You are required to prepare a proposal for Rahn and Deepa outlining the loan approval process and the transaction risks they should be aware of.

Prepare the proposal document, in a suitable format, and explain the consumer loan options available to Rahn and Deepa. Outline the process that will need to take place for them to complete the purchase of the property and construction of the three units.

Note: You will need to refer to the case study and Toolbox for supporting information.

In developing your report, you should cover the following:

1. Who the parties to the loans are.

2. Provide Rahn and Deepa with two initial loan products that would meet their requirements.

Option 1: A loan/s secured by the family home to provide the required funds to purchase land and complete the development. This involves cross-collateralisation of properties.

Option 2: A loan/s that will include a property development loan to assist with the purchase of land and construction without leveraging the family home.

3. Provide an explanation of why each of the loan structures is suitable for the client. Also, present your recommendation for the preferred loan structure and explain why you have recommended it.

4. Present Rahn and Deepa with three (3) lenders that provide the product required to facilitate this transaction and advise the client of the product type, loan term, interest rate, ongoing fees and monthly repayment for each of the products.

5. Describe the procedure, from proposal to unconditional loan approval, including documentation required from Rahn and Deepa.Ensure you mention the compliance documents you need to complete.

6. Describe the client responsibilities, so Rahn and Deepa understand the facilities being proposed.

7. Outline the risks (potential and real) of which Rahn and Deepa should be made awareof, including using their own home as security. Also provide suggestions to mitigate risks.

8. Prepare a full funding description including a summary of fees and charges for the initial purchase of the land through to completion of the project. Ensure you include the costs for set-up and those of the lender.

9. Prepare a timeline for the project, detailing payments and where funds will be obtained from.

10. A request for the client to inform you of any questions about the transaction and provide an instruction for you to proceed. (Prepare an authority statement with signature provisions.)

11. Advise which relevant disclosures need to be made regarding broker remuneration.

(800 words)

Notes: Any assumptions you make should be listed, and not conflict with the case study information already provided.

You are to write a report to the clients demonstrating your professional writing skill, not simply commenting on each of the points detailed above.

Student response to Task 2

Answer here

Summary of proposal

(Introduce your organisation and briefly outline the proposal.)

This proposal, which details the loan approval procedure and the transaction risks related to your property purchase and development project, is something we are happy to present. This paper attempts to provide you a thorough explanation of the consumer credit alternatives that are accessible to you, the procedures that must be followed in order to finish the acquisition of the land and the building of the three units, the dangers involved, and the specifics of funding

Parties to the loan

Rahn Singh and Deepa Singh

Product description

Home equity loan and Investment loan

Loan structure Option 'A'

(Include an explanation of why this loan structure is suitable.)

Loan structure Option 'B'

(Include an explanation of why this loan structure is suitable.)

Product recommendation

Propose lender (1) based on product recommendation

Lender:

Loan product:

Value:

LVR:

Loan amount:

Loan term:

Interest rate:

Monthly repayment:

Establishment fees:

Ongoing fees:

Propose lender (2) based on product recommendation

Lender:

Loan product:

Value:

LVR:

Loan amount:

Loan term:

Interest rate:

Monthly repayment:

Establishment fees:

Ongoing fees:

Propose lender (3) based on product recommendation

Lender:

Loan product:

Value:

LVR:

Loan amount:

Loan term:

Interest rate:

Monthly repayment:

Establishment fees:

Ongoing fees:

Lender security requirements

(Include comments concerning ongoing obligations, i.e. insurance etc.)

Funding table

Purchase price of land	$600,000
Stamp duty (state)	$22,000
Solicitor's fees	$10,000
Sundry costs
TOTAL FUNDS NEEDED TO PURCHASE LAND
Lender's fees and charges
Demolition and site clearance costs	$40,000
Subdivision costs	$30,000
Building contract
Contingency costs
TOTAL COST OF PROJECT

Outline associated risks

Lender documentation required for submission to lender

Scope out the process from acceptance of proposal to unconditional approval

Financial risks associated with this new facility

Project timeline

Provide relevant disclosures to client concerning remuneration

Fees payable by you to us. These fees are payable by you.	$
Commission is payable for:
Commission payable by:
Commission payable to:
Reasonable estimate of commission:	% of the amount of credit limit shortly after the finance is provided. We estimate this to be $. % p.a. of your amount owing from time to time payable monthly. We estimate the largest monthly payment to be $.

Invite client to ask questions

Authority to proceed