No.

Mark

1.

The two financing options suggested for Roslyn has been considered with taking a car loan and dealer finance.

/1

2.

Some of the main features of the car finance is understood with variable interest rate, fixed interest rate, comparison rate, extra repayments, redraw facility, frequency of payment frequency and loan term. In dealer finance the term varies from three to four-year terms. Dealer finance allows for balloon payment which is payable end of the term. It offers lower interest rates than car loans, however the low interest may be applicable to only specific models and makes of car.

/2

3.

As Roslyn has newly started with her job, the dealer finance usually needs good credit for eligibility. Therefore, car loan is recommended as the main financing option. This will provide a range of competitive loan options and allow for the repayments to be repaid in full amount at the end of LT (Loan Term). However, Roslyn needs to be particularly aware of the higher interest rates than the dealer finance and she may need to pay upfront and ongoing fees during the entire loan period.

/2

     Sub-total  /5

Mark

Dear M/s. Roslyn,

                        This is to inform you that based on your decision to buy a small hatchback I would suggest you that you choose the option of taking a car loan. Firstly, with a starting salary of $50,000 you will have several repayment options based on the rate of interest for the loan amount $ 15,800. Secondly, there is no need for balloon payment. The secured car loan needs to be paid with a monthly repayment of $ 317.78 at 6.99% fixed interest rate over a term of 5 years. This is inclusive of the total interest charge of $ 2,967 and loan establishment fees of $ 350. In this way you will need to pay a total loan amount of $ 18,767 over a period of 5 years. In compare to the dealer finance this option will save you $ 3,160 of balloon value charged at 20% rate of interest. Moreover, being new employed in the job there is less scope attaining the eligibility of dealer finance. Henceforth, this car loan option will be the suitable technique to efficiently use the credit amount.

Yours sincerely,

/4

No.

Mark

1.

The main information which needs to be maintained for obtaining a copy of credit file includes “Income – gross (before tax) and net salary (after tax), employment details and other income (from shares, rental property”. In addition to this, Roslyn should have the on-hand information of the approximate “values of property, vehicles, savings and superannuation”. Some of the other information needed is seen with “loan balances, repayment amounts, credit card or overdraft limits”. She needs to pay loan establishment fees of $ 350 for obtaining a copy of credit file.

/2

2.

“Credit reporting body (CRB)” is seen as the only authority to give consumer the right to take part in the “consumer credit reporting system”, along with a limited people and organizations. The organizations such as Trade insurers, credit providers and mortgage insurers have the right to access the credit report information. 

/2

Further information

Roslyn mentions that her mother’s washing machine has broken, and she urgently needs a replacement washing machine. The cost is less than a thousand dollars and she plans to use her credit card for the purchase. She tells you that she will make the minimum required repayment per month until she pays the machine off.

Mark

Dear Roslyn,

        I have considered the price of washing machine to be $ 800. The market analysis has suggested that the average rate prevailing in Australia is seen to be 13.5% for credit cards. In case you wish to repay the credit amount with higher repayments, you will be able to save $ 162. This is considered with making a payment of $ 38 each month over a period of 2 years. In this way you will need to pay a total amount of $ 907. In case, you opt for the minimum repayment option then you need to pay $ 20 for a period of 4 years 6 Months. In this way you will be able to need to pay total amount $ 1069 which is higher than $ 907. Therefore, it is recommended to choose the higher repayment option for taking a credit of $ 800.

/2

Applicant 1

Applicant 2

 Loan purpose

Purchase home (owner occupied)

Amount and type of loan sought

$480,00, standard variable rate

Deposit

$60,000

Address

Unit 2, 27 High St.,

Mackville, NSW. 2080

Unit 2, 27 High St.,

Mackville, NSW. 2080

Status

Renting

Renting

Years there

5 years

5 years

Contact details

Phone (W) Phone (H)

02 9200 1111 (w)

02 9400 9900 (h)

02 9310 2000(w)

02 9400 9900 (h)

Mobile

0400 100 156

0418 960 000

Email

[email protected]

[email protected]

Number of dependants

Nil

Nil

Employment

Gaines Consulting Pty. Ltd

Jackson Equipment Hire Pty Ltd

How long?

12 years

8 years

Gross income ( p.a.)

$80,000 p.a.

$70,000 p.a.

Credit history

Personal loan to purchase a car — since repaid.

