FNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING – ASSESSMENT TASKS Page 1

ASSIGNMENT 2
To be completed by the Trainee
You must include this page with your Assignment 2 submission
Alternatively you can retype the details as a front page to your Assignment

Trainee Name _________________________________________________________________________

Trainee Postal Address _______________________________________________________________

_______________________________________________________________

Trainee Daytime Phone Numbers __________________________________________________________

Trainee Email Address _________________________________________________________________

By your submission you are stating that this Assignment contains no answers which have
been completed by another person. You acknowledge that your assessment marking may be
compromised if it is found to be otherwise.

Date _______________________________________________

Submissions can uploaded or mailed to NFI, P.O. Box 1354, Capalaba B.C. Qld 4157 OR
Email to [email protected] (if emailing you must adhere to the emailing size rules)

OFFICE USE ONLY BELOW HERE

Date received by NFI ____________________ Date received by Assessor ______________________

Name of Assessor ______________________________________________________________________

Date assessed ____________________________ Mark ____________________

Competent 
Not Yet Competent 
Assessor’s Comments: ...................................................................................................

......................................................................................................................................

......................................................................................................................................

......................................................................................................................................

Further action required (if applicable) ______________________________________________________

© Copyright 2020, The National Finance Institute V.010920

FNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING – ASSESSMENT TASKS Page 2

ASSIGNMENT 2
Task
Using the information contained in the Scenario below, please complete the following 6 tasks. You
must complete each task in order for your submission to be assessed. Omission of any one of these 6
tasks will be regarded as Not Yet Competent and you will then be required to resubmit this assessment in
full.
1. Recommend a product for the clients and explain your reasons for recommendation
2. List the supporting documents that would be needed to support the loan
3. Complete a loan costing sheet *
4. Complete a loan servicing calculation (NSR) *
5. Download and complete the FHOG application form that is relevant to your
state/territory, from the internet (or print from Appendix 15)
6. Complete a loan application form (a blank Westpac loan application form has been
provided for you which you should use) and complete all of the accompanying
documents as provided for you.

Your answer to this Task should be prepared as if you were submitting a real loan application to the lender.
Please note: If there is information required on the application that is not supplied please improvise. The
application should be completed as neatly as possible to ensure ease of review. It is to be submitted to
NFI as if NFI is the lender and you were an accredited broker. If you do not submit in a professional
manner, your assessment will not be marked.
* Important: The fees and charges required in order to complete this assignment correctly (ie.
Estimate of Costs worksheet) can be found in Unit 7 (use your own state-specific section at the back
of Unit 7) and the instructions for how to complete the NSR form are in Unit 8. A Lenders Mortgage
Insurance Chart table (if you determine LMI is applicable) is found in Unit 7. Trainees should ensure
Units 7 and 8 are used to source correct figures for this assignment.

Scenario
Clients: Lynette Mary Bowen
DL No.: 417390; DOB: 16/02/90

Gordon George Bowen

DL No.: 421810; DOB: 17/09/89

Best phone number: 0400 111 222

Current Address: 22 Elmslie Street, North Parramatta NSW 2151

Time at address 32 months (Rent $380 per week)

Previous Address: 33 Grant Street, Tweed Heads NSW 2485

Time at address 2 years

Children Two children aged 6 and 8

Credit Cards: ANZ credit card - $6,000 limit (balance $3,200)
Other: Mr and Mrs Bowen each have $45,000 in superannuation

Scenario Continued overleaf ….

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FNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING – ASSESSMENT TASKS Page 3

ASSIGNMENT 2 Continued

The clients are looking to purchase their first home which is a small, newly built 2 bedroom unit at 4/12
Garden Grove Bankstown NSW 2200, for $485,000. The property has never been occupied before.

They have funds of $55,000 of which $35,000 were genuinely saved. The remaining $20,000 was a
redundancy payment to Mr Bowen from his previous employer.

Mr and Mrs Bowen are eligible to apply for the FHOG. They are aware there will be a body corporate fee
in the new unit complex which they have been told is $75 per week per unit.

Mr Bowen works as a carpenter with a JJ Construction, a major construction company in Bankstown and
has been there for 36 months. His salary is $72,000 p.a. plus he has earned an average of $500 per week
in regular overtime over the previous 18 months. He previously worked for a Tweed Heads Carpentry
company for 4 years before being made redundant when the business was bought out.

Mrs Bowen works as a Receptionist with the BB Real Estate company and earns $47,000 p.a. She has
been there for 36 months. She previously worked for another Real Estate company in Tweed Heads for 4
years.

