Statement of Credit Assistance for Cheryl Ann Henderson and Alan Jacob Henderson
Loan App Case Study 1
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Checklist of attachments:
☐ PART A – SOCA document
☐ PART B – File Notes
☐ PART C – Completed loan application
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☐ Online ☐ Virtual Class
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CREDIT TRANSFER
You may be able to claim credit transfer for a unit/s of competency that you have previously completed with AAMC Training or another RTO. If you have been awarded a record of result or statement of attainment for any of the units detailed below then please go to the Credit Transfer tab in your Learning Centre and follow the prompts.
This assessment relates to the following units of competency:
FNSFMB411 Prepare loan applications on behalf of clients
FNSFMB412 Identify client needs and present broking options
FNSINC412 Apply and maintain knowledge of financial products and services
FNSCRD401 Assess credit applications (Certificate IV students only)
FNSSAM411 Sell financial products and services (Certificate IV students only)
Please refer to AAMC Training’s full Recognition Policy for further details.
STUDENT INSTRUCTIONS
The tasks in this assessment are based on this Case Study Scenario 1 featuring Cheryl Ann Henderson and Alan Jacob Henderson. You will need to refer to this document to complete all parts.
Part A – Statement of Credit Assistance (SOCA)
The SOCA has been designed for training purposes only. A SOCA found in many workplaces will be more comprehensive. We have included multiple choice questions to help you complete the SOCA correctly, according to the client’s scenario/situation.
Open the embedded Loan App Case Study 1 Scenario on Cheryl Ann Henderson and Alan Jacob Henderson. We strongly advise you have this document open and alongside whilst answering the following SOCA questions. On some occasions we will refer you to certain areas of this document and/or the Learning Guide.
If you are unable to open the embedded documents in this assessment, go to your Resources tab in the Learning Centre where you will find all assessment resources.
Statement of Credit Assistance for Cheryl Ann Henderson and Alan Jacob Henderson
Information about the credit required
Q1From the Case Study Scenario provided look at the “Funding Position” to research the answer for this question. Select the total amount of credit sought by the Hendersons.
☐ $515,000, plus LMI capitalisation $522,150.00
☐ $522,150, plus LMI capitalisation $529,300.31
☐ $522,150, no LMI capitalisation
Q2Read the Case Study Scenario provided, under the heading “the clients told you the following” to research the answer for this question.Select the term of credit sought by the Hendersons.
☐ 20 years
☐ 25 years
☐ 30 years
Your circumstances, goals and priorities
Q3Choose the correct responses based on the Hendersons’ Case Study Scenario that you would record in the SOCA.
Your circumstances and goals are:
☐ Purchase land and construct a new owner occupied home on the land at 47 Queen Street, CANLEY HEIGHTS, NSW, 2166, which will be used as security.
☐ Purchase an established home with a 100% offset account located at 1 Cherry Street, Parramatta, NSW, 2150.
☐ Purchase land first and then look at a construction loan for security located at 8 Bentleigh Street, Coffs Harbour, NSW, 2450.
☐ Apply for the First Home Owner’s Grant (FHOG).
Q4Choose all the priorities that the Hendersons told you from the Case Study Scenario so you can record in the SOCA.
Your priorities are:
☐ LMI (this is a one-off payment to protect the lender) must be available, so we get the full benefit of our savings.
☐ Have a 100% offset facility to park future savings.
☐ The loan amount of $522,150 to be placed in a deposit bond.
☐ Internet banking required.
☐ Interested in a fixed rate.
☐ Variable rate so you can make any additional repayments with no minimum or maximum restrictions.
☐ Available re-draw
Your financial awareness and habits
Q5Select the correct answers that demonstrate the Hendersons’ financial understanding.
As a broker you would feel comfortable that the Hendersons have a good level of financial awareness if they expressed themselves like this…
☐We own a motor bike.
☐ We have previously had loans and are financially aware.
☐ I have seen advertisements on TV about the special rates available on motor bikes.
☐ This is our first home loan and you have provided information relating to construction, lenders mortgage insurance and grants.
Foreseeable material changes
Q6 Select the correct statement the Hendersons could say to you to support the loan.
The Hendersons expressed their stability to support the loan because…
☐ We don’t see our financial position changing in the near future including no changes in our income and living expenses. We are not planning to retire during the proposed loan term.
