Best practice note taking to be best interests duty ready

Note 1:
10/2/2020 – Conducted fact find via phone as client living interstate. Client has deposit and wants to purchase first investment property. Client has found property and signed purchase contract. Discussed the following with the client:

• purchase price and required loan amount, IO v P&I, variable v fixed, current assets and liabilities, current living expenses, an exit strategy for the loan (sell investment and/or use cash to reduce loan).

Credit guide has been provided to the client.

Note 2:
6/7/2020 – Preliminary assessment not run due to internal admin error. Preliminary assessment now rerun and placed on client's file. Living expenses discussed with the client. I requested bank statements to confirm living expenses. Month of February from Bank XYZ statement used to calculate living expenses.

Monthly expenses completed by Jack and Jill through the needs analysis questionnaire.

They declared a monthly living expense of $5,080. Given their income and three kids, I felt this was an accurate representation of their spend. Jack works away every second week so isn’t home for 26 weeks of the year meaning food expenses are less and I confirmed his employer meets these expenses.

In addition, the car lease covers all associated car expenses for the Mercedes.

The declared living expenses align with my review of their bank statements. Figure adopted for servicing.

Hi Rosie,

Attached gives you an idea of the costs associated with purchasing the property, plus estimated bank charges including lenders mortgage insurance (LMI). Please refer to our fact sheet about LMI.

Based on these calculations, you should have approximately $9,000 in surplus funds post settlement which will provide you with a buffer for anything unexpected relating to the purchase of your new property and which you advised you would like to retain.

Hi Rosie,

This report details the 3 lenders that I am recommending for your consideration. As your borrowing requirement exceeds 80% of the purchase price, there will be some LMI payable and I have included the estimated cost of each lender in the loan amount. This amount will not be paid out of your cash reserves – it is added onto the loan and paid off over the course of your loan term. The LMI added to your loan amount will increase interest charges over the life of the loan, however you do not have sufficient savings to pay the LMI premium up-front. I have outlined these calculations in the attached Funding Position.

I have only looked at variable interest rates, as you expressed a preference in your Needs Analysis questionnaire. In our meeting we discussed the advantages and disadvantages of fixed versus variable and you reconfirmed your preference for variable rates.

My recommendation would be to go with Bank ZZZ, given they have the most competitive interest rates and whilst the application fees are slightly higher than the other two lenders, the overall savings this product delivers over the life of the loan makes up for the additional costs upfront.

Please review the information provided and let me know if you are happy to proceed with Bank ZZZ or if you have any other questions about the products listed in the report.