The clients own 2 cars – a 2010 Holden Ute worth $12,000 and a 2016 Nissan X-Trail 4x4 worth $20,000
with Nissan finance of $15,000 with repayments of $343 per month over 48 months.

Assumptions:
o Although addresses show NSW, for the purpose of duty/cost calculations, assume
that the clients live in the same state as you (the broker).
o You should assume a Standard Variable Rate of 5% and a Qualifying rate of 2.5%
above the Standard Variable Rate (for your NSR form).
o Assume the clients will be “full-doc”.
o Assume this lender would accept 50% of overtime income and assume
overtime forms part of the applicant’s total gross income

TIPS
LVR and LMI: To work out the LVR you first have to decide how much money your client can afford
to borrow.

1. One method would be to determine if they could do a 95% loan so you would simply work out what
95% of the purchase price would be. The purchase price is $485,000 x 95% = $460,750 (loan amount)
LVR 95%. The LMI is worked out on $460,750 and the clients pay the fees from their own funds or
some lenders will allow them to capitalise it into their loan.

2. Another method would be to work out the total funds available to the clients e.g. $55,000 savings
plus FHOG. After working out costs and taking these away from their available cash you would then
know how much is left for a deposit. Once you know how much deposit they have you would then know
the loan size and from there work out the LVR. The LMI is worked out on the loan amount that you end
up with. Don’t forget to add the LMI stamp duty.

Keep in mind that first home buyers tend to want to do things with their first house, such as carpets,
furniture, fittings, etc. and if they have some funds left over after settlement, they wouldn’t need to rely
so heavily on credit cards, etc.

Please note: The table called Living Allowances on the NSR sheet is based loosely on the Henderson
Poverty Index and should be used in these assignments, as we are not using a real client. However, in real
life ASIC has ruled that a budget must be completed for each client to assess living expenses (we
provide a sample budget form at the back of Appendix B20 for interest).

© Copyright 2020, The National Finance Institute V.010920

FNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING – ASSESSMENT TASKS Page 4

ASSIGNMENT 2 Continued

1. Recommend a product for the clients and explain your reasons for the
recommendation

Write or type your answer in this box

Considering the investment property value being quite low unlike the loan needed hence its
recommended that they should employ a collaterisation and provide home property in form of
security including new investment properties. Another advantage of splitting loan is that Mrs.
& Mr. Dowell are paying residential home loan at which they are not able to claim tax
deduction of interest payment. However, with splitting of loan for residential purpose and
investment, they would be able to avail interest deduction on interest payment of loan amount
as per taxation laws. Moreover, ANZ shall charge one application fee as it is treated as one
loan facility. Cross collateralisation will also allow lowering of Loan to Value Ratio and thus
saving Lender Mortgage Insurance.

© Copyright 2020, The National Finance Institute V.010920

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ASSIGNMENT 2 Continued

2. List the supporting documents that would be needed to support the loan
application. Even though there may be a checklist in the lender’s application
form, you must list the documents separately below.

Write or type your answer in this box

a) Notes to support the application

b) Application Form
c) 100-point check
d) Photo ID like passport
e) Statement showing other investment, if any
f) A letter from employer stating the designation, pay and tenure of the PAYG employee
availing for loan.
g) Loan Serviceability work sheet
h) Financials: In borrower order with the oldest information first.
i) Loan Statements of current loans and bank statements of all types of bank account.
j) Rate notices
k) Contract of Sales (for purchases)
l) Letter from Property Manager re expected rental income.
m) All other supporting documents required.

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ASSIGNMENT 2 Continued

3. Complete the loan costing sheet below

Estimate of Costs Worksheet - Purchase

Client/s Name: _______________________________________________________________________

Mr & Mrs Bowen

Owner Occupier: ✔ Yes

  No Lender (if chosen): ________________________
ANZ

Estimated Costs:

New Lender’s Loan Establishment/Application Costs $ _______________________

600

Valuation cost (if not included above) $ _______________________

600

Property Transfer Stamp Duty $ _______________________

23,850

Solicitor/Settlement Agent/Conveyancing Charge $ _______________________

2,000

Registration of new Mortgage $ _______________________

219

Register of Transfer of Title $ _______________________

219

Title Search $ _______________________

88

Miscellaneous Costs (if applicable):

- Rates adjustment $ _______________________
3,000

- Home/contents insurance $ _______________________

1,200

- Progress inspection (construction loan) $ _______________________

-
(Estimated buffer cost
- Other ………………………………………………… $ _______________________
1,000

- Other ………………………………………………… $ _______________________

===================
SUB TOTAL $ _______________________
32,776

Lenders Mortgage Insurance (if applicable) $ _______________________

0

===================
TOTAL COSTS $ _______________________
32,776

Summary
Purchase Price $ _______________________
685,000.00
Plus Total Costs (from above) $ _______________________
33,276.00
Equals Total Purchase Funds Required $ _______________________
911,436.00
Less Loan Requested $ _______________________
911,436.00
Equals Client Contribution $ _______________________
1,680,000.00

Equals LVR ____________%

54.25

Client Signature: ………………………………………………………………. Date: ……………………………..