☐ We plan on retiring within the loan term and move to QLD to be close to family.
☐ When the children finish high school and move out, we plan on selling the home and downsizing the home.-
Financial information
The broker has collected financial information from the clients at the first interview, follow up emails and via permission to contact their employer.
Q7 From what the Hendersons shared with you in the Case Study Scenario, their cash assets are as follows:
☐ NAB joint savings $93,000 Bankwest joint investment account $17,000 Total cash assets $120,000
☐ NAB joint savings $93,000 Bankwest joint investment account $27,000 Total cash assets $110,000
☐ NAB joint savings $944 Bankwest joint investment account $52,000 Deposit paid $24,000Total cash assets $76,944
Q8 From the listed assets of the Hendersons please select the six (6) correct assets from the statement of assets and liabilities.
☐ 20XX Mitsubishi Outlander $27,000
☐ 20XX Mitsubishi Outlander $20,000
☐ Furniture $95,000
☐ Collectables $40,000
☐ Share Portfolio $25,000
☐ Harley Davidson motorcycle $30,000
☐ Superannuation (Alan) $177,860
☐ Superannuation (Cheryl) $89,141
Q9 Select the total monthly liability commitment determined by the lender for the Hendersons.
☐ The ANZ car loan repayment is $539.88, and the credit card repayment determined by the lender is $151.00. The total monthly commitment per month is $700.88.
☐ The ANZ car loan repayment is $519.88, and the credit card repayment determined by the lender is $191.00. The total monthly commitment per month is $770.88.
☐ The ANZ car loan repayment is $539.88, and the credit card repayment determined by the lender is $221.00. The total monthly commitment per month is $760.88.
Q10 Select the correct liability balance for the Hendersons.
☐ $5,000
☐ $21,000
☐ $26,000
Q11 Alan’s gross income per year is $111,000 and Cheryl’s gross income per year is $120,000 as confirmed from their pay slips.
Select the correct monthly gross income that you need to input in the application and servicing calculator.
☐ Alan’s gross income per month is $9,250.00 and Cheryl’s gross income per month is $10,000.00
☐ Alan’s gross income per month is $7,050.00 and Cheryl’s gross income per month is $14,000.00
☐ Alan’s gross income per month is $8,500.00 and Cheryl’s gross income per month is $20,000.00
Q12 Select the total declared monthly living expenses for Alan and Cheryl. Refer to Alan and Cheryl's declared monthly expenses from the Scenario.
☐Total monthly declared expenses are $7,860
☐ Total monthly declared expenses are $5,360
☐ Total monthly declared expenses are $4,460
Product comparison report
Comparison between the product and features
The Product Comparison Report embedded below is supplied for your assessment. The report has been produced using current industry software for the Hendersons’ circumstances, requirements, goals, objectives and the features relevant to them. The Hendersons will need to choose their desired product before the broker can complete the SOCA. The broker cannot complete the loan application until the clients have signed the SOCA (ensure the clients sign and date the SOCA).
Q13Select the correct statement regarding maintaining promotional, product knowledge and compliance updates.
☐ It is a good idea to check Bing or Google to maintain compliance.
☐ It is important to check your forms once a year to ensure your constantly updated.
☐ You must use the latest version of your broker software and compliance documents to ensure you are constantly updated.
Recommendation
Based on your circumstances, requirements and objectives and the features relevant to your goals and objectives, we recommend that you apply for the credit product(s) below. Refer to the embedded Product Comparison Report above.
Q14 Select the recommended loan
☐ Virgin Money, reward me variable $500K - $750K, 80% - 90% LVR, Owner Occupied P & I Construction
☐ Westpac – Premier Advantage Rocket Repay Home Loan >70% LVR $150k+ P&I
☐ NAB – Tailored Home Loan Choice Package $750k+ Owner Occupied P&I
Q15 Select the recommended loan amount
☐ $515,000
☐ $522,150
☐ $529,300
Q16 Select the recommended loan term
☐ 20 years
☐ 25 years
☐ 30 years
Q17 Select the monthly repayment
☐ $2,313.92
☐ $2,313.52
☐ $2,398.46
Reasons for recommendation
Q18 The Hendersons are keen for you to explain why you have chosen this lender. Select the correct reason why you are recommending the product. Refer to the Product Comparison Report and the Case Study Scenario.
☐ Virgin Money allowed capitalisation of LMI cost.