Personal credit card with Central Bank with a limit of $3,000. Current balance: $300

Note: All credit cards are repaid in full when due.

Personal credit card with Northern with a limit of $2,000. Current balance: $300

Store card with Wilson’s Department Store. Current balance: S250

Note: All credit cards are repaid in full when due.

Assets

Liabilities

Details

Market value

Details

Monthly payments

Amount owing

Cash at bank

$15,000

Credit card limit: $2,000

$3,000

$300

Deposit paid on property

$60,000

Credit card limit: $3,000

$2,000

$300

Motor vehicles:

1.

2.

$15,000

$7,000

Other:

Personal effects

$30,000

Business value

Nil

Total assets

$127,000

Total liabilities

$600

Mark

Some of the important terms and conditions for the clients include:

·         Despite of the final recommendations the client needs to consider the market risks which are associated to the credit borrowing

·         The firm is not responsible for compensating any loss as a result of market volatility

·         The firm is not responsible for assisting with repayment in case of any default of a particular

·         The client’s needs to be aware of the any previous history of default in the payment which may significantly affect the credit scoring of the present borrowing

/2

Mark

à  Provide Information about the Commonly used lenders (“Commonwealth Bank, ANZ, Westpac, NAB, AFG Home Loans, St George Bank”)

à  Fees to be paid by the clients to the third party (“credit application (loan) is submitted, you may need to pay the lender’s application fee, valuation fees, or other fees” which needs to be considered even if the loan is ultimately unsuccessful

à  Payments received by the licensee (The different types of the fees may be received in form of  “fees, commissions, or financial rewards from Lenders or Lessors in connection with any finance“

à  Fees payable by the licensee to the third parties (Taking note of the credit quote provided by the firm. In case the credit note is not supplied this will indicate consumers are not charged any additional fees).

à  Volume bonus arrangement with (AFG ltd. and AFG members may be receiving the additional remuneration as bonuses)

à  Information about the Commonly used lenders by the broker (suggested with 6 most commonly used lenders such as “Suncorp, Macquarie Bank, AFG Home Loans – Edge, ING Direct, ME and ANZ”

/3

Mark

Primary Document

·         “Collection of certain minimum ‘know your customer’ (KYC) information”

·         Providing the verification of customer information

·         “Provide for the collection of information about the agent of a customer”

Secondary Document

·         “Agents acting on behalf of a customer”

·         “Incorporated and unincorporated associations”

·         “Registered Cooperatives”

/3

Mark

Credit Provider

ANZ

Commonwealth Bank

Westpac

/6

Product Name

ANZ Standard Variable home loan

Commonwealth Bank Standard Variable

Rocket Repay Home Loan

Interest Rate Type (%)

5.20%

5.22%

5.24%

Comparison Rate (%)

5.30%

5.36%

5.38%

Minimum Loan Amount ($)

250,000

150,000

150,000

Maximum Loan Amount ($)

499,999

249,999

249,999

Minimum Loan Term

1 Year

1 Year

1 Year

Maximum Loan Term

30 Years

30 Years

25 Years

Maximum LVR (%)

90%

90%

90%

Maximum Insured LVR (%)

80%

80%

80%

Mortgage Offset Account (Yes/No)

Y

Y

N

Loan Redraw Facility (Y/N)

Y

Y

Y

Split Loan Facility (Y/N)

Y

Y

N

Fixed Interest Option (Y/N)

N

N

N

Mark

The three loan products range from ANZ Standard Variable home, Commonwealth Bank Standard Variable and Rocket Repay Home Loan by Westpac. The significant features such includes facilities such as redraw, flexibility in choosing the loan term, saving on interest payable by maintaining offset account, making interest only repayments and option to split loans.

/2

Mark

The selection of the loan stated in the Task 7.4 has been made with ANZ Standard Variable home. The loan needs to have a loan administration charge of $ 5 per month. The loan needs to further have an additional Renegotiation fee of $ 200 or $ 350 depending on requested change. Ross and Melinda need to pay monthly repayment of $ 264 by taking this loan. They also need to pay the “Lenders Mortgage Insurance (LMI)”.

/2

Mark

Ross and Melinda need to keep the details of their income, expenses, assets and liabilities, driver’s license and An ANZ account number. As per the salary of Ross and Melinda both are eligible to apply for the loan. In order to verify their incomes, the main documents needed are copy of Latest Bank Statement, “Latest 6 Months Salary Slip with all deductions and last 2 years”.

