Serviceability
Enumerate three key elements that influence a client's borrowing capacity. Adding this type of income can increase borrowing capacity.
Living Expenses, Existing Debts,Credit History, Interest Rates,Loan Term, Number of Dependents, Employment Types, & Stability. Deposit Amount / LVR, Lender Policy
A deposit of 20% or more often avoids this cost.
LMI
Lenders Mortgage Insurance
This is a type of insurance that protects the lender (not the borrower) when the borrower has a small deposit, and it is typically added to the loan amount instead of being paid upfront.
Lenders Mortgage Insurance (LMI)
Back book reviews are often done this many times a year.
Once or Twice a year
When calculating joint applications, the servicing calculator combines these two financial figures to assess borrowing capacity.
Total household income and total liabilities
These are non-refundable, one-off expenses incurred when purchasing a property, such as stamp duty, legal fees, and registration costs.
Purchase costs/transaction costs
Borrowers with this type of property may have higher LMI.
Investment Property
When a borrower’s fixed rate expires, the loan may move to this type of rate.
Variable Rate
What happens to the surplus when expenses go up?
The surplus decreases
The funding calculator helps identify if the borrower will need this to cover a shortfall.
Additional savings/extra funds
Reducing the loan amount has this effect on the LMI premium.
It reduces the LMI premium
What is the term for a small discount negotiated on a loan for an existing client?
Repricing
In the serviceability calculator, what setting is used to check if the borrower can still afford repayments if interest rates increase?
The buffer rate/assessment rate
A gift letter may be required when deposit funds are provided by which source?
Family/Parents
LVR stands for this.
Loan-to-Value Ratio
This report helps brokers identify loans reaching expiry.
Expiry/maturity report
Brokers must check this tab to see the calculation summary.
The summary/assessment/results tab
Total funds are calculated by adding the borrower's deposit to what?
Loan Amount
If the borrower has a guarantor, LMI may be…
waived/reduced
Retaining existing clients is often more cost-effective than what?
Acquiring new clients