☐ Westpac has the cheapest LMI of $9,919.20
☐ NAB has Direct Debit Access that was essential for the Hendersons.
Interest rate
Q19 The interest rate recommendation meets the Hendersons’ request. Select the statement that confirms this. Refer to the Product Comparison Report.
☐ The rate of 3.29% with the true rate of 3.33% from Virgin Money Reward Me Variable is competitive for a land and construction loan for the purposes of building our first home.
☐ The NAB- Tailored Home Loan Choice Package with a 3.73% true rate is the best rate out of the product comparison report.
☐ Westpac - Premier Advantage Rocket Repay Home Loan with a rate of 3.29% and a true rate of 3.4% is the most competitive rate.
Loan amount
Q20 As the Hendersons have asked you to clarify their situation with LMI. Select the correct statement to ensure the Hendersons understanding of the difference between a loan for $522,150 (87.03% LVR) and a loan for $480,000 (80% LVR). Refer to the Product Comparison Report.
Loan for $522,150 87.03% LVR, with LMI
Loan for $480,000 80% LVR, no LMI
Difference
Total Payable (inc. Fees)
$823,813
$757,626
($66,187)
Total Time (Yrs)
29.94
29.94
0
Total Principal Paid
$519,181
$477,270
($41,910)
Total Interest Paid
$300,743
$276,465
($24,277)
LMI Fee
$7,150.31
$0
(7,150.31)
Variable repayment estimate
$2,313.92
$2,100.00
($213.92)
☐ The Hendersons understand the LMI premium is $7,150.31. The Hendersons understand they will pay an additional $66,187 over the life of the loan if they borrow $522,150. The Hendersons understand the additional monthly loan repayment difference of $213.92 if they borrowed $522,150. They appreciate you advised them of the amounts and would like to continue with the loan $522,150 as it meets their goals.
☐ The Hendersons understand the LMI premium is $2,313.92. The Hendersons understand they will pay an additional $66,187 if they borrow $522,150. The Hendersons understand the additional monthly loan repayment difference of $413.92 if they borrowed $522,150. They appreciate you advised them of the amounts and would like to continue with the loan $522,150 as it meets their goals.
☐ The Hendersons understand the LMI premium is $10,150.31. The Hendersons understand they will pay an additional $66,187 if they borrow $522,150.The Hendersons understand the additional monthly loan repayment difference of $813.92 if they borrowed $522,150. They appreciate you advised them of the amounts and would like to continue with the loan $522,150 as it meets their goals.
Capacity
Q21 Select the statement that confirms the Hendersons are capable and comfortable with borrowing
☐ As calculated in our Financial Position we declared we have $3,010.37 surplus funds every month for discretionary expenses so we are confident we can borrow up to $1,047,283.70.
☐ We are capable of borrowing a maximum loan amount of $1,047,283.70 as per the Product Comparison Report from Virgin Money. We feel more comfortable borrowing $522,150 which is our required amount.
☐ If the system allows us to borrow $1,047,283.70, we will build a bigger house.
Loan structure
Q22 Select the correct loan structure and features the Hendersons confirmed they are looking for in a loan.
The loan structure meets your goals and requirements.
☐ It has an 100% offset, variable rate, LMI capitalisation on a land and construction loan.
☐ The repayment option of principal and interest with the ability to redraw.
☐ The Hendersons wanted a 5 year interest only loan.
☐ Internet banking is available.
☐ Approved FHOG is accepted by the lender and included in the funds to complete.
☐ The Hendersons wanted a fixed loan.
Specialist advice
Q23 The Hendersons have decided they will go ahead with the home loan. They mention that their contents and collectibles are insured with Allianz and they have no insurance policies covering life, trauma, and income protection. Select how you would respond to the information the Hendersons shared with you.
☐ You are accredited to quote for building insurance. The life, trauma, and income protection inquiry you are unable to assist as you are not qualified. You ask the Hendersons to look for a specialist as this is not part of your expertise.
☐ You are accredited to quote for building insurance. The life, trauma, and income protection inquiry you will need to refer to a specialist (financial planner) within DNZ Financial Services Pty Ltd, as you are not qualified to offer such advice.
☐ You are accredited to quote for building insurance and offer advice on life, trauma, and income protection. You advise the Hendersons that this is important and that they must take out life, trauma and income protection in view of the financial commitments they are now planning.
