Finance and Mortgage Broking Academic Essay

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Finance and Mortgage Broking Academic Essay

Malcolm and Susan Johnson are a young couple about to buy their first home. They have been married for five years and during that time have rented an apartment while also saving for their own home.
They have been looking at properties for the last month and one has really caught their eye, although the bathroom and ensuite could do with a little work. They had planned on shopping around the various lenders themselves to find the most appropriate loan for their needs, but as they both work, they have little time to do the research necessary. And, as they both admit, they have limited knowledge of the loan products available and might have difficulty in evaluating the options.
They have not paid a deposit at this stage.
On a suggestion from Susan’s brother (one of your former clients) they have contacted you about the loan.
Following is a summary of the details of the property they wish to purchase, the couple’s financial and employment details, and the loan features they require.
The property
Address: Unit 12, 43 Seaside Parade, Coastville,

Purchase price: $490,000

Description: 2 bedroom strata title unit

Agent details: Steven Allstone

Phone: 8282 1113

Mobile: 0412 880 088

The couple

Current address: Unit 12, 22 Wentworth Lane, Highville,

Malcolm and Susan have lived there 5 years

Home phone: 9001 2121

Funds position

Purchase price: $490,000

Estimated costs: $20,000

Total required: $510,000

Loan: $430,000

Own contribution: $80,000

Assets

Capital Bank savings account (joint) $92,000

Capital Bank cheque account (joint) $1,600

Holden Commodore SS, eight years old (Malcolm) $25,000

Suzuki Baleno, seven years old (Susane) $9,000

Superannuation — Capital Bank (Malcolm) $28,000

Superannuation — Capital Bank (Susan) $62,000

Household effects (insured value) $40,000

Liabilities

Capital Bank personal loan (Malcolm) $3,600

(repayments $180 p.m.)

Capital Bank Visa card (Malcolm) $200

(limit $2,000)

Capital Bank Visa card (Susan) $600

(limit $3,000)

All debts have been repaid according to arrangements. In relation to the credit card debt, the minimum monthly commitment should be calculated at 3% of the credit limit.

Income/employment

Malcolm (date of birth 21/2/86)

Position: Team leader (full time)

Employer: ACME Limited

101 City Rd, Westside,

Phone: 9800 1111

Income (gross): $55,000 p.a., net monthly income: $3,705

Employer contact: Alison Johnson, HR Manager

Length of service: 10 years

Driver’s licence: 8855KL

Email: [email protected]

Susan (date of birth 8/10/87)

Position: Accountant (full time)

Employer: Phones R Us

804 High Street, City East,

Phone: 9910 2033

Income (gross): $91,000 p.a., net monthly income: $5,629

Employer contact: Stan Adams, HR Manager

Length of service: 12 years

Driver’s licence: 17016C

Email: [email protected]

Interest income

Approximately $40 per month from $12,000, remaining in savings account after home loan deposit. Interest 4% p.a.

Solicitor’s details

Jones and Co

22 High Street, City East,

Phone: 8281 1382

Fax: 8290 1800

The loan requirements

• 30-year term

• Premium Option home loan

• standard variable interest rate @ 5.57%

• proposed settlement date — 6 weeks time

• ability to make additional payments from time to time without penalty

• fortnightly repayment option

• redraw facility

• funds access via card

• offset facility.

Identify and describe three (3) of these disclosures.

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 is ‘not unsuitable’ for the borrower.
Identify and describe the key factors that must be taken into consideration when assessing whether a credit facility is ‘not unsuitable’ for a borrower.

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Posted on May 23, 2016Author TutorCategories Question, Questions