Assignment DetailsASSIGNMENT SWEET DRINKS OR MARIJUANA.docx

Assignment Details
ASSIGNMENT: SWEET DRINKS OR MARIJUANA
Apply epidemiological perspective to an issue in regards to
political implications and overall
health impact.
Explain the importance of epidemiology for informing
scientific, ethical, economic, and
political discussion of health issues.
INSTRUCTIONS
In this scenario you have been hired by the President of the
United States of America to
provide health policy recommendations. Currently there is a
great debate about if we should
outlaw super sized soft drinks or legalize marijuana. You need
to research both options,
decide which one you recommend and create a PowerPoint
presentation presenting and
justifying your recommendation.
REQUIREMENTS
The presentation should be visually appealing, geared toward a
non-health professional audience
and should include the following sections:
· A cover slide with your name and presentation title (1 slide)

· An overview of both issues from a health perspective
including scientifically proven health
pros and cons (3–6 slides)
· Specific health information for each issue as it relates to
obesity rates (2 slides, one for each
topic)
· An overview of both issues from an economic perspective (4–6
slides)
· An overview of both issues from an ethical perspective (4–6
slides)
· An overview of both issues from a political perspective (4–6
slides)
· Your recommendation regarding which one to pursue for
policy implementation and an
explanation why (2–4 slides)
REFERENCE LIST
Each slide should have a clear title indicating the focus of the
slide.
Include speaker notes as needed on each slide.
Reference ID:5a82f203a1652200010216e8
Loan details
Loan amount: $410,792.00 Security value: $450,000.00

Loan term (in months): 360 LVR: 91.29%
Actual rate: 4.78%
Repayment type: Principal and interest Interest-only period (in
years): 0
Applicant details
Applicant type: Individual Number of applicants: 2
Applicant 1
Applicant name: Clinton
Marital status: Couple Joint with applicant: 2
Number of dependants: 1 Residential suburb: EAST HILLS
Residential postcode: 2213
PAYG
---------------------------------------------------------------------------
------------------------------------------------------------
Income type: Gross Frequency: Annually
Base income: $75,000.00
Rental income calculation
---------------------------------------------------------------------------
------------------------------------------------------------
Rental income 1
Rental type: Standard
Amount: $11,700.00 Frequency: Annually

Ownership: 50.00%
Amount of investment loan: $410,792.00 Amount of interest
add-back: $10,372.50
Total rental income: $5,850.00
Non-taxable income
---------------------------------------------------------------------------
------------------------------------------------------------
Non-taxable income: $0.00
Total net income: $64,221.91
Applicant 2
Applicant name: Stephanie
Marital status: Couple Joint with applicant: 1
Number of dependants: 1 Residential suburb: EAST HILLS
Residential postcode: 2213
PAYG
---------------------------------------------------------------------------
------------------------------------------------------------
Income type: Gross Frequency: Annually
Base income: $74,000.00
---------------------------------------------------------------------------

------------------------------------------------------------
Rental income 1
Rental type: Standard
Amount: $11,700.00 Frequency: Annually
Ownership: 50.00%
Amount of investment loan: $410,792.00 Amount of interest
add-back: $10,372.50
Total rental income: $5,850.00
Non-taxable income
---------------------------------------------------------------------------
------------------------------------------------------------
Non-taxable income: $0.00
Total net income: $63,566.91
Total net income for all applicants: $127,788.83
Commitment
Actual living costs:$3,200.00 HEM living costs:$42,637.40
Total credit card limits:$8,000.00
Total Commitments: $36,675.25
Genworth serviceability calculation
Genworth NDI ratio:2.32:1

Net disposable income:$85,151.00 Assessment rate:7.3%
Maximum loan amount:$1,000,035.00 Monthly
repayment:$2,816.27
Actual rate serviceability calculation
NDI ratio:2.97:1 Actual interest rate:4.78%
Maximum loan amount:$1,309,744.00 Monthly
repayment:$2,150.32
Note: Genworth serviceability calculation is based on the
Genworth assessment rate or the actual rate plus a
buffer of 2.25%, whichever is the higher.
Disclaimer: Important - This Serviceability Calculator was
prepared by Genworth Financial Mortgage Insurance Pty
Limited
(Genworth) to provide you with an indication only as to whether
a loan application may meet Genworth servicing criteria. It sets
out the methodology by which Genworth arrives at this
conclusion. It is provided to you on the basis that you
acknowledge that:
You are not relying on this Serviceability Calculator when
determining a customer's loan serviceability, credit worthiness
or
whether the loan is 'not unsuitable' in any respect as part of the
credit approval process. This Serviceability Calculator does not
take the place of your own credit policy, prudent lending
guidelines or your responsible lending obligations under the
law. A
positive outcome under this Serviceability Calculator does not
guarantee that your own credit policy and lending guidelines
will
have been met or that you have complied with your responsible

lending obligations and does not constitute any representation
or warranty on the part of Genworth that the loan applicant
represents an acceptable credit risk for the customer. You are
responsible for ensuring that you comply in all respects with the
National Consumer Credit Protection Act when considering the
loan application and entering into the loan. Genworth reserves
the right to determine whether or not it is prepared to grant
insurance in respect of a loan application irrespective of
whether a positive indication is provided by the Serviceability
Calculator.
© Genworth Financial Mortgage Insurance Pty Limited • ABN
60 106 974 305 • ® Genworth, Genworth Financial and the
Genworth logo are registered service marks of Genworth
Financial, Inc and used pursuant to licence •
Assignment
Certificate IV in Finance and Mortgage Broking
(CIVMB_AS_v3A3)
Student identification (student to complete)
Please complete the fields shaded grey.
Student number
Assignment result (assessor to complete)
Result — first submission (Details for each activity are shown
in the table below)
Parts that must be resubmitted:
Result — resubmission (if applicable)
Result summary (assessor to complete)

First submission
Resubmission (if required)
Section 1: Case study 1 —
Clinton and Stephanie Clintons
Task 1 — Initial disclosures
Not yet demonstrated
Task 2 — Gathering and documenting client information
Task 3 — Assessing the clients’ situation
Task 4 — Using equity
Task 5 — Reasonable enquiries
Task 6 — Recommendations

Task 7 — Clinton and Stephanie’s professional network
Task 8 — Interest rates
Task 9 — Settlement
Section 2: Case study 2 —
Tony and Lorraine Denton
Task 10 — Establishing level of financial knowledge
Task 11 — Responsible lending obligations
Task 12 — Self Employed special considerations

Task 13 — Advising on strategies
Task 14 — Impact of credit history
Task 15 — External dispute resolution
Task 16 — Effective access to files
Feedback (assessor to complete)
[insert assessor feedback]
Before you begin
Read everything in this document before you start your
assignment for Certificate IV in Finance and Mortgage Broking
(CIVMB_AS_v3A3).
About this document
This document includes the following parts:

• Part 1: Instructions for completing and submitting this
assignment
• Section 1: Case study 1 — Clinton and Stephanie Clintons
– Task 1 — Initial disclosures
– Task 2 — Gathering and documenting client
information
– Task 3 — Assessing the clients’ situation
– Task 4 — Using equity
– Task 5 — Reasonable enquiries
– Task 6 — Recommendations
– Task 7 — Clinton and Stephanie’s professional
network
– Task 8 — Interest rates
– Task 9 — Settlement
• Section 2: Case study 2 — Tony and Lorraine Denton
– Task 10 — Establishing level of financial knowledge
– Task 11 — Responsible lending obligations
– Task 12 — Self Employed special considerations
– Task 13 — Advising on strategies
– Task 14 — Impact of credit history
– Task 15 — External dispute resolution
– Task 16 — Effective access to files
• Appendix 1: Client information collection tool/Fact Finder.
• Appendix 2: Serviceability calculator.
How to use the study plan
We recommend that you use the study plan for this subject; it
will help you manage your time effectively and complete
the assignment within your enrolment period. Your study plan is
in the KapLearn Certificate IV in Finance and Mortgage
Broking (CIVMBv3) subject room.
Part 1: Instructions for completing and submitting
this assignment
Completing the assignment
Saving your work
Download this document to your desktop, type your answers in

the spaces provided and save your work regularly.
• Use the template provided, as other formats will not be
accepted for these assignments.
• Name your file as follows:
Studentnumber_SubjectCode_Submissionnumber
(e.g. 12345678_CIVMBv3A3_Submission1).
• Include your student ID on the first page of the
assignment.
Before you submit your work, please do a spell check and
proofread your work to ensure that everything is clear and
unambiguous.
The assignment
This assignment is split into 16 Tasks, over 3 Sections. To
finish this assignment, you must complete all 16 tasks.
The information and data needed to complete Sections 1 and 2
is presented in case studies at the beginning of those sections.
Word count
The word count shown with each question is indicative only.
You will not be penalised for exceeding the suggested word
count. Please do not include additional information which is
outside the scope of the question.
Additional research
When completing the Client Information Collection Tool in
Appendix 1, assumptions are permitted, although they must not
be in conflict with the information provided in the Case Study.
You may also be required to source additional information from
other organisations in the finance industry to find the right
products or services to meet your client’s requirements or to
calculate any service fees that may be applicable.
Submitting the assignment
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Microsoft Word document.
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Do not delete/remove any sections of the document template.
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The assignment marking process
You have 26 weeks from the date of your enrolment in this
subject to submit your completed assignment.
Should your assignment be deemed ‘not yet competent’ you will
be given an additional four (4) weeks to resubmit your
assignment.
Your assessor will mark your assignment and return it to you in
the Certificate IV in Finance and Mortgage Broking (CIVMBv3)
subject room in KapLearn under the ‘Assessment’ tab.
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Section 1: Case study 1 — Clinton and Stephanie Clintons

