Scenario Clients: Leanne Faye Hemingway DL No.: 528421; DOB: 21/03/91 Larry John Hemingway DL No.: 532921; DOB: 18/10/90 Best phone number: 0400 111 111 Current Address: 21 Dale Street, Lidcome NSW 2141 Time at address 34 months (Rent $750 per week) Previous Address: 55 Hayes Street, Lismore NSW 2480 Time at address 2 years Children One child aged 7 Credit Cards: CBA credit card - $7,000 limit (balance $2,200) ANZ credit card - $5,000 limit (balance $1,500) Other: Mr and Mrs Hemingway each have $45,000 in superannuation Scenario Continued overleaf . The National Finance Institute V.010522 ASSIGNMENT 2 Continued The clients are looking to purchase their first home which is a small, newly built 2 bedroom unit at 4/12 Shelly Road, Auburn NSW 2144, for $595,000. The property has never been occupied before. They have funds of $63,000 all of which were genuinely saved. Mr and Mrs Hemingway are eligible to apply for the FHOG. They are aware there will be a body corporate fee in the new unit complex which they have been told is $125 per week per unit. Mr Hemingway works as a site supervisor with Peabody Contractors, a major demolitions company in Parramatta and has been there for 36 months. His salary is $80,000 p.a. plus he has earned an average of $400 per week in regular overtime over the previous 18 months. He previously worked for a Lismore renovations company for 4 years before being made redundant when the business was bought out. Mrs Hemingway works as a medical receptionist for Parramatta Eye Surgery and earns $62,000 p.a. She has been there for 36 months. She previously worked for another medical practice in Lismore for 4 years. The clients own 2 cars a 2010 Kia Cerato worth $12,000 and a 2021 Ford Ranger 4x4 worth $20,000 with Ford Finance of $18,000 with repayments of $431 per month over 48 months. Assumptions: o Although addresses show NSW, for the purpose of duty/cost calculations, assume that the clients live in the same state as you (the broker). For S.A.-based students assume the FHOG cap is $595,000. o You must assume a Standard Variable Rate of 3% applies to this loan application and a Qualifying/Servicing rate of 3% is added to the Standard Variable Rate (for your NSR form). o Assume the clients will be full-doc, that you suggested 3 lenders products from which the clients decided on NAB o Assume this lender would accept 80% of overtime income and assume overtime forms part of the applicants total gross income TIPS LVR and LMI: To work out the LVR you first have to decide how much money your client can afford to borrow. 1. One method would be to determine if they could do a 95% loan so you would simply work out what 95% of the purchase price would be. The purchase price is $595,000 x 95% = $565,250 (loan amount) LVR 95%. Here, the LMI would be calculated on $565,250 and the clients pay the fees from their own funds. 2. Another method would be to work out the total funds available to the clients e.g. $63,000 savings plus FHOG. After working out costs and taking these away from their available cash you would then know how much is left for a deposit. Once you know how much deposit they have you would then know the loan size and from there work out the LVR. The LMI is worked out on the loan amount that you end up with. Dont forget to add the LMI stamp duty. Keep in mind that first home buyers tend to want to do things with their first house, such as carpets, furniture, fittings, etc. and if they have some funds left over after settlement, they would not need to rely so heavily on credit cards, etc. 3. The clients have mentioned that, if there is a shortfall in the funds required to complete the transaction, Larry's parents have said that they would like to gift the couple $25,000 to complete the purchase. The parents are prepared to confirm in writing that the money is a non-repayable, unconditional gift.

question is Recommend a product for the clients and explain your reasons for the recommendation. The lender has been agreed upon and we have provided that lenders application form for your use.