Title Demonstrate knowledge of the mortgage industry, lending principles, home loan products and apply the application process
Level 4 Credits 5
Purpose People credited with this unit standard are able to:
– demonstrate knowledge of the mortgage industry in New Zealand;
– demonstrate knowledge of lending principles; – demonstrate knowledge of home loan products and
borrowers; and
– apply knowledge of the mortgage application process.
Classification Financial Services > Mortgage Broking
Available grade Achieved
Explanatory notes
1 Assessment against this unit standard may be on job, off job in a simulated work environment, or a combination of these within the financial services industry context.
2 References Commerce Act 1986; Companies Act 1993;
Consumer Guarantees Act 1993;
Credit Contracts and Consumer Finance Act 2003; Electronic Transactions Act 2002;
Fair Trading Act 1986; Financial Advisers Act 2008; Financial Reporting Act 1993;
Financial Service Providers (Registration and Dispute Resolution) Act 2008; Financial Transactions Reporting Act 1996;
Health and Safety in Employment Act 1992; Human Rights Act 1993;
Income Tax Act 2007; KiwiSaver Act 2006; Land Transfer Act 1952;
New Zealand Bill of Rights Act 1990;
NZ IFRS (New Zealand Equivalent to International Financial Reporting Standards) available from http://www.nzica.com;
Privacy Act 1993; Property Law Act 2007;
Securities Act 1978; Securities Markets Act 1988; Trustee Act 1956;
Trustee Amendment Act 1988; industry codes of practice;
and all subsequent amendments and replacements.
3 All activities must comply with any policies, procedures, and requirements of the organisations involved; the standards of relevant professional bodies including codes of ethics; and any relevant legislative and/or regulatory requirements.
4 This unit standard does not cover repackaging of residential property loan products for investment purposes. There are two unit standards which deal with investment; Unit 25648, Demonstrate understanding of investment concepts used by financial advisers and Unit 25649, Apply principles of investment advice.
5 Definitions
Application form – mortgage application form such as the New Zealand Mortgage Brokers Association form or other equivalent form, which includes but is not limited to the following elements – key dates, borrower details, application summary, adviser contact details, personal and employment details of applicant, funding details, loan type and structure, bank account details, proposed monthly income and expenditure, statement of assets and liabilities, security, and client acknowledgement of Personal Disclosure Statement.
Credit history – record of how a person has borrowed and repaid debt. DSR – Debt servicing ratio.
Financial history – incorporates variables such as a client's savings and repayment record and credit history.
LAQC – loss attributing qualifying company. LVR – loan to value ratio.
OCR – official cash rate.
Situation relevant to mortgage broking – situation containing the elements of duty of care, contract, and negligence, where the facts may be provided for assessment purposes.
UMI – uncommitted monthly income.
Outcomes and evidence requirements
Outcome 1Demonstrate knowledge of the mortgage industry in New Zealand.
Evidence requirements
1.1 Industry participant roles are explained in terms of their responsibilities in the mortgage industry.
Range industry participants include but are not limited to – aggregator, franchisor, licensor, mortgage manager, lender, solicitor,
1.2 Elements of duty of care, contract, and negligence are explained and applied to a situation relevant to mortgage broking.
1.3 Legislation is explained in terms of the elements relevant to mortgage broking.
1.4 Roles of the Reserve Bank, fiscal policy, and the OCR are described in terms of effects on mortgage broking.
Outcome 2
Demonstrate knowledge of lending principles.
Evidence requirements
2.1 Purpose is explained in terms of mortgage lending and application to mortgage situations.
Range includes but is not limited to – description of funds required, reason for loan requirement, validity of loan for lender.
2.2 Character is explained in terms of mortgage lending and application to mortgage situations.
Range includes but is not limited to – financial history, employment history, residential history, personal attributes.
2.3 Servicing is explained in terms of mortgage lending and application to mortgage situations.
Range includes but is not limited to – UMI, DSR, frequency and type of repayments, potential contingencies.
2.4 Security, types of security and property tenure are explained in terms of mortgage lending and application to mortgage situations.
Range explanation of security includes but is not limited to – purpose, value, effects on value from external factors (e.g. zoning).
types of security and property tenure include but are not limited to – freehold, leasehold, Māori leasehold, strata, cross lease,
company share, unit title.
2.5 Equity is explained in terms of mortgage lending and application to mortgage situations.
Range includes but is not limited to – deposit, assets, net statement of position, LVR.
Outcome 3
Evidence requirements
3.1 Home loan types are explained in terms of their repayment structure.
Range includes but is not limited to – table loan, reducing loan, interest only, line of credit, revolving credit, equity release.
3.2 Home loan terminology is explained in terms of benefits and limitations.
Range includes but is not limited to – fixed, floating, capped, loan term length, early repayment, bridging loan, construction loan, repayment holiday, loan insurance.
3.3 Legal entities of borrowers are explained in relation to home loan products.
Range individual, Limited Liability Company, company with LAQC status, family trust, trading trust.
3.4 Borrower default guarantees are explained in terms of lender needs and responsibilities of guarantors.
Range role of borrowers, role of guarantors, priority amount, cross guarantees.
Outcome 4
Apply knowledge of the mortgage application process.
Evidence requirements
4.1 Mortgage application process is applied and documents are produced, in accordance with industry requirements.
Range includes – cover sheet and diary note, application form, authority and declaration, proof of income, proof of identity, finance date, settlement date, solicitor detail, Adviser Personal Disclosure Statement;
may also include but is not limited to – financial history, registered valuation, sale and purchase agreement, building contract, trust deed, certificate of incorporation, proof of residency, rental agreement.
4.2 Calculations are performed for the mortgage application process.
Range includes but is not limited to – LVR, DSR, UMI, statement of position, settlement position.
Status information and last date for assessment for superseded versions
Process Version Date Last Date for Assessment
Registration 1 12 February 2010 31 December 2017
Review 2 19 February 2015 31 December 2017
Consent and Moderation Requirements (CMR) reference 0003
This CMR can be accessed at http://www.nzqa.govt.nz/framework/search/index.do.
Please note
Providers must be granted consent to assess against standards (accredited) by NZQA, before they can report credits from assessment against unit standards or deliver courses of study leading to that assessment.
Industry Training Organisations must be granted consent to assess against standards by NZQA before they can register credits from assessment against unit standards.
Providers and Industry Training Organisations, which have been granted consent and which are assessing against unit standards must engage with the moderation system that applies to those standards.