Background
Clinton and Stephanie Clintons live in Sydney with their two
school-age children. They bought their home 15 years ago. With
the rise in its value over time they have generated substantial
equity and have decided to purchase an investment property.
Recently they went to a real estate seminar where the presenter
explained that it is possible with correct leverage to purchase
more than one investment property. Consequently, they have
decided to borrow 90% LVR on the investment property plus the
LMI. The deposit, stamp duties and other costs will come from
their ‘offset account’ attached to their home loan. They have
requested not to use their current lender.
After conducting research over the last six months they have
decided to purchase a new four-bedroom home in outer Brisbane
for $450,000 with a rental income of $450.00 per week.
The real estate agent has recommended they contact you to
arrange their finance. Their accountant has been providing some
advice in relation to negative gearing benefits.
The following tables are a summary of the details obtained from
the couple during the fact find interview. The details provided
include a description of the property they wish to purchase,
their financial and employment details and the loan features that
they require.
The investment property
Address:
29 Pacific Drive, Ipswich, Queensland 4305
Purchase price:
$450,000
Description:
4-bedroom brick veneer home
Rent:
$450.00 per week
Agent details:
Rain and Hall
Phone:
07 9322 1113

Mobile:
0412 880 088
The borrower’s home address
Current address:
17 Moss Ave, East Hills, NSW 2213
Description:
5-bedroom full brick home
Value:
$850,000
Mortgage:
$190,000
Monthly repayment:
$1,020.00 per month
Home phone:
02 6051 2121
Clients’ view of funding requirements
Purchase price:
$450,000
Estimated costs:
$20,000
Total required:
$470,000
Loan:
$405,000 + LMI
Own contribution:
$65,000
Assets
Big Bank offset savings account (joint)
$180,000
Little Bank fixed term account (joint)
$10,000
Ford Falcon G6, 8 years old (Clinton)
$15,000
Holden Barina, 10 years old (Stephanie)
$5,000

Superannuation — MPA Insurance (Clinton)
$82,000
Superannuation — CLM Insurance (Stephanie)
$54,000
Household effects (insured value)
$80,000
Liabilities
Big Bank standard home loan (Joint)
(P&I repayment, variable, no fees)
5.0%
$190,000 (repayments $1,020 p.m.)
Big Bank Visa card (Clinton)
18.5%
$800 (limit $5,000) (clears monthly)
Little Bank Visa card (Stephanie)
12.9%
$1,200 (limit $3,000) (pays $500 per month)
All debts have been repaid according to arrangements. In
relation to the credit card debt, the minimum monthly
commitment for servicing purposes should be calculated at 3%
of the credit limit.
Income/employment
Clinton (date of birth 24/5/84)
Position:
Project Manager (full time)
Employer:
ACM Construction
10 Wide Rd, Ryde, NSW
Phone:
02 7061 2111
Income (gross):
$85,000 p.a., gross monthly income of $7,083, net monthly
income of $5,476
Employer contact:
Kelly Williams, HR Manager

Length of service:
16 years
Driver’s licence:
8869KL
Email:
[email protected]
Stephanie (date of birth 8/10/87)
Position:
Accounts Assistant (full time)
Employer:
Pretty Clothing Pty Ltd
80 High Street, Penrith, NSW
Phone:
02 9940 3677
Income (gross):
$74,000 p.a., gross monthly income of $6,166, net monthly
income of $4,837
Employer contact:
Joan Collins, HR Manager
Length of service:
7 years
Driver’s licence:
2897HT
Email:
[email protected]
Interest income
Approximately $30 per month from the $10,000 term deposit,
interest of 3.5% p.a.
Expenditure
Monthly expenditure for living expenses — $3,200.
Solicitor’s details
Jackson & Williams
28 West Street, Yagoona, NSW
Phone: 02 9283 1365
Fax: 02 9283 1802

Note: The solicitor has quoted $1,500 to cover estimates costs.
Proposed loan details
• application fee — $600.00 (includes valuation)
• 30-year term
• principal and interest
• residential investment loan
• standard variable interest rate of 5.68% (comparison
5.82%), special offer rate of 4.78% (5.16% comparison) (Note:
Clinton & Stephanie will qualify for this special loan offer.)
• proposed settlement date — 6 weeks’ time
• ability to make additional payments from time to time
without penalty
• fortnightly repayment option
• redraw facility
• internet banking.
Assignment tasks (student to complete)
Task 1 — Initial disclosures
Following a personal introduction and before you begin
gathering information about the clients’ existing financial
situation or needs, there are certain disclosures you are required
to make as a finance broker. These disclosures include the way
you are remunerated and the range and limitation of your
services.
1. There are four (4) documents listed in ASIC Information
sheet INFO 146 ‘Responsible lending disclosure obligations –
Overview for credit licensees and representatives’ that must be
provided to customers. Refer to this Information sheet and the
information contained in your topic notes to answer part (a) and
(b) below.
(a) Identify which of these four (4) documents you
must provide your client before you commence providing
credit assistance and explain the main disclosures relevant to
that document. (40 words)
Student response to Task 1: Question 1(a)
Answer here
Before collating information from the new clients, following

three disclosures should be made:
· how intermediary is to be paid
· who the intermediary represents
· who the intermediary pays for referrals
The MFAA’s code of Practice requires that all the members to
disclose the commissions regardless whether the commission is
to be paid by borrower or the lender. Irrespective of
membership of the MFAA and the need to comply with their
Code of Practice, certain disclosures are mandatory for loans
regulated by the NCC.
The Corporations Act prohibits secret commissions between
agents and principals. Both the NNC and the Corporations Act
include provisions that commissions must be disclosed in
relations to commercial transactions.
The Consumer Credit Administration (Finance Broker)
Regulations 2004(NSW) requires loan writers to, as well as
disclosing monetary commissions, aslo disclose any interests,
relationships and alternative forms of commissions that may
influence their recommendation. It also includes soft dollar
commissions such as, tickets to sporting event and holiday
packages.
Payments by intermediaries to third parties (such as real estate
agents, accountants, solicitors, valuers and other associates of
the borrower) for referring potential clients are widespread in
the mortgage industry. Both the CCLC and the steering
committee advising the NSW government on credit reform have
strongly recommended the inclusion of provisions requiring
intermediaries to fully disclose any fees or commissions paid to
third parties referring business
(b) Identify which of these four documents you will
provide the client should you intend to charge a broker fee and

explain what is required for it to be valid. (40 words)
Student response to Task 1: Question 1(b)
Answer here
For disclosure of commissions, the relevant documents are: (a)
credit guide—given by credit assistance providers, credit
providers and the credit representative of those licensees; (b)
credit proposal disclosure document (proposal document)—
given by credit assistance providers; and (c) pre-contractual
disclosure statement—given by credit providers.
Assessor feedback:
Resubmission required?
No
Task 2 — Gathering and documenting client information
Complete the Client Information Collection Tool (located at the
end of the assignment in Appendix1) using the information
provided in Case Study 1.
Note: Any assumptions you make should be listed and should
not be in conflict with the case study information already
provided.
Assessor feedback:
No
Task 3 — Assessing the clients’ situation
1. Using the Excel or Online version of the Genworth
Serviceability Calculator, calculate the Genworth NDI for the

borrowers. This will require you to enter all the data,
including their future rental income.
<http://www.genworth.com.au/online-tools-forms-and-
reports/lmi-tools/serviceability-calculator>.
Once you have completed the calculations, copy the data
into the Serviceability Calculator (located at the end of this
assignment in Appendix 2).
Do not upload the Excel spreadsheet as a separate file.
Applicant 1
Applicant 2
Other names
CLINTON
STEPHANIE
Contact details
Address
10 Wide Rd, Ryde, NSW
80 High Street, Penrith, NSW
Phone
07 9322 1113
02 9940 3677
Mobile
0412 880 088
Email
[email protected]
[email protected]
Employment
HR MANAGER
HR MANAGER

How long?
16 YRS
7 YRS
Previous employer
How long?
PAYG
YES
YES
Self-employed
Gross income ( p.a.)
$85000
$74000
Number of dependants
0 ?
0 ?
Motor vehicles
Ford Falcon G6,
$15,000
Holden Barina,
$5,000
Loan purpose
NEW FOUR-BEDROOM HOME
Purchase price/Valuation
$450000
Deposit
65000
Loan amount

405000 (LMI?) loan amount incorrect no LMI added
Borrowing capacity
650000-750000 (?) where this figure came from ?
Assets and liabilities
Assets
Liabilities
Details
Market value
Details
Monthly payments
Amount owing
Property at:
$190,000
Mortgage with:
$1200
-
Property at:
Credit Card
?
Property at:
Credit Card
?
Cash at bank
$180,000
$10,000
Car leasing ?

