FNSFMB512 - Client Project #1 (Suzie and Martin Connor) - Case Study Questions v1.0

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Apr 3, 2024

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FNSFMB512 – Identify and develop credit options for clients with special financial circumstances (Release 1) Client Project (Suzie and Martin Connor) Client Project #1 S UZIE AND M ARTIN C ONNOR Case Study Questions What you need to do: Page | 1 of 7 © Real Estate Academy Australia Version 1.0 – May 2022 RTO 32426

FNSFMB512 – Identify and develop credit options for clients with special financial circumstances (Release 1) Client Project (Suzie and Martin Connor) 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 your learner portal following the instructions provided within the assessment task. 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 of 7 © Real Estate Academy Australia Version 1.0 – May 2022 RTO 32426

FNSFMB512 – Identify and develop credit options for clients with special financial circumstances (Release 1) Client Project (Suzie and Martin Connor) Scenario 1 – Suzie and Martin Connor Suzie and Martin Connor are a married couple without dependent, owning their owner-occupied home in the suburb of Ipswich, 4305 QLD. The property has been valued by a local real estate agent for $320,000 a couple of weeks ago as they want to sell their property to upsize as they plan on having a baby soon. The balance of their current mortgage loan is $102,000 and they would like all fees and costs associated with the purchase of a new property included in the new mortgage. They want to keep their savings for their child to come. It’s been agreed between them that Suzie would terminate her current casual employment to be a stay-at-home mother and look after their first child for at least the next two years or so. They visited a home a few days ago only two blocks from their current home and fell in love with the place. They made an offer at $510,000 that was accepted this morning. The couple is adamant that this is THE home they want, and they are ready to take appropriate moves to make it happen as soon as possible. They are a ‘connected’ and very busy couple so prefer a lender with great online services and if possible, allows for a fully digital application. While they are very excited about this fantastic news, they are also a little nervous as they have no idea yet on how to make their wish come true. Both Suzie and Martin’ risk profiles were assessed, and their risk capacity was evaluated as being ‘Moderate to Aggressive’. Whilst their current property has been on the market for two weeks and has received lots of interest, they have not secured a contract yet on their place and they hope this will not stop them from purchasing their newly found dream home. The following information and supporting documentation have been provided by Suzie. ● IDs ● Assets & Liabilities ● Needs Analysis Questionnaire ● Suzie’s latest 2 payslips ● Martin’s latest 2 payslips ● Latest Home Loan Statement ● Latest Credit Card Statement ● Latest Car Loan statement ● 3 months bank statements ● 3 months saving bank statements Based on the supporting documentation and the information you hold, complete the activities below. This activity will assess your ability to determine special financial needs and risk profile for clients. Page | 3 of 7 © Real Estate Academy Australia Version 1.0 – May 2022 RTO 32426

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FNSFMB512 – Identify and develop credit options for clients with special financial circumstances (Release 1) Client Project (Suzie and Martin Connor) Question 1 Identify from the supporting documentation and information you hold what are the goals & objectives, requirements, and situation of the Connor’s couple. Suzie and Martin Connor Goals and Objectives 1- Upsize of owner-occupied residence for $5,10,000 due to expansions of family member. 2- Suzie and Martin Connor want to keep their savings for their child to come . 3- Include all fees and costs associated with the purchase of the new property in the new mortgage. Requirements 1- Lender with great online services and if possible, allows for a fully digital application. 2- Current property required to be sold within 6 to 12 months depends on lenders requirements 3- Lenders should be able to provide offset account facility for their savings to keep for child to come. Page | 4 of 7 © Real Estate Academy Australia Version 1.0 – May 2022 RTO 32426

