Alan Jacob Henderson Case Study - Lenders Credit Policy and Procedures - Accounting Assignment Help

Assignment Task:

Task 1

Alan Jacob Henderson is residing in suburban areas of 17, Capital Court for 4 years in rent. His date of birth is 04.01.1982. He is the marketing manager in Hi-Temp Gas. He has been working in this company for the last six years. His gross income is 111,000 dollars per year. His wife Cheryl Ann Henderson also lives with him. Her date of birth is 07.02.1981. She is a law clerk by profession in the firm Smith, Smith, and Smith. She has been working for six years in this firm (Bucks et al., 2019). Her gross salary is 65,000 dollars per annum. They have two children. The bank details have been attached there. They want to purchase real estate and in this regard, they wish to apply for a home loan. Their real estate agent is the flying high real estate agent. The builder of the real estate is Homes Plus more. The conveyance firm is Lightning Settlements. The selected vendor is Inspired Development Pty Ltd.

Henderson’s do not possess any life insurance policy. They have no policies covering life, health, income, or trauma protection. The couple should think of the insurance policies regarding a home loan. There is good and bad sales pitch. Henderson’s should consider the risk factor associated with life. A good financial planner should as to buy term insurance in order to secure the home if any fatal happens. The term insurance policy is a good sales pitch. The family would be financially secured if any worse happens. The marketing manager of the housing finance company (HFC) sells the insurance policies along with the home loan. The policy is known as the home loan protection plan (HLPP) (Deacle and Elyasiani, 2016). The insurance company is responsible to pay the principal loan amount to the bank in case any fatal happens.
 
The land the Henderson’s are going to buy has the valuation of $60,000. The valuation has been decided by the experts of asset assessment. The technology used to figure out the valuation of the land is the abstractive method. The estimated cost then calculated for the land after making the due allowance as deprecation (say T) (Manwani et al., 2019). The difference was then calculated (S-T). The difference gives the actual cost or value of the land. If the area considered is A, then the cost per unit area would be D/A. 

If the couple considers the life insurance policy along with the home loan they do not need to change their lifestyle. The Henderson’s are eligible for first home owners grant or FHOG. They can receive up to $20,000 from FHOG. The purchasing price of the property is below $750,000 thus it would not affect the assessment process if the FHOG rises or falls down. They have $110,000 in savings. Thus their funds become $130,000 (by adding savings and FHOG amounts). They are able to pay off the credit cards every month (Dharmadhikari and Krishnamoorthy, 2019). The loan application procedure should be carried out by the team of the broker, lenders, agents of real estates, and others. 

Loan structure suitable for the needs of Henderson’s:

They can utilize one of the sound lending strategies discussed below.

1. Comparing the rates online: For the first borrowers of the home loan, this strategy may be helpful. The online portals give a summarised view of the rates of interest for a home loan (Choplin and Stark, 2019). The other fees or charges are also mentioned in the portals. Thus the Hendersons can consider researching online before going for a home loan. They could get the best deal in this way.
  
2. Longer repayment tenure: The option for a longer tenure of repayment is another useful strategy. The longer tenure of repayment may be linked to the payment of more interest on the outstanding amount of loan. They can use the EMI calculator of ET Wealth’s home loan (Aalbers, 2016). Hendersons can maximize the EMI but within the limit of their comfortable payment capacity every month. Thus the tenure should be selected carefully.
 
3. Making a big down payment: Hendersons can adjust to give a big down payment according to the status of their savings. The lenders of home loan can give up to 90% of the value of the property. In that case, it is required to give 10% down payment of the total value. The loan would be approved easily (Rani, 2016). They should also be careful of not stretching their limit when contributing higher down payment.

Task 2:

Verification of the information in accordance with lenders credit policy and procedures

The lenders' credit analyst has analysed all the points related to the eligibility of Hendersons to get the home loan. All the information is in accordance with the credit policy and procedure of the lenders. The analysis is given below.

• Fill up of the application form attaching the documents necessary: Hendersons have filled up the application form giving the basic information. The basic details comprised of personal details, residential details, monthly income, yearly income (Haque, 2019). The personal details are necessary to check the eligibility criteria of the applicant. It met the criteria for Hendersons.
• Payment of the processing fees: after the complete submission of the application form Hendersons had to submit processing fees. The processing fees are required to maintain the loan account Hendersons (Das, 206). It went successfully with the completion of the paper-work required.
• Discussion with the lender: The lender checked all the papers and documents of Hendersons. A face to face conversation of the lender with Hendersons has also taken place (Homes, 2019). The applicant clarified all the queries of the lender successfully.
• Valuation process: this process needs the applicant to be genuine as millions of people are there applying for the loan (DiSalvo and Johnston, 2017). All the documents were genuinely submitted by Hendersons. 
• Serviceability ratio- This will set the ability of the borrowers to meet the loan repayment. However, it generates the overall debt service ratio which reveals the monthly debt expenses of the borrowers as the proportion of the monthly income. For instance, in the given case, loan application maker has a limit of the $ 15000, then the minimum monthly payment computed through the serviceability ratio would be 3% I .e.$450.
• LVR- It is analysed that when the LVR is considered 80% less then the COS will be liable to certify the loan and order the valuation of the assets. However, it will be done only when the LVR is less than 80%. In the given case, the value of the property worth $250,000 and deposited 80,000 then the LVR set would be 80%
• Approval process: this was the most crucial part of the entire process. The lender thoroughly studied all the documents of Hendersons (Fund, 2017). There was no discrepancy in any of the documents. 
• Legal checking of the papers of the property: the focus of the lender was on to the purchasing property. The papers appeared to be all genuine and original (Agarwal et al., 2016). The legal owner has given NOC (No Objection Certificate).
 
Explanation of approval guidelines:

The approval guidelines followed by the lenders in accordance with the policy and procedures are discussed below.
• Documentation: the decision of the lender depends on the documentation detailing the land to be purchased. The lender has to check whether all the requisites for the land to be purchased are cleared or not in accordance with government rules and regulations. 
• Income to debt ratio: this guideline is mandatory to see whether the applicant is paying the EMI on any other loan at the time of application or not. It is the deciding factor of the lender to sanction the loan. The Henderson’s do not have any other EMI to pay at the time of loan application (Adelino et al., 2016). Thus this process was easily cleared out.
• Credit report and score: the guideline says that a high credit score with a strong history of credit and high salary may be helpful for loan approval. 
The checking and verification of the documents have been done in accordance with relevant legislation. The analyst has properly verified and maintained all the records before sanctioning the loan. The sale deed is another important document to be verified. 

This Accounting Assignment has been solved by our Accounting Experts at My Uni Paper. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our experts are well trained to follow all marking rubrics & referencing style.

Be it a used or new solution, the quality of the work submitted by our assignment experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.