Other cash
$1600
2.
$3600
Deposit paid on property
Overdraft
Motor vehicles:
Ford Falcon G6,
Holden Barina,
$15000
$10000
Other loans:
1.
2.
Personal effects
Credit card limit: $5000
18.5%
$800
Credit card limit: $3000
12.9%
$1,200
Shares and investments
Other:

Superannuation
Superannuation — MPA Insurance (Clinton)
$82,000
Superannuation — CLM Insurance (Stephanie)
$54,000
Total assets
$237600
Total liabilities
$4400
Surplus/deficiency:
Needs analysis
1
Name of your current lender?
CAPITAL BANK
2
What type of loan do you have?
PERSONAL LOAN (CLINTON)
3
Why did you choose this particular loan and lender?
3
What is the interest rate?
4
What are your payments?
Amount
$180

5
Frequency
MONTHLY
6
Do you know the fees and charges?
NO
7
What is your proposed purpose for the loan proceeds?
BUY HOME
8
Branch access available
YES
9
Internet banking available
YES
10
Phone banking available
YES
11
Lenders not to be considered
TOO BUSY TO FIND LENDERS
12
Type of loan sought
30-YEAR TERM HOME LOAN
13
Interest rate
5.68%
14
Payment frequency
FORTNIGHTLY
15
Redraw
YES
16
Offset

YES
17
Salary crediting
FUND ACCESS VIA CARD
18
Low fees and charges
YES
Notes
CLINTON AND STEPHANIE ARE PLANNING TO BUY
THEIR SECOND HOME.
THEY HAVE FOUND THE PROPERTY THEY WANT BUT
HAVEN’T PAID DEPOSIT.
CLIENTS ARE BOTH BUSY AND HAVE LIMITED
KNOWLEDGE OF THE LAON PRODUCTS AVAILABLE.
REAL ESTATE AGENT REFFERED.
PROPOSED SETTLEMENT DATE 6 WEEKS TIME
VARIABLE RATE @5.68%
Anticipated fees and charges
Anticipated purchase price
$ 430000
(PURCHASE PLUS RENOVATION)

Deposit
$ 60000
Loan amount
$ 370000
LVR
90.24%
Purchase costs
Stamp duty on transfer
Mortgage
Transfer
$ 13940
$ 107
$ 214
Solicitor/conveyancer
$ 1500
Rates and land taxes
$ 500
Pest inspection
$ 500
Borrowing costs
Application/establishment fee
$ 600
Valuation fee
$
Security admin fee
$
Mortgage stamp duty
$
LMI
$ 9842
Registration of mortgage

$ 150
Release of mortgage
$
Search fees
$
Other
$
Total
$ 457353
Loan interview diary
Name(s) of client(s) present at interview
CLINTON & STEPHANIE
Date of interview:
Location of interview
10 WIDE RD, RYDE, NSW
Indicate all clients who were interviewed in person
CLINTON & STEPHANIE
Do all of the clients appear to clearly understand English? YES
If not, have the services of an interpreter been recommended?

Do all of the clients clearly benefit from taking out this loan?
YES
If not, what inquiries have been made to ascertain the level of
benefit to each party of the loan?
Are any clients acting as though they are under duress or other
disability? NO
Are any clients acting as though they are unsure of anything
about the loan? NO
Are any of the clients acting as though they are unable to
comprehend
their obligations? NO
Are there any guarantors? NO
If yes is answered to any of the above questions, have the
clients
been advised to seek the services of a lawyer or financial
adviser?
YES.
Solicitor’s details
Jones and Co
22 High Street, City East, 2997
Phone: 02 8281 1382
Fax: 02 8290 1800
Provide details of other pertinent information obtained during
the loan interview which may be of interest or any unusual
circumstances you may wish to record
Clients both work and have little time to do research.
They also mentioned that they ae limited knowledge of loan
products available and might have difficulty in evaluating the
options.
Referred by Stephanie’s father.
The clients are renting and have found the property they like.

The settlement is in 6 weeks time.
Assessor feedback:
No
2. Based on the information provided in the case study and
using the tools available to you (e.g. loan calculators, including
those available on lenders’ websites), provide an assessment
of the clients’ borrowing ability. Consider and comment on the
following issues:
(a) the maximum loan using the Genworth
calculator
(b) deposit requirements for the loan required
(c) combined net monthly income, less cost of
living expense as specified by the borrower
(d) do they require Lenders Mortgage Insurance
(LMI) and if so, how much will it cost?
Refer to Genworth LMI estimator for this figure
(e) any other issues that may impact, now or in the
future, on the clients’ ability to meet their obligations,
including any possible risks.
Provide data to support your comments and conclusions.
(No word count requirement for questions (a) to (d)).
Question (e) (100 words)
Answer here
Depending upon the information provided by client, the client
can secure a loan with a number of lenders. They can borrow
$600k - $750k (Where this figure came from?) depending on
various assumptions made by the lenders. Rate of 5.68%
(Incorrect interest rate used couple is qualified for 4.68% as per

above information ?)is used to calculate the borrowing capacity.
$2000 (Living expenses incorrect its $3200 as per above
information ?) provision has been made of personal expenses
per month expenses
Various quotes are as follows:
· $607000 with Bankwest
· $713000 with NAB Homeside
· $743000 with Commonwealth Bank
· Various lenders requires a 20% deposit plus the stamp duty
and other incidentals. NAB homeside has a policy where it
allows application with 5% deposit along with lenders mortgage
insurance.
Answer here
In this case, Clinton and Stephanie is planning to deposit
$60000 65K and the property price is $450000. Therefore, they
need to get lender mortgage insurance due to the higher LVR
(more than 80%). ? 87%According to Genworth online LMI
calculator, it is estimated as $9842 $5792
Student response to Task 3: Question 2(c)
Answer here
Depending upon the information provided by client, the client
can secure a loan with a number of lenders. They can borrow
$600k - $750k ( upto $ 1,000,035.00) depending on various
assumptions made by the lenders. Rate of 5.68% is used to
calculate 4.68% (eligible interest rate for couple ) the
borrowing capacity.
$2000 $3200 provision has been made of personal expenses per
month expenses
Student response to Task 3: Question 2(d)
Answer here
Notes: Clinton and Stephanie is planning to deposit $60000 and
the property price is $450000. Therefore, they need to get
lender mortgage insurance due to the higher LVR (more than

80%). According to Genworth online LMI calculator, it is
estimated as $9842 ?
Student response to Task 3: Question 2(e)
Answer here
Potential risk for the client could be not budgeting their
expenses and may fall behind payments. Also there may be a
possibility of rate hike which can adversely affect client
repayments. But Clinton and stephanie have summarised their
expenses and can afford loan up to a further 200 bases point
increase. ?
There are many inherent risks like drop in property prices,
increase in rates and taxes, borrower being redundant which
have been taken in consideration by the client before applying
for loan.
Assessor feedback:
No
Task 4 — Using equity
1. Although Clinton and Stephanie have chosen to borrow
90% LVR on the investment property plus the LMI costs, what
other option could you present that would avoid the cost of
LMI? (100 words)
Student response to Task 4: Question 1
Answer here
To avoid the LMI they can use a family guarantor who has the
ability of providing additional equity against their property and
this may provide them with 100% ifthe new property’s value
since the family member will offer 20% if the risk leaving the
bank with the remaining 80%.
Their guarantor would ideally be the parent or grand parents as

well as brother or sister, step relationships can be accepted as
well. The family member must have sufficient equity and any
source of income even retirement funds are acceptable.
Assessor feedback:
No
2. Explain how it could be possible for Clinton and Stephanie
to borrow 100% of the purchase price ($450,000) and obtain a
tax benefit for the interest charged. (100 words)
Answer here
They can use their first home as equity since lenders will allow
the to refinance and gear their property to 90% ? with the
mortgage insurance capitalized and base loan.
This is because the value of property has sky rocketed and this
has increased their capital value. Thus, by tapping into this
growth Stephanie and Clinton will be able to buy another
property with full tax benefit by borrowing at 100% of the
purchase price.
Assessor feedback:
No
Task 5 — Reasonable enquiries
In the course of gathering information about the couple, you are

