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Applicants’ solicitor
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Moffat and Co (contact is Maree Moffat)
16 Tatlor Street, Yourtown, 1234
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Phone
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7890 5678
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Applicants’ accountant and registered office
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Buckland Accountants (contact is Simon Williams)
28 Mary Street, Yourtown, 1234
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Phone
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2982 0987
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Applicants’ banker
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Westcoal Building Society, Yourtown, 1234
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Notes:
- Assume for credit card debts, the minimum monthly commitment should be calculated at 3% of the credit limit.
- Each of the working directors has appropriate death, income and disability insurance in place.
- A sensitisation factor of 2% should be used when calculating financial commitments.
Task 1b — 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 Company and Trust structure and benefits that will come to the Company from purchase of this property
- the identification of potential risks in such a transaction and Bill’s and John’s tolerance of risk
- the financial aspects of the transaction and current financial position of the business.
In addition to the list of questions, please also comment on any potential risks you identify (you are permitted to make assumptions here). In considering these risks you should consider:
– how you would identify the risks and the criteria you used to evaluate these risks
– how you would assess their current debt exposure; the tools you would use in terms of risk probability, impact and consequences.
(800 words)
Student response to Task 1b
Task 2b — 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, outline to the directors the options available to them and the process that will need to take place for them to complete the new property purchase and establish the loan.
In developing your report you should cover the following:
- the parties to the loan
- what is the best loan structure for this transaction — provide Bill and John with options to use their own residential properties as cross security or use a cash contribution and use the property to be purchased as the property
- your recommendation of the best option, including amount, security/collateral, term, repayments and potential interest rate
- name three (3) lenders that would consider and potentially approve this transaction, and advise the client of the product type, loan term, interest rate, ongoing fees, balloon payment (if applicable) and monthly repayment they offer
- the procedure to commence the loan, including documentation Bill and John need to provide
- the client responsibilities, so Bill and John fully understand the facility being proposed
- outline the risks (potential and real) of which Bill and John should be made aware
- the name in which the client will sign the contract to purchase and, given Trust involvement, in what name will it be registered (this varies state to state so please advise which state you are from)
- a summary of fees and charges — including those for setup and those of the lender
- a request for client to inform you of any questions about the transaction and/or provide an instruction for you to proceed
- advise which relevant disclosures need to be made
(800 words)
Notes: Any assumptions you make should be listed, and not be in conflict with the case study information already provided.
You are to write a report to clients demonstrating your professional writing skill, not simply commenting on each of the points detailed above.
The use of tables in the report, to set out some of the numeric information, may be of benefit.
Student response to Task 2b
Task 3b — 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:
- details of borrower, guarantors and their contact details
- borrowers’ backgrounds
- an overview of the proposal — what the finance is for:
– the proposed structure of the facility being recommended — product type, deposit amount (if required), loan amount, term, interest rate and residual value (if any)
– full details of the security/collateral that is to be provided
– Sensitised serviceability calculations including Debt Service Cover Ratio (DSCR) calculation and all personal borrowing facilities of directors (sensitisation rate is disclosed in case background)
– provide a funds- to-complete table, including statutory costs and any relevant fees
– highlight the relevant risks, industry, business, transactional and how they are mitigated
– any other information that is relevant to assist the lender provide an approval
– your comments and recommendations
– list attachments.
(800 words)
Notes: Any assumptions you make should be listed, and not be in conflict with the case study information already provided.
You are to write a formal submission to the lender, not simply commenting on each of the points detailed above.
The use of tables in the report, to set out some of the numeric information, may be of benefit.
Student response to Task 3b
Assessor feedback:
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[insert feedback]
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Date assessed:
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Click here to enter a date
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Does the student need to resubmit?
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No
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Questions that need to be resubmitted
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First submission
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Not yet demonstrated
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Resubmission
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Not applicable
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To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
