/contents insurance $ _______________________
- Progress inspection (construction loan) $ _______________________
- Other ………………………………………………… $ _______________________
- Other ………………………………………………… $ _______________________ ===================
SUB TOTAL $ _______________________
Lenders Mortgage Insurance (if applicable)
Summary $ _______________________ ===================
TOTAL COSTS $ _______________________
Purchase Price $ _______________________
PlusTotal Costs (from above) $ _______________________
EqualsTotal Purchase Funds Required $ _______________________
LessLoan Requested $ _______________________
EqualsClient Contribution
LVR ____________% $ _______________________
Client Signature: ………………………………………………………………. Date: ……………………………..
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
Name of Client/s
1. Loan Amount $
2. Security Value $
3. LVR %
Self-Employed - Annual
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) $
LivingAllowances–Annual
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
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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
- Credit Guide / Disclosures
- Privacy statement and Consent
- Loan Application Cover Sheet
- Westpac Application form
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