required under the National Consumer Credit Protection Act
2009 to make all ‘reasonable’ enquiries to determine a
borrower’s objectives, requirements and financial situation.
Identify at least six (6) ‘reasonable’ enquiries that you would
make with the clients in the case study and explain why these
enquiries are important in terms of NCCP compliance. (200
words)
Student response to Task 5
Answer here
1. The reasonable inquires, such as the amount of credit
required, time frame for repayment, the purpose and whether the
desired product has appropriate features ad flexibility can be
made to determine Clinton and Stephanie’s objectives.
2. Clinton and Stephanie have provided their employment
details and history of residence. I will ask Clinton’s loan bank
statement of his personal loan. This is to determine the
likelihood that they will meet repayment obligations over the
term of the loan.
3. I will consider clients main source of income including their
salaries and interest income by checking their pay slips and tax
returns to confirm that the clients have the capacity to repay the
loan.
4. The borrower’s appreciation of the risks associated with the
features of a particular credit product need to be noticed. I also
will confirm with Clinton and Stephanie that the deposit to
calculate LVR.
5. Valuations will be required for the property that the clients
want to purchase. This will also be used by bank to assess their
level of risk in proving loan to the clients.
6. Additional loan protection – Lender’s mortgage insurance
will be required.
Assessor feedback:
No

Task 6 — Recommendations
Note: Incorrect or uninformed advice can lead to significant
financial detriment for your client and lead to possible
complaints against you for misleading or deceptive and
misleading conduct. Therefore, all three (3) questions of this
task are ‘critical’ and you must demonstrate the required
knowledge in each to be deemed competent.
1. Based on the information presented in the case study,
prepare a written proposal (letter or email) outlining your
proposal to clients. (750 words)
The style and language used in the proposal should be
appropriate to the case study client’s level of understanding. It
should be clear and concise and written in language that is easy
to understand, while still remaining professional in its
presentation.
You may base your response to this part of the assignment
either on your knowledge of the products currently offered by
your own organisation or on the products offered by a lender
you have researched.
In your proposal, you should include:
• a summary of your understanding of the clients’
needs (this could be an outline summary of their proposed loan
structure)
• a summary of their current financial position (use
information from the ‘funds to complete’ template completed in
Appendix 1)
• the product options you have considered that meet
their needs (research two lenders and detail their loan features;
you can use the internet or if working in industry, internal
software)
• the option you recommend and the reasons for the
recommendation — explain how the recommended product
meets the clients’ needs (refer to the case study and explain why

you are recommending this lender)
• disclosures applicable to the situation (a summary of
likely applicable disclosures is adequate). Include disclosures in
the Credit Guide and any conflicts of interest.
Note: List any assumptions you have made about the clients and
their situation in order to complete this part of the assignment.
There are no rules regarding the format. Please use the format
that best suits you. Should you require it, an example of a
written proposal format has been provided in topic 3.3. Note
that the credit guide in your resources is not a ‘written
proposal’.
Answer here
Written Proposal
Client’s needs
Clinton and Stephanie who have been married for five years are
looking to buy their Second home. They have been looking at
properties for the last month and found one which is cost
$450000. The renovation of the kitchen and bathroom and other
costs could be $20000 extra.
Clients are looking to take a variable interest loan with
following requirements:
• 30-year term
• Premium Option home loan
• standard variable interest rate @ 5.68%
• proposed settlement date — 6 weeks time
without penalty
· fortnightly repayment option
· redraw facility
· funds access via cardoffset facility
Current financial situation
Clinton and Stephanie are working in their jobs for more than 3

years and have $72000 ( in saving, out of which they want to
use $60000 65K towards their home deposit and $12000
remaining in their saving account. Clinton, the husband, has a
personal loan of $3600 ? and a Visa card with $2000
(5000)limit. Stephanie has a Visa card with $3000 limit.
Total Assets Total
liabilities
Car $15000 Loan
$190,000
Car $10000 ($5000) Credit card
balance$2000 ($8000)
Superannuation $136000(Both)
Cash at bank $190000
Net Financial Position $159000 ?
As Clinton and Stephanie have no other liability, they can easily
secure home loan to buy their second home. Assuming that
Clinton estimated they spend around $2500 towards their living
costs and insurances. After paying for mortgage and other costs,
they will have $2560 left per month. ($4900 + $2900 -
$2500(monthly expense) - $2740(monthly repayment) = $2560 )
They can save the money into offset account or to pay off the
loan quickly. ? please explain where this comes from
As Clients are existing customers with Capital bank, I will
suggest they apply for the 30-year term Premium option home
loan with standard variable interest rate @5.68% with Capital
bank . I believe capital bank will provide debit card attached to
offset account. Capital bank allows application with less than
20% deposits along with LMI. Bank fees are also less than other
banks. Capital bank has several branches throughout Australia
and clients can access accounts via phone or online. Capital
bank has several branches throughout Australia and clients can
access accounts via phone or online.

If Clinton and Stephanie proceed with the loan, our organisation
will get 1.2% (its max 0.71%) upfront fees and will also
receive a trail. Disclosures will also include the external and
internal dispute resolution process.
Assumptions
· Living costs and insurances are $2000 per month
· all information used related to Capital bank is based National
Australia bank information
Proposal Disclosure Document
Client’s needs
Clinton and Stephanie who have been married for five years
(15years) are looking to buy their second home. They have been
looking at properties for the last 6 months and found one which
is $450000. The renovation of the kitchen and bathroom and
other costs could be $20000 extra. The other main costs are
stamp duty $13940 and LMI $9842.
Clients are looking to take a variable interest loan with
following requirements:
• 30-year term
• Premium Option home loan
• standard variable interest rate @ 5.68%
• proposed settlement date — 6 weeks time
without penalty
• fortnightly repayment option
• redraw facility
• funds access via card

• offset facility
Current financial situation
Clinton and Stephanie are working in their jobs for more than 3
years and have $72000 in saving, out of which they want to use
$60000 towards their home deposit and $12000 remaining in
their saving account. Clinton, the husband, has a personal loan
of $3600 and a Visa card with $2000 limit. Stephanie has a
Visa card with $3000 limit.
Total Assets Total
liabilities
Car $15000 Loan
$190,000
Car $10000 Credit
card balance $2000
Superannuation $136000(Both)
Cash at bank $190000
Net Financial Position $159000
Proposed finance
Lender/lessor: Capital Bank
Finance amount: $398,000
Interest rate: 5.68%
Term: 30 year
Repayments: $ 1365 fortnightly
Other features: 6 weeks settlement, ability to make additional
payments from time to time without penalty, fortnightly
repayment option, redraw facility, funds access via card, offset
facility
Notes: Clinton and Stephanie is planning to deposit $60000 and

the property price is $450000. Therefore, they need to get
lender mortgage insurance due to the higher LVR (more than
80%). According to Genworth online LMI calculator, it is
estimated as $9842.
If Clinton and Stephanie only contribute $60,000, they will not
have sufficient money to settle the property with $370,000 loan.
The total estimated cost including Stamp duty and LMI is
$457,353, less $60000 contribution is equal to $397,353.
The estimated loan amount is $398,000. Fortnightly repayment
(principal & interest) of $1365 depending upon 5.68% interest
on loan of $398,000 is quite convenient in current situation.
Assuming that Clinton estimated they spend around $2000
towards their living costs and insurances. After paying for
mortgage and other costs, they will have $2842 left per month.
($4900 + $2900 - $2000(monthly expense) - $2958(monthly
repayment) = $2842).
Fees payable by you to us
Nil
Reasonable estimate of commission
I will receive the commission from capital bank for assisting
you to obtain finance.
0.4% of the amount of credit limit shortly after the finance is
provided. We estimate this to be $1592.
0.15% per annum of your amount owing from time to time
payable monthly. We estimate the largest monthly payment to
be $4.44.
We may receive additional commissions from volume bonuses
which are referred to in our credit guide. The amount of those
additional commissions cannot be determined at the date of this
document.
Estimate of total fees and charges payable to the financier in

relation to applying for the finance
Establishment fee: $600
Valuation fee: $0
Total $600
These figures are estimates only and the final figures will be
shown in your credit contract or lease. Some or all of these fees
may be paid from the finance proceeds.
These fees are payable only once.
We are not aware of any other fees or charges payable to anyone
else in relation to the application for finance, but the financier
may impose some additional requirements.
Assessor feedback:
No
2. (a) Describe the home buyer assistance scheme
benefits and stamp duty concessions that are available in your
State or Territory, who would be eligible and what would be
their benefit?
Note: Please identify what State or Territory
you are from in your answer.(150 words).
Answer here
The following home buyer assistance schemes and stamp duty
concessions are available in NSW.
1. The second home - New Home scheme commenced from 1
January 2012 and provides eligible purchasers with exemptions
from transfer duty on new homes valued up to $550,000 and
concessions for new homes valued between $550,000 and
$650,000.