FNSFMB512 – Identify and develop credit options for clients with special financial circumstances (Release 1) Client Project (Suzie and Martin Connor) Situations 1- Suzie and Martin Connor Want to sell their current place to upsize. 2- Married couple without dependents. 3- Currently own an owner-occupied home in Ipswich, QLD. 4- Property value of their current home is $320,000. 5- Remaining mortgage loan balance is $102,000. 6- Suzie plans to terminate her casual employment and be a stay-at-home mother for at least the next two years. 7- Risk profile assessed as "Moderate to Aggressive." 8- Their current property has been on the market for two weeks, but they have not secured a contract yet. Question 2 From your findings from the previous question, assess and analyse the clients’ special financial needs and describe the most obvious type of loan that might be best suited to the clients’ situation. Justify why this type of finance opportunity would be appropriate according to their circumstances. Based on their goals, requirements, and situation, the most obvious type of loan that might be best suited to the Connor couple's situation is a "Bridging Loan." This type of loan would allow them to finance the purchase of their new home while considering their current financial circumstances. It could include the funds required to settle the new property and potentially incorporate the fees and costs associated with the purchase. Justification: A home loan for upsizing would be appropriate for the Connor couple because it provides the necessary financing to purchase their desired property without depleting their savings earmarked for their future child. This loan type would enable them to transition to a larger property suitable for their growing family and accommodate Suzie's plan to be a stay-at-home mother. Additionally, it aligns with their risk profile of being "Moderate to Aggressive" as it allows them to pursue their goals while managing financial commitments. Page | 5 of 7 © Real Estate Academy Australia Version 1.0 – May 2022 RTO 32426

FNSFMB512 – Identify and develop credit options for clients with special financial circumstances (Release 1) Client Project (Suzie and Martin Connor) Question 3 Identify and define the risks and constraints associated with this type of loan. Financing Risk: The risk of not being able to secure the required financing amount due to factors such as creditworthiness, loan-to-value ratio, or changes in lending criteria. This could impact their ability to purchase the desired property. Market Risk: The risk of changes in property values or market conditions that could affect the resale value of their current home or the value of the new property they wish to purchase. Fluctuations in the property market could impact their overall financial position. Repayment Risk: The risk associated with the ability to meet mortgage repayments on the new loan, considering potential changes in income (Suzie terminating employment) and other financial commitments. Question 4 According to the legislative requirements, assess the impact of the risks identified in question 3 against the risk tolerance of Suzie and Martin and clarify if this type of finance aligns with their risk profiles. As per the information provided, the risk tolerance of Suzie and Martin has been evaluated as "Moderate to Aggressive." This suggests that they may be willing to take on some level of risk in pursuit of their financial goals. However, it is important to assess the impact of the identified risks against their risk tolerance. Financing Risk: The risk of not being able to secure the required financing amount due to factors such as creditworthiness, loan-to-value ratio, or changes in lending criteria. This could impact their ability to purchase the desired property. Market Risk: The risk of changes in property values or market conditions that could affect the resale value of their current home or the value of the new property they wish to purchase. Fluctuations in the property market could impact their overall financial position. Repayment Risk: The risk associated with the ability to meet mortgage repayments on the new loan, considering potential changes in income (Suzie terminating employment) and other financial commitments. Page | 6 of 7 © Real Estate Academy Australia Version 1.0 – May 2022 RTO 32426

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FNSFMB512 – Identify and develop credit options for clients with special financial circumstances (Release 1) Client Project (Suzie and Martin Connor) Question 5 You are accredited with the following lenders and are to assess your ability to meet your clients’ goals and objectives: are you comfortable you can meet these and act in the best interests of Suzie and Martin? Justify your response. ● Westpac ● ANZ ● Heritage Bank ● BOQ ● CBA ● Bankwest As an accredited entity with Westpac, ANZ, Heritage Bank, BOQ, CBA, and Bankwest, I am confident in my ability to meet Suzie and Martin's goals and act in their best interests. Each lender offers a variety of products and services, allowing me to tailor solutions to their specific needs. By thoroughly understanding Suzie and Martin's financial situation, risk tolerance, and objectives, I can recommend the most suitable lender and financial products to help them achieve their goals effectively and responsibly. Additionally, I will ensure transparency and provide clear explanations to Suzie and Martin regarding the options available to them, empowering them to make informed decisions aligned with their best interests. Page | 7 of 7 © Real Estate Academy Australia Version 1.0 – May 2022 RTO 32426