Preferred Loan Features
This is a summary of the specific loan features the Hendersons have requested. Please ensure you have read and understood the characteristics associated with each feature.
Q24 A variable rate is a must have for the Hendersons.
Select the reasons for a variable rate.
☐ We want to take advantage of potential future decreases in the interest rate
☐ We do not want to pay the interest penalty for paying out the variable loan early
☐ We do not want to risk breaking a fixed price contract
☐ A variable rate is preferred so we can make any additional repayments with no minimum or maximum restrictions.
Q25Select the variable rate characteristics that could impact the Hendersons’ variable rate loan.
☐ The interest rate and repayment amount may increase while the loan is on a variable rate.
☐ The variable rate will only increase if we have a recession.
☐ The repayments are guaranteed throughout the entire loan term.
Q26 Principal and interest monthly repayments are a must have for the Hendersons.
Select the reason for this repayment type.
☐ Alan Henderson is paid every fortnight; therefore, fortnightly payments are easier to manage. A variable rate is preferred so no principal will be paid off the loan for the first 3 years.
☐ Alan Henderson is paid every month; therefore, monthly payments are easier to manage. A variable rate is preferred so the Hendersons can make any additional repayments with no minimum or maximum restrictions and are keen to take advantage of potential future decreases in the interest rate.
☐ Alan Henderson is paid every month; therefore, fortnightly payments are easier to manage. A variable rate is preferred so the Hendersons don’t have to make any additional repayments.
Q27 The offset account is a must have for the Hendersons.
Select 2 reasons for requesting the offset feature:
☐ The Hendersons would like a 100% offset facility to park future savings.
☐ A standard savings account will enable the Hendersons to access their funds.
☐ Virgin Money has no fees for the offset facility.
Q28 The redraw facility is a must have for the Hendersons.
Select 3 redraw features the Virgin Money home loan offers.
☐ The option to access additional repayments
☐ No fee to redraw
☐ $5 fee to redraw
☐ Minimum redraw of $100
Q29 Before making your final recommendation select 2 reason/s for why Westpac and NAB are not suitable for the Hendersons that you can present to the Hendersons. Refer to the Product Comparison Report.
☐ Westpac and NAB do not offer LMI capitalisation on a construction loan
☐ Westpac offers 1.29% on the Premier Advantage Package
☐ To qualify for the NAB loan, the borrowing must be $750K
☐ Westpac and NAB offer 100% offset
Credit Proposal Disclosure
Fees and Charges
Q30 Referring to the fees and charges table in the Case Study Scenario, select the correct fees and charges payable by the client.
Category
Amount
Application Fee
☐ $600
☐ $500
☐ $300
Settlement Fees
☐ $0
☐ $150
☐ $300
Establishment Fees
$0
Valuation Fees
$0
Other Upfront Fees
$0
Government Fees (payable at settlement)
Stamp duty
Govt. Mortgage registration
Govt Transfer fee
Govt. Mortgage registration
☐ $3,000
☐ $147.70
Govt Transfer fee
☐ $56.70
☐ $147.70
Estimated Legal Fees
$ 1,197.39
Lender Custom Fee
$0
Lenders Mortgage Insurance
$7,150.31
Broker Fee
$0.00
Total Fees (Payable by client)
$9,093.10
Total Fees (Payable from Loan)
☐ $7,150.31
☐ $9,895.71
☐ $6,350.35
Commissions
Q31 As a credit representative you will receive commission in relation to the Hendersons’ application. Select the four correct statements you would disclose in the SOCA to the Hendersons. Refer to the Case Study commission information.
☐ If you have not received a Credit Quote, this indicates that no fees are payable by the Hendersons unless previously issued to the Hendersons that indicated fees were payable.
☐ If for any reason this loan is discharged within 2 years, the credit representative will forfeit part, or all commissions earned, this will be passed onto the Hendersons.
☐ The maximum trail commission paid by Virgin Money after settlement is 0.22% of $522,150.31 (loan amount) = $95.73 (monthly inclusive of GST) and maximum upfront commission is 0.66% of $522,150.31 (loan amount) = $3,446.19 (inclusive of GST) after settlement.
☐ Potential commission on the 2 products not selected must be advised to the Hendersons.
☐ Benefits in the form of conferences and training sessions provided by the licensee, financiers, or others do not need to be disclosed.