Eligible purchaser buying a vacant block of residential land to
build their home will pay no duty on vacant land valued up to
$350,000, and will receive (NO Stam Duty) concessions for
vacant land valued between $350,000 and $450, 000.
(concession in stamp duty only)
These rates apply from 1 July 2012.
2. The seconf home Owner Grant (New Homes) scheme (the
Scheme) was established to assist eligible second home owners
to purchase a new home or build their home by offering a
$15,000 grant.
The Scheme applies to new homes only and will reduce to
$10,000 on 1 January 2016.
Clinton and Stephanie are not eligible for stamp duty
concessions and the second home owner grant because they are
buying an established home.
Assessor feedback:
No
2. (b) Provide a summary of all additional costs and
fees, that the couple should be made aware of. (100 words)
Note: When considering your response, you can
refer to your completed Appendix1 which lists fees expected
and charges. Apart from known costs, you can estimate other
costs (i.e. pest inspection, rate etc.).
Answer here
Other costs and charges
· Establishment fees
· Account keeping fees
· Late payment fees

· Guarantee fees(where applicable)
· Settlement fees
· Early repayment fees
· Solicitor fees
· Stamp duty (where applicable)
· Lender mortgage insurance (where applicable)
Assessor feedback:
No
Task 7 — Clinton and Stephanie’s professional network
1. Name three (3) parties Clinton and Stephanie may wish
you, as their broker, to keep informed of the progress of their
finance application who are not directly involved in the loan
processing? (100 words)
Answer here
Some of the parties Clinton and Stephanie may wish to keep
informed include
· The Real estate agent
· Real estate agents are among the most crucial people anyon
interacts with when buying property, not unless a private vendor
is involved. They mainly act as the sellers by communicating to
the buyer about the features of the property as well as negotiate
prices.
· The Insurance companies
· Since homes are high-value purchase that are long term any
buyer ought to consider risk management iclusive of roperty
insurance and mortgage. This will helps them to prevent
incurring huge major financial losses if things do not go as

planned.
· The Conveyancer
· The conveyancer is the individual that takes care of the legal
aspects of purchasing property. They also offer legal advice.
They mainglt prepare the necessary docunments that the
ownership has been transferred meeting all legal requirements
within the state.
Assessor feedback:
No
2. It is important that as a broker you understand the loan
application process and how to effectively manage the progress
of a loan application. Outline to Clinton and Stephanie the
process that will occur from your first meeting through to post
settlement. Please present nine (9) steps in the process.
(350 words)
Answer here
1. Steps will be taken to verify the financial situation and
serviceability of the borrower
2. Credit assistance providersa will make a preliminary
assessment,
3. Credit providers will then make a final assessment so as to
verify if the credit contract is suitable or not. This will be on
the basis of the information obtained from the initial two steps.
4. A final and preliminary assessment to assess the suitability of
the loan based on the information derived from the first two
steps will be made.
5. A declaration as to the purpose of credit needs to be signed if
the loan is to be used predominantly for business or investment

purposes.
6. Preparation for settlement: Instructions for settlement are
received from all related parties, such as borrowers, solicitors
and conveyancers, and reviewed. All documents associated with
the loan are thoroughtly hecked ensure that the information
contained is correct, and that the documents have been correctly
executed.
Supporting documentation such as contract and insurance
polices should be provided and checked. Accounts are opened
and periodic payment authirited are obtaindfo he payment of
aon funds and acceptanece ofo loan repaymets, as necessary.
Broker must make sure that client understands the terms and
conditions and bank fees and charges and execute the document
properly. Mortgage insurance is finalised as required.
7. Registration of security: The loan approval is checked for
conditions relating to the taking of security. Staff from related
organisation should attend the settlement. The securities are
regstrered and stamped in accordnace with organisational policy
and guidelines, and relevant legislation. All necessary actions
taken with regard to security are confirmed and checked for
completeness and accuracy.
8. Disbursement of funds: Authority to fraw down funds is
received from approving personnel such as the relationship
manger,credit manager or laons officer. Funds should be
disbursed as per the instructions provided to the institutions.
And client has to be informed when settlement is complete.
9. After settlement, the purchaser, or their solicitoe or
conveyancer, must:
· Pay stamp duty to the relevant state giverment department or
authoruty, if it has not already been paid.
· Lodge documents regardng the the change o ownership wth
relevant state government department or authority.
10. Notify other parties, such as bodies corporate, owner’s
corporations and utilities providers of the change if ownership

Assessor feedback:
No
3. Briefly explain why is it important for the broker to remain
informed of developments in the lending process despite not
being actively involved at every stage? (100 words)
Answer here
Brokers have to directly interact with the borrowers so as to
identify their needs and analyse the data. Then draft a
reasonable understanding of their requirements. The main
inclusion being the purpose of the loan.
Additionally brokers usually act as liaisons between the lender
and the buyer. In our case they will need to stay updated on
throughout the process even if they are not playing a huge role
in all processes since they need to match the buyers’ property
goals to their finances and thus negotiate a loan product that
will match their needs. They wil not only do the tiring legwork
they will also ensure smooth loan processing since they will be
able to guide the buyer throughout the entire process.
Assessor feedback:
No
Task 8 — Interest rates
Clinton and Stephanie have reconsidered the loan proposed and
have called in to discuss whether they should consider fixing
the interest rate on their proposed loan — they have conflicting
opinions and are seeking your guidance.

1. Firstly, they need to understand the role of the RBA with
respect to interest rates and why it is necessary to have these
controls. Conduct some research and answer the following;
(a) What is the role of the RBA with respect to the
movements of interest rates?
(b) Why is it important to have these controls and
how do they impact mortgage loans in Australia?
(c) Are banks obliged to follow the RBA cash rate?
Explain the reason for your answer.
(200 words)
Student response to Task 8: Question 1(a)–(c)
Answer here
(a) RBA decides to either stimulate or ‘cool off’ economic
activity
Every month except January, the RBA board meets to decide on
the most appropriate monetary policy for Australia’s economic
environment. The policy involves setting the cash rate, which is
the interest rate banks charge each other on overnight loans.
(b)In Australia it is important for the RBA to set a target for the
interest rate on overnight loans between financial institutions in
the wholesale money market. This is done by the RBA then
borrowing and lending overnight money on the wholesale
markets to influence the supply and demand of overnight
money, ensuring that the actual overnight interest rate remains
as close as possible to its target rate. Moreover, home loan
interest rates in the economy are influenced by this interest
rate to varying degrees, so that the behaviours of borrowers and
lenders in the financial markets are affected by the RBA’s
monetary policy.
.
(c)Banks are not obliged to follow suit because the RBA does
an estimate of the borrowing rates they think would be
appropriate and what cash rate cuts would need to be to achieve

that, taking into account the likely movements in funding costs
for the major banks.
.
Assessor feedback:
No
2. Explain to Clinton and Stephanie some of the advantages
and disadvantages of fixing a loan. (150 words)
Answer here
Advantages
The main advantage of a fixed rate home loan is certainty.
Fixing their loan ensures that their repayments do not change
for a set period of time.
During times of very low interest rates, fixing their loan can
work to their own advantage, because they can retain a low rate
for a fixed term even if the rates rise steeply
If the RBA were to decide to lift interest rates in the near
future, they will retain a low and stable interest rate for their
home loan.
Disadvantages
The main disadvantage of a fixed rate loan is that they will not
benefit from falling interest rates (should the Reserve Bank cut
the cash rate again).