/3

No.

Mark

1.

The loan to value ratio is the lending risk assessment ratio which the “financial institutions and others lenders” examine prior to approving of a mortgage. It is the amount of the mortgage lien divided by the appraised value of the property in terms of percentage. A higher percentage of LVR represents higher risk and such approval is seen with a higher risk. A loan with a high LTV will need the borrower to “purchase mortgage insurance to offset the risk of the lender”.

/1

2.

Lender’s Mortgage Insurance is identified as that condition of borrowing home loan where the mortgage lender may require to make an off payment to protect the lender against the events which might lead to failure in making the loan repayments. Insured LVR is designed to protect the borrower in case of loan default.

/1

3.

In general, the lender will need to pay for a lender to pay for the lender’s mortgage insurance if the home loan deposit is less than 20% of the total value of the mortgage. However, the individual lender may require more or less than a 20% of the deposit to avoid paying LMI.

/1

Mark

/15

No.

Mark

1.

The broking firm will ensure that the clients are informed at every stage from the loan application process to the disbursement of the loan amount. The initial 3-4 days will be spent on the preparation of the documents, this will consist of the various document ranging generating a credit eligibility rating based on the previous borrowings. The next stage will involve will involve input of the loan application in into the core banking system of the bank. The customer will be informed when the initial processing is charged as soon as the loan account is opened. This stage will be followed with creating an entry in the memorandum of the bank. The customer will be duly informed about the drawing process of the loan. This will done in the 4^th day from the application process.

/2

Mark

Both Ross and Melisa are having a good reputation of repaying loans. This is evident with Ross’s “Personal loan to purchase a car — since repaid” and Mellissa’s paying the dues of the credit card amount.

/2

No.

Mark

1.

Estimated monthly payments are $2,877.84, and Ross and Melisa need to pay $556,023.31 in interest over the total 30 years loan period.

/1

2.

As per the income percentage method the monthly repayment is seen with $ 309.26. This calculation is considered on a “loan amount of $48,000 with an interest rate of 6.00% and a loan term of 25 years”. Ross and Melisa cooper both have more the same capability to repay the loan amount

/1

     Sub-total  / 6

No.

Mark

1.

The verification of the equity is determined with Full-time and part-time employment assessment, Commission, bonuses, overtime and allowances, Self-employed applications, rental income

/1

2.

A deposit of $ 60,000 paid on the property shows that borrowers are having the ability to repay a loan by comparing “income against recurring debts and assessing the borrower’s debt-to-income (DTI) ratio”. However, they need to ensure that the borrower has a sufficient DTI ratio.

/1

No.

Mark

1.

The total Loan to Value Ratio has been depicted as 100%

/1

2.

Based on the high loan to value ratio Ross Cooper needs to apply for insurance LVR. The bank needs to ensure that the loan amount is supported with a guarantor

/1

Mark

The conditions of the loan are seen to be specific with standard variable loan. The conditions of the loan application process need to be handled with Pre-Qualification, Mortgage Programs and Rates.

/2

Mark

The updating process of the loan amount needs to be ensured with sending regular emails and SMS in the client’s email id and personal number.

/2

No.

Mark

1.

Valid Proof of Applicant’s Identity

/1

2.

Latest 3 month’s Salary Slips

/1

3

Current Employment Certificate

/1

4.

Latest 6 month’s statement from bank

/1

5.

Proof of Age

/1

6.

Proof of Residence

/1

Mark

The access to the client’s files needs to be ensured with “confidential information of current and former clients not be disclosed outside the law firm except” in some of the specific ways as stated in Rule 1.05. The client also needs to ensure “TDRPC Rule 1.15(d) of the Texas Disciplinary Rules of Professional Conduct states”.

/2

Mark

“When a loan is fixed for its entire term, it remains at the then-prevailing market interest rate, plus or minus a spread that is unique to the borrower”. In general, “if interest rates are relatively low, but are about to increase, then it will be better to lock in your loan at that fixed rate”.

/1

Mark

·         “Proof of Identity”

·         “Proof of Residence”

·         “Latest 6 months Bank statement”

·         “KYC Documents: Proof of Identity; Address proof; DOB proof”

·         “Office address proof”

·         “Proof of residence or office ownership”

·         “Proof of residence or office ownership”

/2