FNSFMB412 - Client Project 1 (Jack Palmer) V1.1 - done

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FNSFMB412

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May 31, 2024

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FNSFMB412 - Identify client needs and present broking options (Release 1) Client Project 1 (Jack Palmer) Client Project 1 Jack Palmer Page 1 © Real Estate Academy Australia Version 1.1 – January 2022 RTO 32426

FNSFMB412 - Identify client needs and present broking options (Release 1) Client Project 1 (Jack Palmer) What you need to do: Answer the questions below by writing in the space provided. You are required to answer all questions correctly. If correct, you will see ‘Satisfactory’ or if incorrect you will see ‘Not Satisfactory’ in your grades section of your learner portal next to the assessment name. The assessor will provide feedback and a Record of Results in the assessment task once graded. You will be required to resubmit your work for any ‘Not Satisfactory’ assessment tasks. What you will need: Use the learner material provided in your online student portal as well as research materials such as books, internet, magazines, workplace documentation etc. to assist you in gaining the knowledge required to answer the questions. Remember that the assessment task is self-paced and open book. You can use whichever resources you have to answer the questions. What you need to submit: Your answers to these questions. How to Submit your Assessment: Upload your completed document into the “FNSFMB412 – Client Project 1” in your learner portal. You can drag and drop the file into the window or use the add file icon in the top left of the submission window and select the file your wish to upload by using the browse/choose file option. Click on finish attempt to submit it for grading. Page 2 © Real Estate Academy Australia Version 1.1 – January 2022 RTO 32426

FNSFMB412 - Identify client needs and present broking options (Release 1) Client Project 1 (Jack Palmer) Question 1 According to the information from Jack’s email, calculate the weekly repayment of his current mortgage. What Mathematical equation can you use if you do not have a mortgage repayment calculator available? According to Jack’s email he current mortgage balance is $211,215 with a remaining term of 156 months (13 years) at a rate of 4.2%. This indicates that his weekly repayments are $405.92. Calculations would indicate that the monthly repayment is $1,759. To work out the weekly repayment you would do the following: $1,759 x 12 / 52 = $405.92 To calculate the weekly repayment of a mortgage, you can use the following equation: M = P \times \frac {r(1 + r)^n}{(1 + r)^n - 1} Where: M is the monthly mortgage payment P is the principal (the amount of the loan) r is the monthly interest rate (the annual interest rate divided by 12) 1 2 To explain the answer provided, let's break down the formula and how it applies to calculating the weekly repayment of a mortgage: 1. Identify the Variables: o M is the monthly mortgage payment. o P is the principal, which is the total amount borrowed. o r is the monthly interest rate, calculated by dividing the annual interest rate by 12. o n is the total number of payments (number of years of the mortgage multiplied by 12 for monthly payments). 2. The Formula: o The formula provided, ( M = P \times \frac{r(1 + r)^n}{(1 + r)^n - 1} ), is known as the formula for calculating the monthly payment of a loan (or mortgage) with compound interest. This is derived from the amortization formula. 3. Applying the Formula: o Plug in the values for P , r , and n into the formula to calculate M , the monthly repayment amount. 4. Calculating Weekly Repayment: o To find the weekly repayment, you would typically divide the monthly repayment ( M ) by the average number of weeks per month. Since there are about 4.33 weeks on average in a month, you can calculate the weekly payment by dividing M by 4.33. Page 3 © Real Estate Academy Australia Version 1.1 – January 2022 RTO 32426

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FNSFMB412 - Identify client needs and present broking options (Release 1) Client Project 1 (Jack Palmer) [ \text{Weekly Payment} = \frac{M}{4.33} ] This formula and method allow you to estimate how much Jack would need to pay on a weekly basis for his mortgage without needing a specific mortgage repayment calculator Question 2 List the client priorities, goals, and product expectations according to the information provided. Jack has listed that he does not want to increase his loan term though believes he could be paying a lower interest rate on his loan (currently 4.2% @ Westpac). Jack is expecting a lender that offers a lower interest rate at the same loan term of 156 months or 13 years Page 4 © Real Estate Academy Australia Version 1.1 – January 2022 RTO 32426