They are also usually fixed for a set term of, say, up to five
years, so they will have to ride it out if decide they would
prefer to switch to a variable rate or they would wish to sell
their property or refinance their loan.
Assessor feedback:
No
3. Suggest how Clinton and Stephanie could potentially
manage the risks associated with fixing a loan in the event they
need to break the fixed loan contract. (100 words)
Answer here
If they decide to break that contract by switching, your existing
lender must be compensated for any loss they incur. Breaking a
home loan during a fixed interest period can be expensive,
which is why it's always worth getting a quote from your lender
before breaking a fixed interest rate home loan.
If they are thinking about breaking a fixed home loan, their first
step is to contact the lender and request a quote for breaking
their loan inclusive of the early repayment cost. Then compare
the interest costs of a potential new loan, this could be a
variable or fixed rate loan option
Assessor feedback:
No
Task 9 — Settlement

Outline in detail the steps a Lender should take post-approval in
order to document, settle the loan and administer the loan post-
settlement. (300 words)
Answer here
1) A declaration as to the purpose of credit needs to be signed if
the loan is to be used predominantly for business or investment
purposes.
2) Preparation for settlement: Instructions for settlement are
received from all related parties, such as borrowers, solicitors
and conveyancers, and reviewed. All documents associated with
the loan are thoroughtly hecked ensure that the information
contained is correct, and that the documents have been correctly
executed.
Supporting documentation such as contract and insurance
polices should be provided and checked. Accounts are opened
and periodic payment authirited are obtaindfo he payment of
aon funds and acceptanece ofo loan repaymets, as necessary.
Broker must make sure that client understands the terms and
conditions and bank fees and charges and execute the document
properly. Mortgage insurance is finalised as required.
3) Registration of security: The loan approval is checked for
conditions relating to the taking of security. Staff from related
organisation should attend the settlement. The securities are
regstrered and stamped in accordnace with organisational policy
and guidelines, and relevant legislation. All necessary actions
taken with regard to security are confirmed and checked for
completeness and accuracy.
4) Disbursement of funds: Authority to fraw down funds is
received from approving personnel such as the relationship
manger,credit manager or laons officer. Funds should be
disbursed as per the instructions provided to the institutions.
And client has to be informed when settlement is complete.
5) After settlement, the purchaser, or their solicitoe or
conveyancer, must:
· Pay stamp duty to the relevant state giverment department or

authoruty, if it has not already been paid.
· Lodge documents regardng the the change o ownership wth
relevant state government department or authority.
· Notify other parties, such as bodies corporate, owner’s
corporations and utilities providers of the change if ownership.
Assessor feedback:
No
Section 2: Case study 2 — Tony and Lorraine Denton
Background
Tony and Lorraine Denton have a small cleaning business at
which they have been working for the last eight years. As it is
only the two of them in the business they operate as sole
traders.
They have approached you to help restructure their finance, as
they are finding the management of their debts a struggle
following the loss of one of their major cleaning contracts.
After further questioning, you realise that the situation is more
serious than they originally explained; they have missed
payments on their mortgage, only pay the minimum on their
credit card of 3% each month and the work car they have on
lease is expiring. They have a $15,000 residual or balloon
payment due and do not have the funds available.
When they lost the major contract and fell behind on the
mortgage payments, they spoke to their lender (Popular Credit
Union) and accepted a ‘hardship application’. The missing
payments have now been corrected by extending the term of
their loan. This happened nine (9) months ago and no report was
made to the credit agency.
After reading the case study above and reviewing their funding
position below, answer the questions that follow:

Assets
23 Watkins Road, Central Park
$450,000
Popular Credit Union savings account (joint)
$1,200
Little Saving Building Society cheque account (joint)
$2,300
Business debtors (unpaid invoices for work)
$6,200
Ford Utility, 3 years old (work vehicle)
$25,000
Holden Commodore, 7 years old (family car)
$15,000
Superannuation — AMB Insurance (Tony)
$36,000
Superannuation — AMB Insurance (Lorraine)
$24,000
Household effects (insured value)
$60,000
Liabilities
Lender
Situation
Interest rate
Monthly repayment
Debt
Popular Credit Union (home loan — joint)
Currently up to date though had 3-month extension to contract
after hardship application 9 months ago
5.7%
$1,567.00
$270,000
Big Bank Visa card (Tony)
Only able to repay 3% per month for last 6 months
18.95%
(pays 3% per month)
$230.00

$7,600
(limit $8,000)
Little Bank Visa card (Lorraine)
Only able to repay 3% per month for last 6 months
Is over limit by $800
21.5%
(pays 3% per month)
$90.00
$3,800
(limit $3,000)
Hardly Normal Furniture Store
Did not keep to interest free contract and paying debt by
instalments
28.50%
$380.00
$3,600
Super Car Loan lease
3-year contract expiring next month and need $15,000 to pay
residual
n/a
$850.00
$15,000
(residual)
Cleaning Contract Supplies
Purchase approx. $1,000 per month in supplies, they are behind
1 month
n/a
$1,000.00
$1,800
Total
$4,117.00
$301,800

Assignment tasks (student to complete)
Task 10 — Establishing level of financial knowledge
What communication skills might you use to confirm Tony and
Lorraine’s understanding and knowledge about credit and
finance, as well as their current position, including establishing
their requirements and objectives with the refinance?
Provide examples of how you would use these skills to establish
Tony and Lorraine’s level of financial knowledge.
(150 words)
Answer here
Effective communicators have excellent observation and
listening skills.
· Verbal communication – I will use clear language suited to
Natalie because she did not work and manage the household
finance previously and may only have little financial
knowledge. Asking simple open and closed ended questions in
order to under stands clients need for credit, methods of
repayment and if she can afford a credit.
· Non-verbal communication can aid brokers in understanding
what the client really means as well as helping brokers to
express themselves ad confirm what they are saying. In this
case, I believe facial expressions and eye contact are very
important. I can help to obtain Natalie’s reliability.
Active listening is used to obtain more information and to
explore for the real need. I will show my interests, remain
neutral and use questioning and summarising techniques to
show that I understand and to confirm my understanding
Assessor feedback:
No
Task 11 — Responsible lending obligations

The National Consumer Credit Protection Act 2009 imposes
‘responsible lending’ obligations on brokers that must be
satisfied by all people arranging loan applications. The primary
objective under responsible lending guidelines is that the credit
facility offered to the borrower is ‘not unsuitable’ for the
borrower, meets their requirements and objectives and will not
create substantial hardship.
1. How would you define ‘substantial hardship’ (detailed
information on this subject is found at RG 209 issued by
ASIC)? (150 words)
Answer here
While the NCCP does not define substantial hardship, there is a
presumption that if the only way a consumer can afford to repay
a loan is by selling their principal residence, then the consumer
cannot afford the loan without substantial hardship unless the
contrary is proved (ss. 131(3) & 133(3) NCCP). This should be
especially useful in fringe lending scenarios such as where a
short–term loan is secured over the consumer’s home and the
consumer is inevitably forced to sell the home at the end of the
term (equity stripping), but may also be useful in the case of
other loans such as credit cards if the consumer can clearly only
repay the principal debt by selling their home.
ASIC has also provided some guidance in relation to substantial
hardship in Regulatory Guide 209. Credit providers are
expected to have detailed policies and processes to assess
whether a consumer will be able to repay a loan, including
processes for calculating what funds a person needs to pay for
basic living expenses, in order to determine at what level a
consumer can make repayments. Such processes:
· Must have reference to the consumer’s situation as ascertained
from reasonable enquiries;
· Must involve some process for enquiring about living
expenses or estimating living expenses using a benchmarking
tool such as, for example, the Henderson Poverty Index plus a
margin, or the maximum level of benefits for a person or family

in the consumer’s situation; and
· Should generally involve the consumer meeting the
repayments from income rather than assets (with obvious
exceptions such as reverse mortgages and bona fide bridging
loans).
Assessor feedback:
No
2. What are the benefits of debt consolidation for Tony and
Lorraine? (100 words)
Answer here
It will reduce their overall monthly repayments substantially, as
they only had one mortgage payment to make.
Debt consolidation loans usually have a lower interest rate and
tend to be spread over a longer period – so the weekly or
monthly payments are smaller.
Debt consolidation can make budgeting easier because there’s
only one loan to manage
Assessor feedback:
No
3. Tony and Lorraine have decided to consolidate their debts
into one home loan with two splits, one for the existing home

loan and a second split for the all other debts. They will not be
including the cleaning supplies bill as they pay this in full each
month.
In the template below provide a new liabilities summary
once Tony and Lorraine have completed the debt consolidation
including their new monthly repayments.
Note: They have chosen ‘New Bank Loan’ who are offering a
4.5% interest rate on a variable, principal and interest loan over
30 years.
Answer here
Lender
Interest rate
Monthly repayment
Debt
Popular Credit Union (home loan — joint)
4.5%
1567 ?($1368.05)
$270,000
Big Bank Visa card (Tony)
4.5%
342 ?($38.51)
7600
Little Bank Visa card (Lorraine)
4.5%
171 ? ($19.25)
3800
Super Car Loan lease
4.5%
675 ? ($76)
15000
Hardly Normal Furniture Store
162
3600
Cleaning Contract Supplies

81
1800
Total
$2998
$301,800
Assessor feedback:
No
4. What savings will Tony and Lorraine obtain in monthly
repayments?
(Include calculation how you determined the savings.)
Answer here
$4,117.00-$2998=1,119
Assessor feedback:
No
Task 12 — Self Employed special considerations
1. As Tony and Lorraine are self-employed, what documents
will you need to obtain and assess their income? (150 words)
Answer here

Unlike PAYG (employed borrowers) who require to provide
relatively simple documentation that is payslips and the latest
group certificates, self employed individuals are required to
provide audited tax returns and company financials for the last
2 years, some may require returns for the last one year. This
will enable the lendor to assess the flow of income and how it
affects the business so as to understand their financial position.
Not only that they are will also be required to provide
solepropretorship, partnership trust ir company returns and tax
assessment notices.
Assessor feedback:
No
2. If a Low Doc application is an option for the customer,
name three (3) extra documents you will need to obtain and
assess. Explain how each these documents will establish their
income? (150 words)
Answer here
low doc loans, they are required to provide supporting
documents to verify the income that they have declared to the
lender.
Each lender has their own requirements and will accept
different document types to prove income.
The main documents that can be used to verify their income are:
· 12 months’ BAS statements showing a high turnover. lenders
like to minimize their risks, and to see that you’ve got skin in
the game.
· An accountant’s letter verifying your income. Large bank and
investment accounts might serve as “reserves” you can dip into
to keep making payments.

