Mr and Mrs Monash have hired your team of financial planners to consult on their intention to buy their next home.

In 4 years time, they intend buy a 3 bedroom house in Caulfield to live in. They intend to spend $1,440,000 to buy their house.

Task 1:

Find and present in a business report, the cheapest (lowest interest rate) home loan in the market. Mr and Mrs Monash have the following conditions and needs of the loan you present to them: (if you breach the conditions above or below, -2 marks will be deducted for each breach)

The loan has to be from a Non-bank financial insitution

The loan needs to have a Offset facility

Mr & Mrs Monash wish to make monthly repayments

They wish to borrow money for 30 years

They wish to take a fully amortizing loan.

They are interested in a 3 year Fixed rate loan (use comparison rates only)

Mr & Mrs Monash want an LVR of 90% (Assume any loan you research allows the LVR desired and ignore mortgage insurance) a) Applying their desired LVR, Calculate the amount Mr and Mrs Monash has to borrow.

b) Calculate the deposit Mr and Mrs Monash must contribute in the future.

c) Apply financial math to calculate the periodic loan repayment Mr and Mrs Monash must pay. (show your formula, substitution and working, missing financial math will result in a -4 mark penalty)

d) Today, Mr and Mrs Monash have $1,700.00 of disposable income to service their debt at each loan repayment period. Assuming, their income increases by the current rate of annual inflation, will they be able to afford the periodic loan repayment needed for the loan? If not, by what nominal annual percentage will they have to grow their disposable income available to service the loan in the future when they buy their house? If their future income is greater than the loan repayment required, by what percentage is their income greater than the loan payment required?

Task 2:

Given the deposit Mr and Mrs Monash must pay in the future, they also task you with finding a good investment to help them save.

Mr and Mrs Monash have the following conditions and needs for the term deposit you present to them: (if you breach the conditions below, -2 marks will be deducted for each breach)

The term deposit is to be from a Non-big 4 Bank (domestic or foreign)

The term of the deposit matures when they purchase the house in the future.

They require interest to be calculated and paid monthly

Mr and Mrs Monash have $80,000 to investment today

a) Given what Mr. and Mrs. Monash have to invest today, apply financial math and calculate the future value of investing in your recommended term deposit today, for when Mr and Mrs Monash need to buy their house. (show your formula, substitution and working, missing financial math will result in a -4 mark penalty)

b) Do Mr. and Mrs. have enough now, to pay for their deposit in the future? If yes, by what percentage are they over their deposit.