FNSFMB412 - Identify client needs and present broking options (Release 1) Client Project 1 (Jack Palmer) Question 3 What methods and tools will you use to clearly identify Jack’s needs and objectives, and establish his asset/liability/income/expenditure position while you would meet with him? Funding Position Table Borrowing Capacity Calculator Serviceability Calculator for lenders offering what Jacks needs are requiring Question 4 Jack is required to obtain information about an offset account. Explain what an offset account is and what are the benefits of using it. An offset account is a transaction account linked to your home loan. A regular transaction account allows you to make deposits and withdrawals. By holding money in an offset account over time, you can reduce the amount of interest charged on your mortgage. In general, the longer the term and the higher the balance, the less interest you'll pay. As a result, you may be able to pay off your loan sooner. Benefits of an offset account are: Reducing interest Tax savings and personal savings Access to your money Question 5 What mandatory document should you provide Jack with prior to providing him with credit assistance? What important information is disclosed in this document? Privacy Disclosure Agreement and Credit Proposal /Guide Page 5 © Real Estate Academy Australia Version 1.1 – January 2022 RTO 32426

FNSFMB412 - Identify client needs and present broking options (Release 1) Client Project 1 (Jack Palmer) Question 6 You will need to identify the documentation that Jack is required to provide to you according to the Westpac Home Loan Application Checklist . Provide your answer in the text box below. 2x most recent payslips (no longer than 1 month old) 3 months bank statements for all transaction and institutions – home loan statements included Superannuation details Detailed list of assets Building: RENOVATION Plans, specifications, council approval, a Builder's Contract (signed by both customer and provider) or, ifthe client isthe builder, an Owner Builder Independent Adviser's Report. Identification: For existing customers: Bring along one of your Westpac Cards or a photo ID. Question 7 In this task, you are required to research , identify and match two current lending products according to Jack’s needs and expectations. (Briefly explain why have you chosen these two options for Jack.) To assist you with this task you will need to look for a loan key fact sheet on lender websites. COMMONWEALTH STANDARD VARIABLE RATE 6.49% pa What you'll get  Wealth Package interest rate discount 1  Link multiple offsets  Unlimited additional repayments  Unlimited redraws  Access features like top ups  Option to split loan  Eligible for interest rate reductions Trade-offs  Not protected from interest rate increases Fees  $395 annual Wealth Package fee Page 6 © Real Estate Academy Australia Version 1.1 – January 2022 RTO 32426

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FNSFMB412 - Identify client needs and present broking options (Release 1) Client Project 1 (Jack Palmer)  Additional fees may apply Commonwealth Bank digi Loan – refinacing from another lender 6.15%pa What you'll get  A low variable rate  Monthly cashback for eligible CommBank Yello customers  Unlimited additional repayments  Unlimited redraws  Eligible for interest rate reductions Trade-offs  No offset account  No Wealth Package  Not protected from interest rate increases  Not available to company or trust borrowers  Fees may apply for phone or in branch support for some transactions Fees  $300 establishment fee  $10 monthly loan service fee (monthly cashback for eligible CommBank Yello customers)  Additional fees may apply ANZ BANK STANDARD VARIABLE RATE WITH OFFSET OPTION 7.24%PA (P & I) - Discounted standard variable rate when borrowing 80% or less of the property value  Save on interest with an offset account Offset your home loan with an ANZ One Offset account and only pay interest on the difference. A fee of $10 per month applies.  No ongoing fees You won't pay any ANZ set up or ongoing fees on your home loan. Superscript: 1  Discounted variable interest rate Get a discounted interest rate based on your Loan to Value Ratio (LVR). Higher discounts may apply if your LVR is 80% or less.  Pay your loan off sooner Make additional repayments whenever you can, with no fee. And if you Page 7 © Real Estate Academy Australia Version 1.1 – January 2022 RTO 32426

FNSFMB412 - Identify client needs and present broking options (Release 1) Client Project 1 (Jack Palmer) need to, you can access funds from extra repayments made with ANZ Redraw. Superscript: 8  Draw down the loan progressively as you build If you're constructing a property , your loan can be drawn down over a period of up to 24 months.  Make interest only payments Superscript: 10 Tooltip You can apply for a loan with interest only payments for an agreed term (5 years maximum for owner occupied and 10 years maximum for investment property). Superscript: 11 Making interest only payments may suit you in some circumstances $0 Loan approval fee $0 Loan administration charge $0 Renegotiation fee $0 Valuation administration fee $0 Progress payment fee $0 Guarantee administration fee These fees may apply, depending on how you choose to manage your home loan: Fees ANZ One offset account $10 per month With the current rate increase the best advisable rate between these 2 would be to go with the digi loan even tho it doesn’t include an offset. Page 8 © Real Estate Academy Australia Version 1.1 – January 2022 RTO 32426

FNSFMB412 - Identify client needs and present broking options (Release 1) Client Project 1 (Jack Palmer) Page 9 © Real Estate Academy Australia Version 1.1 – January 2022 RTO 32426

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