· Business bank statements showing a high turnover. Lenders
are only willing to settle for less information if ythe borrowers
have good credit scores (above 720 is a good place to start)
· Previous tax returns (over 24 months) income always helps
them get approved for a loan
· Interim financial statement if everything else is in good shape,
a few dings on their credit reports might not ruin the deal.
Assessor feedback:
No
3. Explain how applying for a ‘Low Doc Loan’ could lead the
mortgage broker to be accused of recommending an ‘unsuitable’
product. (250 words)
Answer here
Low-doc loans are an alternative for the self-employed and
small-business people who, without payslips or recent tax
returns, can't readily verify their sometimes "lumpy" income for
a standard home loan.
Instead, they're able to secure loans with a bigger deposit or by
signing a statement simply declaring they can afford the
repayments.
Low-doc borrowers usually have to come up with upto 30-40%
per cent deposit depending on the lenders you are eligible with
, where other lenders might need just 10 per cent.
However, consumer groups say low-doc loans have been used
by "predatory" mortgage brokers to defraude borrowers in the
market. They give under people loans who have little hope of
servicing them in the knowledge that ultimately they can force

the sale of the property and take the money.
This is because some lenders do not follow responsible lending
rules that require them to determine if a loan is is suitable or
not suitable
Assessor feedback:
No
Task 13 — Advising on strategies
Following the presentation of your proposal, Tony and Lorraine
say that they would like your avice regarding loan and debt
management strategy tools that are available to help them to pay
down their home loan as quickly as possible.
List strategies or methods that will help them achieve their aim.
Note to students: You may refer to the MoneySmart website for
information on this subject and your answer may also include
available mobile phone apps used for debt management.
Provide the advantages and disadvantages of each. (300 words)
Answer here
Find a cheaper interest rate
Shop around to find a home loan that offers a lower interest rate
than the current loan. A loan that offers a honeymoon or
introductory rate can be good but you need to check that it is
right for them. The savings tend to be short-lived and once the
honeymoon period ends, you could end up with a more
expensive loan.
Make larger or more regular payments on their loan
Unless they have an interest-only loan, they will have to pay
both principal and interest on a home loan. On a typical 30-year
mortgage, anything extra you pay in the first 5 to 8 years (when

most of your payments go towards paying off the interest) will
cut your interest bill and shorten the life of your loan.Pay off
their credit card
They should try to pay off the entire amount owing on your
credit card each month (or as much as possible). This will let
them take advantage of any interest-free period.
If they only make the minimum payment each month, they will
pay more interest and it will take them longer to pay off your
balance.Their monthly statement must give you information
about how long it will take to pay off the entire balance by
making minimum repayments.
Assessor feedback:
No
Task 14 — Impact of credit history
Tony tells you that his former wife failed to properly meet their
unsecured personal loan debt obligations before they separated.
Although he eventually repaid the debt he is afraid that this
incident may count against him when he applies for a loan.
There are a few things Tony can do as he is concerned about his
credit rating. What information would you provide in the
following two situations?
1. Provide Tony with the details of three (3) major credit
reporting agencies and explain what information may be
recorded on his credit file. (Information can be sourced from the
websites of credit reporting agencies and
<http://www.oaic.gov.au>.) (200 words)
Answer here
At present, there are three main credit reporting agencies
operating in the Australian market. These are—in order of

market share—Equifax previously known as VEDA Advantage,
Dun and Bradstreet and the Tasmanian Collection Service.
The major consumer credit reporting agency is Equifax
previously known as VEDA Advantage , which states that it
maintains credit worthiness related data on more than 11 million
individuals in Australia and New Zealand.
It has over 5,000 subscribers from a wide range of industries,
including banking, finance telecommunications, retail, utilities,
trade credit, government, credit unions and mortgage lenders.
Equifax previously known as VEDA Advantage’s Australian
credit reporting business commenced in 1968 as the Credit
Reference Association of Australia (CRAA), which was
established by the finance industry.
Assessor feedback:
No
2. Tony has decided he would like to obtain a copy of his
credit report from either Equifax or Dun & Bradstreet. Explain
what options are available for each provider, how long it takes
to obtain a copy, and the associated costs. (100 words)
Answer here
To get a copy of his credit report he is required to contact a
credit reporting body (CRB). He will be asked to provide
personal information to enable them to properly identifyhim.
This could includesr:
· Applicant full name
· Applicant current address
· Applicant date of birth
· Applicant previous address
· Applicant driver's licence number.
He can get a copy of his credit report for free from a CRB in all

of the following circumstances:
· if he has applied for, and been refused credit, within the past
90 days
· where his request for access relates to a decision by a CRB or
a credit provider to correct information included in your credit
report,
· He also has a right to acces it once a year (not counting the
above circumstances).
Credit reports are required to be provided within 10 days of the
receipt of his request, however, if he wants his report
immediately there may be a charge involved. He can check with
the CRB about any charges involved in getting his credit report
immediately.
A credit reporting body (CRB) must give him a copy of his
credit report within 10 days of receipt of your request.
Assessor feedback:
No
3. If there are errors on file, what is the procedure for Tony
to follow in order to have these errors rectified? Hint: Refer to
the Equifax website. (150 words)
Answer here
· Contact the credit provider and/or credit reporting body first
and ask them to investigate and correct the specific inaccuracy.
Tell them why I believe the information is incorrect – if I am
unsure, ask them to explain why the information is on your
report. Consumer safeguards in Australia require credit
providers and credit reporting bodies to look into and respond

to my correction requests.
· If I have documents that may be relevant in showing the
information on your credit report is incorrect, it may be
beneficial to provide this early on in your dealings with your
credit provider or credit reporting body.
· If I think to needs hand with his correction request, I can make
an appointment with a community legal centre who can help us
with the process.
· If neither the credit reporting body nor the credit provider can
correct the listing, I can contact an independent dispute
resolution scheme called an Ombudsman service. Examples of
these services include the Financial Ombudsman Service (FOS),
the Credit and Investments Ombudsman Ltd (CIO), or the
Telecommunications Industry Ombudsman (TIO).
Assessor feedback:
No
4. What are the Lender’s legal obligations if they decline an
application due to the content of the credit agency file? (100
words)
· Student response to Task 14: Question 4
· They are obliged to discloses the inquiries about the client’s
financial situation that made them decline.
· They are obliged to indicate how they verified the information
about the client’s financial situation
· They should show how the assessment was made to find that
the margin loan was not unsuitable by providing documents that
record and reflect:
· The are obliged to decline an application due to multiple
credit applications in a short space of time

· They are obliged to point out a a mistake on your application
form that led to the declination.
Assessor feedback:
No
5. What options are available to Tony and Lorraine in the
event that the loan was rejected by the lender you initially
proposed due to a credit report (150 words)
Answer here
Fix errors: if there are errors in his credit report, fix them. He
shouldn’t be held responsible for computer errors or somebody
else’s actions. He has the right to have mistakes removed. With
big purchases like a home purchase, he can get errors fixed and
he can get his credit score updated within a few days using
rapid rescoring.
Down payment: a larger down payment might help him get
approved. He’ll end up borrowing less, which means his
monthly payments will be lower.
Pay off other debts: His other loans could be part of the
problem. Again, lenders look at how much they spend on debt
repayment, so reducing that expense will make him look better
as a borrower.
Use collateral: if jhe is applying for a personal or business loan,
collateral might help him get approved
Get a cosigner: if his income and/or credit were not sufficient to
get approved, he might have better odds if he can add somebody

else’s income and credit to the application (assuming they have
good credit and decent income.
·
Assessor feedback:
No
Task 15 — External dispute resolution
During the loan process, Tony is starting to become upset with
the time it’s taking to get him an approval. Although you’ve
explained that this is because of delays with the lenders
processing system due to staff being away, you’re concerned the
matter may escalate beyond your control.
1. As a broker it is important to understand the role of the
Credit Ombudsman. Explain the function and role of the Credit
and Investment Ombudsman (CIO) in the EDR process. (200
words)
Student response to Task 15 Question 1
Answer here
The Credit and Investments Ombudsman (CIO), previously
known as Credit Ombudsman Service Limited (COSL), has been
approved by the Office of the Australian Information
Commissioner (OAIC) to handle privacy and credit reporting
complaints under the Privacy Act 1988. All credit providers are
required to be a member of an EDR scheme recognised by the
OAIC before they are permitted to disclose credit information to
a credit reporting body or access such information. If a person
is dissatisfied with the decision of a credit reporting body or a
credit provider about their complaint, or about the outcome of
an access or correction request, they can complain to CIO about
this as long as the credit reporting body or credit provider is a
member of CIO.

