Diploma of Finance and Mortgage Broking Management Assignment

Case Study C - Bill Smith and John Jones

Assignment tasks (student to complete)

Task 1c - Identify the clients' complex broking needs

Prepare a list of questions that you would need to ask Bill and John about their history, experience, business performance and the property purchase.

In preparing your list of questions you should ensure that you cover the following:

• The complex features of Bill's and John's situation and objectives.
• Potential risks and Bill's and John's tolerance of risk. In considering risk you should consider:

- How you would identify the risks and the criteria you used to evaluate these risks

- How you would assess their current exposure, the tools you would use in terms of probability, impact and the consequences.

Task 2c - Prepare complex broking options

You are required to prepare a full report for Bill and John by outlining the process and the risks (potential and real) of which Bill and John should be aware.

In a suitable format, document the process that is required for them purchase the new property and establishing the loan.

In developing your report you should cover the following:

1. The parties to the loan

2. The best physical set up with the lender - are they using their own property as cross security or the investment property?

3. What name should the title be registered in given there is a Trust involved and advise what state you are basing your answer in

4. The procedure to commence a loan for a property like this

5. The steps that will need to be in place

6. The client responsibilities (Bill and John should fully understand the loan that is proposed)

7. An outline as to the lending process and what the client needs to arrange

8. The documentation needed to commence the borrowing

9. The name in which the client will sign the contract to purchase

10. The state revenue requirements

11. A statement as to whether guarantees from spouse's or any other security will be required and why this is/is not the case

12. The maximum LVR

13. Suggest three (3) lenders to client's that would be likely to consider this request

14. A summary of fees and charges - including those for setup and those of the lender.

Note: You may make any reasonable assumptions necessary in order to complete the proposal.

Task 3c - Implement complex loan structures

Bill and John have accepted your recommendations and have given you authority to proceed with their application.

As part of implementing their loan application you are required to prepare a formal written loan submission to the lender for pre-approval. Your loan submission must include the following:

• serviceability calculations
• the proposed structure of the loan given the purchases is in the name of a new Unit Trust entity
• the loan amount
• the property style, size, use
• proposed security
• any other information that is relevant to the lenders requirements.

In additional to these requirements you should also include:

• your obligations under the NCCP (if any)
• maximum loan amount
• maximum loan terms
• any ATO consideration to be made
• your state legislation and OSR requirements
• restrictions on overseas purchase, if any
• your general advice restrictions
• property purchase requirements.

Notes:

• Any assumptions you make should be listed, and not be in conflict with the case study information already provided.
• You will need to calculate and include your workings of the required servicing and debt service cover ratio for the new debt and existing borrowings of Directors. Comment on the DSCR comfort level for lender.
• You may make any reasonable assumptions necessary in order to complete the proposal.

Attachment:- Assignment File.rar