FNS50315 Diploma of Finance and Mortgage Broking Management Editing

FNS50315 Diploma of Finance and Mortgage Broking Management Editing

Assignment 1

1. Borrower’s Details

The borrower of the loan is Mr. Andrew Bisset and Mrs Jane Bisset. Mr. Andrew was born on 29^th July 1965 and Jane was born on 15^th June 1969. They were married and have three children, one is working in the real estate business. The reside in 12 Currumbin Close, Carindale, Queensland 4152

2. Background

Mr. Andrew is in the real estate business for more than 20 years, and possess nearly 6 shops at 55 Park road jointly with his wife. The property was valued at $1,450,000 couple of years ago and there is still pending mortgage to the tune of $625,000 on the property. The Bisset family is interest to buy a new property near their shopping centre which is around 3000 m². The land is current treated as “Special Zone” however, the local council has stated that it will be opened as “Commercial” in the future.

3. Loan Purpose

The basic purpose of this loan is to purchase the land which is now stated as “Special Zone” and which in future may be termed as Commercial in the Town planning scheme. The purchase price of the land is estimated at $600,000. The owners are willing to purchase the property as he trustees of their family trust. The loan is estimated to include the purchase price, $25,000 towards the stamp and other charges, financing and other costs.

4. Facility Details

The facility which is to be purchased is currently termed as Special purpose, however in the future it may be retermed as commercial. The property is around 3000 m²with an estimated price of $600,000. The owners wants to hold it for 1- 2 years pending rezoning  of the property.

5. Funds Position

The funding position of the Bissets is very strong, the following details will specify it

The gross salary of Mr. Bisset was at $78,000 in the last year, salary of Jane was around $43,000. The net profit of the firm is $72,000 with the gross revenue at $346,000 this is after the breaking up of partnership with Joseph Hooper. Also it is noted that the Directors super annuation of Bisset is $11,000.

However, the current property is to be purchased for the Bisset Family Trust, who owns the shopping centre at Belmont. The total rental revenue is $138,000, the tenants include J&R Blend, Copelin Accounting, Spragos, Vu Nguyen, Goodson and Bisset Realty. It is noted that most of the tenants pay the rent in the range of 18,000 to 28,000. Whereas, Goodson pays $8,000 and Bisset Realty pays the highest rent of $42,000. All the tenants will have their rents revived based on the increase in CPI.

The personal asset include the home which is worth $560,000, shares worth $345,000, cash of $45,000 and motor vehicles and furniture. The personal liabilities include the credit card of $10,000 with a maximum limit of 20,000 and home loan of $190,000.

The financial position of the real estate company is that it poses goodwill of $250,000, equipments worth $35,000 and debtors of $30,000. The only liability which the company possesses is the overdraft of $25,000.

6. Servicing Capacity

The servicing capacity of the client is good. Currently they have to pay home loan, credit card bill and mortgage outstanding. Andrew has a good salary income from the Real Estate Company, superannuation, etc. Jane is also drawing a salary of $43,000, but Jane is not currently working. So the per capita income of the family is very good and strong.

7. Security

The Bisset family is willing to keep the land which is proposed to be purchased at 423 Belmont Road,  Belmont and also willing to keep the existing shopping centre at 55 Park road, Belmont. It is further noted that the salary and other income of the couple is strong, the Family trust is also generating more rental revenues with no risk in the near future. The term of the agreement for most of the tenant has a extension period of 3 years to 5 years. Also the rental review is based on CPI, this enables the trust t get constant revenue growth immaterial of the inflation or changes in the current market conditions.

8. Risk Assessment

The risk involved in the loan processing is the property for which the loan is requested is currently under Special Purpose, and only in the future it may be converted for Commercial. When the Bisset family applied for loan at ANZ bank the loan application was rejected for this very reason. So it is quite risky for rendering loan processing for the given land. Also, it is noted that the property is purchased for Family Trust, the major income for the trust comes from the rental income of 6 shopping centres. One of the tenant is Bisset Real estate company, which pays twice the rent than other tenants and this has inflated the total income of the trust. There is a clash of interest of Bisset, his real estate company and family trust.

9. Recommendations

The company can stop processing the loan application. Once the local council clears the current status from Special purpose to Commercial the bank can look forward to process the application and can look for further formalities

10. Attachments

Loan application form, income tax proof for the previous year, agreement of tenants and Bisset Family trust for shopping centres, business income of real estate agency

Assignment 2

Part A – Client

Parties: The clients to the loan applications are Ray Henley and Steve Manning. The applicants in order to expand their business and expand its existing operations are currently looking for seeking $500,000 business loan for purchasing trucks and trailers.

Security: They are willing to keep the assets as their security

Facility: The partners run transport company, which has a big client base which is spread over many industry sectors

Lender details:Commercial equipment finance which is to a tune of $500,000

Confirmation:The partners are willing to expand their business and therefore they are interested to apply for business expansion plan

Personnel:the accountant of the company, financial advisors, partners, solicitors etc

Client responsibilities: The responsibility of the client is to fully understand the loan applications and must adhere to all the rules and regulations which is stated

Outline:The business was started with a seed capital of $500,000 , with a private guarantee of $45,000 per annum. The applicants is interested to reduce the loan amount and pay off the loan within 48 months

Timing: The loan is targeted to be paid in 48 months.

Documentation: The loan application, business financial statement, bank statement etc will be filed.

Fees and Charges: the parties will be interested to pay a loan interest of 6% per annum.

Part B

Lender

Borrower details:The borrowers are Ray and Steve. Ray has completed MBA and Steve is in marketing. They are the controllers of the organisation.

Background:The business of Henman holdings is performing well and they are now looking forward to expand the business

Purpose:  The purpose of the loan is to use it for expansion purpose, the applicants are requesting for $500,000 mainly used for purchasing transportation vehicles for business purpose.

Facility details: The company currently looks for expanding the current business situations

Supervising capacity:The company is possessing net income of more than $240,000 in the 1^st year and $358,000 in the 2^nd year. The company is expected to grow more in the future

Security:The company will keep the current vehicles as the security

Risk assessment:The business is still in infant stage and the partners have invested their capital, though the company is making good progress in the initial years, all the assets are pledged and the company is looking to expand more in the future.

Recommendations: It is recommended that the company will process the loan application and may request personal guarantee of the partners for finalizing the loan application.