Assessor feedback:
No
2. What could be the maximum financial compensation limit
imposed by the CIO?
(You can obtain this information on the CIO website.) (10
words)
Student response to Task 15 Question 2
Answer here
CIO announces that the monetary compensation limit (MCL)
applying to each claim for complaints received from 1 January
2015 will be $309,000.
Assessor feedback:
No
Task 16 — Effective access to files
The loan application is finally approved. Loan offers have been
produced by the lender, as have numerous documents that the
client needs to access and review. The lender has requested
these documents be forwarded as soon as they are available.
Tony and Lorraine are away at the moment and their email
provider has a size limit on the data that can be sent via email.
Name a service provider that could assist in solving this
problem? (100 words)
Answer here
A public notary is a public officer, usually a practising solicitor
or attorney, who is authorised to witness documents, and

administer oaths.
They can perform other wide-ranging administrative tasks for
both international and national purposes and are available in
most countries.
A public notary can be accepted instead of a JP in some cases.
You’ll need to contact your lender to confirm their policy
concerning public notaries overseas.
Assessor feedback:
No
Appendix 1: Client information collection tool/ Fact Finder
(Please complete)
Appointment date:
Appointment time:
Applicant 1
Applicant 2
Surname
Other names
Contact details
Address
Phone (W)
Phone (H)

Mobile
Email
Employment
How long?
Previous employer (if less than 2 years)
How long?
Employment status
PAYG
Self-employed
Gross income (p.a.)
Number of dependants

Motor vehicles
Loan purpose
Purchase price/Valuation
Deposit
Loan amount
Genworth Borrowing capacity (Task 3)
Assets and liabilities
Assets
Liabilities
Details
Market value
Details
Monthly payments
Amount owing
Owner Occupied Property at:
Mortgage with:
Investment Property at:
Mortgage with:
Investment Property at:

Mortgage with:
Cash at bank
(includes fixed deposits)
Car leasing
Other cash
(includes offset accounts)
Personal loans
1.
2.
Deposit paid on property
Overdraft
Motor vehicles:
1.
2.
Other loans:
1.
2.
Personal effects
Credit card limit:
$

Business value
Credit card limit:
$
Shares and investments
Other:
Superannuation
Other:
Other assets (give details)
Other:
Total assets
Total liabilities
Surplus/deficiency: $
CURRENT MONTHLY LIVING EXPENSES (Provide a
breakdown of the total amount listed in the case study – use
your discretion)
Food/housekeeping
Insurance (e.g. motor vehicles, home contents/ building,

medical, life/income protection)
Utilities (e.g. rates, gas, electricity, transport)
Transport (e.g. public transport, petrol, registration, repairs)
Education (e.g. school, college, university)
Dependents support (e.g. childcare, child maintenance)
Entertainment
Other (detail below:
MONTHLY LIVING EXPENSES
Needs analysis
1
Name of your current lender?
2
What type of mortgage loan do you have?
3
Why did you choose this particular loan and lender?
4
What is the interest rate?
5
What are your payments?
Amount

6
Frequency
7
Do you know the fees and charges?
8
What is your proposed purpose for the loan you are applying
for?
9
Branch access available with current lender
10
Internet banking available with current lender
11
Phone banking available with current lender
12
Lenders not to be considered
13
Type of loan sought
14
Preferred Interest rate range
15
Payment frequency
16
Redraw
17

Offset
18
Salary crediting
19
Low fees and charges
Notes
NB: Providing substantive notes is a compulsory part of your
assessment.
Anticipated fees and charges
Anticipated purchase price
Deposit
Loan amount
LVR
Purchase costs
Stamp duty on transfer (include transfer fee)
Solicitor/conveyancer (estimate)
Rates and land taxes (estimate)
Pest inspection (estimate)
Building Inspection (estimate)
Borrowing costs

Application/establishment fee
Valuation fee
Security admin fee
Mortgage stamp duty
LMI
Registration of mortgage
Release of mortgage
Search fees
Other
Total of purchase costs
Funds to complete
PURCHASE AND LOAN COSTS:
AVAILABLE FUNDS:
Purchase price:
Deposit paid
Lender application / valuation fees:
Cash savings:
Transfer stamp duty

Sale proceeds:
Legal and registration fees:
Gift:
FHOG:
Other:
LMI:
1.
2. No Add to Loan?
TOTAL COSTS (A):
TOTAL OWN FUNDS (D):
LOAN AMOUNT REQUESTED (B):
OWN FUNDS REQUIRED (A-B) = C:
OWN FUNDS REQUIRED (A-B) = C
SURPLUS/SHORTFALL (D-C)
Loan interview diary
Name(s) of client(s) present at interview

Date of interview:
Location of interview
Indicate all clients who were interviewed in person
Do all of the clients appear to clearly understand English?
Y/N
If not, have the services of an interpreter been recommended?
Y/N
Do all of the clients clearly benefit from taking out this loan?
Y/N
If not, what inquiries have been made to ascertain the level of
benefit to each party of the loan?
Are any clients acting as though they are under duress or other
disability? Y/N
Are any clients acting as though they are unsure of anything
about the loan? Y/N
Are any of the clients acting as though they are unable to
comprehend their obligations? Y/N
Are there any guarantors? Y/N
If yes is answered to any of the above questions, have the
clients been advised to seek
the services of a lawyer or financial adviser? Y/N
Provide details of other pertinent information obtained during
the loan interview which may be of interest or of any unusual
circumstances you may wish to record.

Appendix 2: Serviceability calculator
Loan details
Loan amount
$
Security value
$
Loan term (in months)
Actual rate
Repayment typeSelect repayment type
Interest only period (in years)Interest-only period
LVR
Applicant details
Applicant typeSelect applicant type
No. of applicants (maximum 6)No. of applicants
Applicant 1
Applicant name
Joint with applicant…Joint with…
Marital statusSelect marital status
No. of dependents
Residential suburb
Residential postcode
PAYGSelect income type
Base income
$
Base income frequencySelect frequency

Self-emplyed/sole trader/partnership
Current year
Previous year
Net profit (loss) before tax (NPBT)
Interest
Other add-backs
Depreciation
Variable income calculation
Income typeSelect income type
FrequencySelect frequency
Amount
Rental typeSelect rental type
Amount
$
Ownership (%)
Amount of investment loan
$
Amount of interest add-back
$
Total rental income
$
Non-taxable income calculation
Non-taxable income

$
Applicant 1: Total net income
$
Applicant 2
Applicant name
Joint with applicant…Joint with…
Marital statusSelect marital status
No. of dependents
Residential suburb
Residential postcode
PAYGSelect income type
Base income
$
Base income frequencySelect frequency
Self-emplyed/sole trader/partnership
Current year
Previous year
Net profit (loss) before tax (NPBT)
Interest
Other add-backs
Depreciation
Variable income calculation

Income typeSelect income type
Amount
Rental typeSelect rental type
Amount
$
Ownership (%)
Amount of investment loan
$
Amount of interest add-back
$
Total rental income
$
Non-taxable income calculation
Non-taxable income
$
Applicant 2: Total net income
$
Total net income for all applicants
$
Commitments
Actual living costs
$
HEM living costs
$
Total credit card limits
$
Commitments (maximum 8)No. of commitments
Commitment type
Amount

Frequency
Limit/scheduled balance (plus redraw)
Commtiment 1Commitment type
$Select frequency
$Select frequency
$Select frequency
$Select frequency
$Select frequency
$Select frequency
$Select frequency
$Select frequency
Total commitments
$
Serviceability calculations
NDI ratio
Net disposable income
$
Assessment rate

Monthly repayment
$
Maximum loan amount
$
Actual rate serviceability calculations
NDI ratio
Monthly repayment
$
Actual interest rate
Maximum loan amount
$
CIVMB_AS_v3A3
Page 36 of 58

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