© Copyright 2020, The National Finance Institute V.010920

FNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING – ASSESSMENT TASKS Page 7

ASSIGNMENT 2 Continued

4. Complete a loan servicing calculation (NSR) by completing the form overleaf.

TIP: You should calculate your loan repayments based on the qualifying rate that we
have provided, Principal and Interest over 30 years.

© Copyright 2020, The National Finance Institute V.010920

FNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING – ASSESSMENT TASKS Page 8

NET SURPLUS RATIO (NSR)

Manual Serviceability Calculation

Name of Client/s
1. Lynette Mary Bowen Loan Amount $ 911,436
2. Gordon George Bowen Security Value $ 1,680,000
3. LVR 54.25 %
Self-Employed - Annual
Profit & Loss Statement (year) 20___(year) 20___ (year)
Net profit $ - $ -
Director’s salary (if applicable) $ - $ -
Depreciation $ - $ -
Interest on debt being refinanced $ - $ -
Other $- $-
Net Profit $- $-
Average Adjusted Net Profit (then transfer to table below) $-
Individuals - Annual
Gross Annual Income Taxation Net Annual Income
Applicant 1 $ 115,000 $ 32,868 $ 82,132
Applicant 2 $ 64,000 $ 13,680 $ 50,320
Applicant 3 $ $ $
Average Adjusted Net Profit (from above if applicable) $-

Total Net Income $ 132,452

A
Outgoings - Annual Loan Amount Annual Payment
Loan (loan being applied for) $ 911,436 $ 76,451.25
Personal loans $ - $ 1,800.00
Other property loans $ - $ -
Credit cards $ 10,000 $ 3,600.00
Other $ - $ -
Total Commitments $ 81,851.25
Less 80% annual rental income $ 25,584.00
Total Commitments $ 56,267.25 B
Living Allowances (Annual)
Single income $19,222 Joint income $27,946
Single income plus 1 $26,401 Joint income plus 1 $34,738
Single income plus 2 $33,193 Joint income plus 2 $41,530
Single income plus 3 $39,985 Joint income plus 3 $48,323
Single income plus 4 $46,778 Joint income plus 4 $51,040
Summary
Annual Living Allowance (from above table) $ 38,687.00
Total Commitments (from B above) $ 56,267.25

Total Outgoings (C) $ 94,954.25 C

C (Total Outgoings) as a % of A (Total Income). [ C÷A x 100 = ] NSR equals 71.68
________________ %

We have created this form for practice purposes only. Each lender will have their own assessment criteria and their own Serviceability
Calculators, which may or may not be similar to this practice sheet.

© Copyright 2020, The National Finance Institute V.010920

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ASSIGNMENT 2 Continued

5. FHOG – Your client is eligible for the FHOG. Log into the website of the Office of State
Revenue in your own state and download the application for a First Home Owner
Grant. Complete this application form and include with your Assignment submission.
Any information within the FHOG form that you are unsure of can be improvised.
Remember to read the FHOG questions carefully when it comes to signing or initialling. An
interactive FHOG form can also be accessed from the back of Appendix 15 (specific to your own
state/territory). You should submit 9 completed pages.

6. Complete a loan application form [a blank Westpac loan application form has been
provided for you which you should use] and complete all of the accompanying
documents as provided for you. Your answer to this Activity should be prepared as if
you were submitting a real loan application to the lender.
Please note: If there is information required on the application that is not supplied then please
improvise. The application should be completed as neatly as possible to ensure ease of review.
Tax charts, an LMI table and sundry forms can be found in your course content. You do not need
to create any “dummy” supporting documents (eg. documents that your client would typically
provide to you in a real submission, eg. rates notices), just ensure you list them where required.

For this question you must include the following 5 completed forms (all have been provided
for you:

- Lending Checklist
- Credit Guide / Disclosures
- Privacy Statement and Consent
- Loan Application Cover Sheet
- Westpac Application form

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© Copyright 2020, The National Finance Institute V.010920