Case study 2 — Mary Azacca Assignment

Case study 2 — Mary Azacca

Background

Mary has an existing home loan with an online lending provider. Lately Mary has been discussing her loan, the lender and interest rate with her friends and work colleagues. They all keep telling her she needs to shop around for a better deal. Mary is also getting tired of the lack of service available to her when she has a question and just wants to speak to someone who can help her. Another issue is that she cannot incorporate her existing banking facilities with her home loan causing her endless frustration.

Mary is currently single, after being divorced two years ago. Whilst she received sufficient funds from the settlement to purchase a home of her own, she still has a reasonably sized mortgage. Mary loves where she lives; and her four-bedroom, two-bathroom home is on a large corner block of land. While the property may seem large for one person, Mary does not want to downsize for at least another five years. She wants to be able to accommodate her young adult children until they are established in their own homes.

Mary’s children are age 23 and 21. Both have good jobs and are financially independent of their parents.

Mary was referred to you by her work colleague, Adib Bursal, who has used your brokering services for several years. Adib rated your services highly and Mary is anticipating excellent service from you. While Mary has had several home loans in the past (with her now ex-husband), she is relatively new to making these big decisions on her own. She is looking for guidance and advice on the best solution for her to refinance her mortgage from Simply Home Loans Ltd.

Your first meeting with Mary was via Zoom. After this meeting, Mary provided the basic information and documents — pay slips, tax returns, bank statements and property rates notice for verification. You have now undertaken your preliminary assessment and need to discuss and present her with a proposal covering the options and your recommendations.

The following is a summary of Mary’s personal information, financial and employment details, property details and the loan features she requires:

Mary Jones

Current address8 North Road, Rockingham WA 6168
Lived there for two years
Home phone(08) 8594 6168

Employment and income

Mary (age 45)

PositionNursing unit Manager (full time/shift work)
EmployerAllied Health Services Ltd, Perth WA 6000
Phone0439 258 478
Income (gross)$95,000 p.a., monthly gross income: $7,917
Employer contactAndrew Jenkins CEO
Length of service18 years
Driver’s licence25974MV
Emailmary.azacca@gmail.com

Living expenses

Annual expenditure for living expenses — $28,000.

Assets

House — 8 North Road, Rockingham WA 6168$550,000
Western Bank savings account$24,000
Western Bank term deposit$10,000
Holden Commodore SS 2007$25,000
Nissan Qashqai 2019$25,000
Indian Scout Motorcycle 2018$18,000
Share portfolio$15,000
Superannuation — HESTA$480,000
Household effects (insured value)$115,000

The property/security

Address8 North Road, Rockingham, WA 6168
Description4-bedroom, 2-bathroom House, 700 sqm block
Purchase price (two years ago)$450,000
Valuation$550,000
Valuing real estate agentLloyds Real Estate
Valuing agent’s landline(08) 8123 1113
Valuing agent’s mobile0415 990 099

Liabilities

Home loan — current balance$330,000
Western Bank Visa card$700 (Limit $5,000)

Payments have always been met on time and any prior loans repaid in terms of contracts. The minimum monthly commitment on the credit card should be calculated at 3% of the credit limit.

Existing lender/loan details

LenderSimply Home Loans
Loan account number34-451-9955
Original loan amount$360,000
Original loan term25 years
Monthly repayments$2,292
Current variable interest rate4.80% p.a.
Outstanding balance$330,000
Lump sum payment made after 12 months$20,000

The loan requirements

  • 20-year term
  • premium option home loan features
  • variable interest rate (for this case use 4.0% p.a.)
  • ability to make additional payments from time to time without penalty
  • fortnightly repayment option
  • redraw facility
  • offset account
  • funds access via card.

Other information

  • Mary does not like to pay monthly servicing fees for several products and would like to know more about packaged loan products.
  • The residential property market has been improving in Perth and Mary believes her home has gone up in value since she purchased it two years ago.
  • Mary wants to stay in this property for another five years before considering down-sizing.
  • Mary has plans to take six months leave to travel around Australia in two years’ time. She will take three months long service leave and three months without pay.
  • Mary works shift work every fortnight earning overtime. This can often equate to $750 gross per month in overtime pay.
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