From the Case study: Joanne and Warwick, in Step 2/3 'Total financial commitments amount = min($1,335, $2,500) = $1,335 per month, Should it not be $2500-1335 = $1165, how do you determine the answer to be $1,335. Also, from the same case study Please provide answers for the below

What is the total expenditure amount?

What is the net income amount?

What is the surplus amount?

Explain to Joanne and Warwick why lending organisations prefer to determine serviceability on the basis of the net income methodology, compared to the commitment ratio.

You compare some repayment options available to Joanne and Warwick based on their initial enquiry to borrow $490,000 as indicated in the table below:

	Monthly payments
Term (years)	Floating 4.44% (variable rate)	Fixed 4.25% (5-yr then floating)
20	3,084	3,655
25	2,707	3,034
30	2,465	2,411

Based on the result you obtained in Question 1 for the Monthly home loan amount, explain what the Monthly payments table (above) indicates in relation to the term of the loan. How does this impact Warwicks future retirement plan?

Explain to Joanne and Warwick why the fixed rate might be lower.

Explain to Joanne and Warwick one (1) advantage and one (1) disadvantage with a fixed rate loan

.

After considering Joanne and Warwicks objectives, the lending organisation advises that due to the Reserve Bank of New Zealands (RBNZs) policy directives, the lenders preferred borrowing amount is $440,000 (based on the clients proposed deposit) and not the $490,000 that Joanne and Warwick are seeking.

On the basis of Joanne and Warwicks deposit and a house purchase price of $600,000, what would be their loan-to-valuation ratio (LVR), rounded to the nearest whole number? Show all your workings.

Explain to Joanne and Warwick why the RBNZ has influenced the lenders preferred borrowing amount and how they have calculated this amount?

Based on this information from the lender regarding the maximum loan amount, what would be the maximum house purchase price the couple could now afford with their existing deposit? If the median house price in Wellington is close to $685,000, other than saving a larger deposit, what would be one (1) alternative option for Joanne and Warwick to achieve their goal?

Joanne and Warwick wish to consider other alternatives which might enable them to purchase a home worth $600,000. Two alternatives which they might wish to consider are either saving for a larger deposit or borrowing a higher amount and incurring lenders mortgage insurance (LMI).

Assume that Joanne and Warwick still want to purchase a home worth $600,000 but accept they will only be able to obtain a lower loan amount. On the information provided in the case study, and assuming that savings are prioritised solely towards increasing the preferred purchase deposit, how much more will the couple need to save and how long might it take?

You note that house prices in Wellington have risen by approximately 10% over the past 12 months. Explain to the couple what this means in terms of saving for a larger deposit and briefly explain what LMI will allow them to achieve and why this might be considered a solution in the current circumstance?

Obtaining a limited guarantor for the loan might alleviate the need for LMI. Briefly explain how this would work and how this might benefit Joanne and Warwick?

Joanne and Warwick seek further information on the steps that will be involved in the lending process. This includes information on the parties involved in a transaction as well as general concepts relating to borrowers, property and security. You explain the credit evaluation process to the couple. You note that credit applications apply consistent guidelines to assist in time efficient loan processing.

Nominate two (2) key external consultants (participants) who will be necessary for the purposes of enabling a successful loan?

What potential issue might arise on the basis of the source of the proposed initial deposit of $110,000?

What potential issue might arise on the basis of the declared total household income?

What potential issues might arise on the basis of Warwicks residency and employment status?

Provide two (2) reasons why Warwick could be considered to meet the character test?