☐ Commissions are paid on a percentage of the loan drawn down in most cases net of any offset amount.
Q32 This is the customer disclosure & acknowledgement declaration the Hendersons need to read, sign and date. Check the appropriate boxes the Hendersons need to acknowledge and declare they understand what you have told them.
Finally, select the correct answers below whether the signature is satisfactory compared to the driver’s licence in the Case Study Scenario.
Please show that the client has accepted all the below acknowledgment by selecting each one.
☐I am / We are comfortable with my / our ability to make repayments under the proposed loan without difficulty.
☐ I am / We are aware that additional interest and other costs will be incurred if I / we elect to borrow money to pay additional expenses (e.g., insurance).
☐ I / We acknowledge that interest rates fees and repayments stated in this document may change due to economic circumstances or the recommended lender changes its terms before my / our loan is settled.
☐ I / We acknowledge that the recommended product is not unsuitable for my / our requirements.
☐ I/We confirm that the information contained in this document is a reliable reflection of my financial position and that there is nothing else to declare that may reasonably affect my application for credit. I understand that any omission of relevant information may create future problems.
☐ We acknowledge that by signing this document I/ We are requesting the broker to submit a loan application on our behalf.
☐ We acknowledge that by signing this document I/ We have received the terms and conditions.
Client signature: A Henderson Date: 14/6/XX
The signature is satisfactory compared to the driver’s licence.
☐ Yes ☐ No
Client signature: Cheryl Henderson Date 14/06/XX
The signature is satisfactory compared to the driver’s licence.
☐ Yes ☐ No
Client acknowledgement
Q33 The Hendersons need to acknowledge the SOCA by signing, dating and entering their legal names.
Signature/s: Alan J HendersonCheryl Henderson
Dated: 14/06/XX
Select the full applicant/ borrower’s correct legal name/s.
☐ Alan Henderson and Cheryl Henderson
☐ Alan Jacob Henderson and Cheryl Ann Henderson
☐ Alan Henderson and Cheryl Ann Henderson
Credit assistance provider details
Q34 Refer to the Case Study Scenario (Company structure and licensing information) for the Hendersons.
List 3 lenders that you are accredited with DNZ Financial Services Pty Ltd.
Type in your own name as the credit representative.
Credit Representative
Name
Credit Representative Number
AN2162
Phone and Mobile
Select 3 lender accreditations you hold.
1200 000 000
0419 XXX XXX
☐ Bankwest
☐ Bank of Queensland
☐ ANZ
☐ Virgin Money
assist@dnzfinancial.com.au
Licensee Name
ACN
DNZ Financial Services Pty Ltd
164 000 XXX
Australian Credit Licence Number
41XYZ5
Information shared by the credit representative
Loans for construction
Q35 Communicate to the Hendersons when you will assist them once the loan is approved and moving into the progress payment stage.
Refer to the Case Study, ‘Research provided by the broker’ and ‘How do progress payments work’.Revise the correct order of the progress payment stages for construction and when you will be communicating and following up with the Hendersons.
The correct order of the building stage
Communicate and follow up with the Hendersons
Frame stage
When the builder is about to begin building the frame.
Fit out or fixing stage
When the builder is about to begin the fit out or fixing.
Slab or base stage
When the builder is about to begin the base stage.
Completion stage
When the builder is about to begin the completion stage.
Lockup stage
When the builder is about to begin the lock up stage.
The correct order of the building stage
Communicate and follow up with the Hendersons
Q36 Once the construction loan has been approved for the Hendersons, explain what will occur once the land loan has settled.
☐ Progress payments will typically be paid directly to the builder at the completion of each stage. For each stage of the construction process, you will confirm that the work has been completed, generally by signing a drawdown request form and sending it to the construction department. An invoice from your builder for the cost of the work also needs to be included. The lender will require a Certificate of Occupancy and a copy of your insurance policy for the last stage. The insured amount must not be less than the total cost of the build and that the lender must be noted on the policy.
☐ Progress payments will typically to the Hendersons at the completion of each stage. For each stage of the construction process, you will confirm that the work has been completed, generally by signing a drawdown request form and sending it to the construction department. The lender will require a Certificate of Occupancy and a copy of your insurance policy for the last stage. The insured amount must not be less than the total cost of the build and that the lender must be noted on the policy.
☐ Progress payments will typically be paid directly to the real estate agent at the completion of each stage.
