Residential Lending Credit Policy
Bendigo and Adelaide Bank
Third Party Mortgage
Lending Credit Policy
Effective December 2014
1
Effective December 2014
Residential Lending Credit Policy
1Introduction.................................................................................................................................3
2National Consumer Credit Protection (NCCP)........................................................................3
3Ownership and maintenance of credit policy..........................................................................4
4Delegated lending authority (DLA)...........................................................................................4
4.1Responsibilities................................................................................................................................................. 4
4.2DLA criteria....................................................................................................................................................... 4
4.2.1Dollar limits.................................................................................................................................................. 4
4.2.2DLA rule groups........................................................................................................................................... 4
4.2.3Approvals and exceptions to lending policy................................................................................................. 5
5Aggregation.................................................................................................................................6
6Applicant (borrowers and guarantors).....................................................................................7
6.1Borrower/Guarantor definition........................................................................................................................... 7
6.2Aged applicant(s).............................................................................................................................................. 7
6.3Disadvantaged applicant(s).............................................................................................................................. 7
6.4Conflict of interest............................................................................................................................................. 7
6.5Permanent Australian residents........................................................................................................................ 7
6.6Non permanent residents.................................................................................................................................. 7
6.7Loans to related parties.................................................................................................................................... 9
6.7.1The Bank’s Business Partners and their staff..............................................................................................9
6.7.2Loans to family, and where a relationship is evident via shared directorship, shareholding or proprietorship
............................................................................................................................................................................. 9
6.8Loans to related parties.................................................................................................................................. 10
6.8.1The Bank’s Business Partners and their staff............................................................................................ 10
6.8.2Loans to family, and where a relationship is evident via shared directorship, shareholding or proprietorship
........................................................................................................................................................................... 10
6.9Applicant structure matrix............................................................................................................................... 10
7Guarantor(s) and third party mortgages................................................................................11
7.1Assessment..................................................................................................................................................... 11
7.2Independent Legal and Financial Advice to guarantor(s)................................................................................11
7.2.1Independent legal and financial advice...................................................................................................... 11
7.2.2Guarantor(s) who wish to waive Independent Legal Advice.......................................................................11
7.3Companies...................................................................................................................................................... 11
7.3.1Multiple director guarantees....................................................................................................................... 12
7.3.2Sole director guarantees............................................................................................................................ 12
7.4Trusts.............................................................................................................................................................. 12
7.4.1Individual acting as trustee in their own right for family/discretionary trust.................................................12
7.4.2Company as trustee for a family/discretionary trust...................................................................................12
7.4.3Unit and Hybrid Trusts............................................................................................................................... 12
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Effective December 2014
Residential Lending Credit Policy
7.4.4Self managed Superannuation Fund (SMSF) Trusts.................................................................................12
8Credit references......................................................................................................................12
8.1Veda and ASIC reports................................................................................................................................... 13
8.1.1Privacy disclosures.................................................................................................................................... 13
8.1.2Currency of reports.................................................................................................................................... 13
8.1.3Company Loans......................................................................................................................................... 13
8.1.4Directorship/Proprietorship/SMSF Listings................................................................................................ 13
8.1.5Newly created credit history reports........................................................................................................... 13
8.2Credit history report assessment.................................................................................................................... 14
8.2.1Adverse credit history................................................................................................................................ 14
8.2.2Bankrupts................................................................................................................................................... 15
8.2.3Declined finance due to credit eligibility information..................................................................................15
8.2.4Credit history subject to a ‘ban period’....................................................................................................... 15
8.3 Non-Disclosure of debts & Fraud................................................................................................................... 15
8.3.1Non-Disclosure of Debts............................................................................................................................ 15
8.3.2Suspected Fraud....................................................................................................................................... 15
9Employment..............................................................................................................................16
9.1Employment Requirements............................................................................................................................. 16
9.2Employment Verification................................................................................................................................. 16
10Income.....................................................................................................................................16
10.1Income documentation verification................................................................................................................ 16
10.1.1Payslips and PAYG payment summaries................................................................................................. 17
10.2Income matrix............................................................................................................................................... 17
10.3Self employed applicant(s) income............................................................................................................... 19
10.3.1Self employed financial statements.......................................................................................................... 19
10.3.2Self employed income matrix................................................................................................................... 19
10.3.3Before tax business add backs................................................................................................................ 20
10.3.4After tax business add backs................................................................................................................... 20
11Serviceability...........................................................................................................................21
11.1Net surplus income method........................................................................................................................... 21
11.2Calculation of net income.............................................................................................................................. 21
11.3Calculation of total income available for debt and housing............................................................................21
11.4Calculation of living expenses....................................................................................................................... 21
11.5Calculation of serviceability ratio................................................................................................................... 23
11.6Qualifying rate............................................................................................................................................... 23
12Credit scorecard.....................................................................................................................24
13Loan sizes...............................................................................................................................24
13.1Processing centre DLA dollar limits............................................................................................................... 24
13.2Mortgage Manager DLA dollar limits............................................................................................................. 24
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Effective December 2014
Residential Lending Credit Policy
13.3LVR dollar limits for loans without LMI.......................................................................................................... 25
14Loan purpose and documented evidence...........................................................................25
14.1Purchase of Residential property.................................................................................................................. 25
14.2National Rental Affordability Scheme (NRAS)............................................................................................... 25
14.3Construction of residential property or home improvements.........................................................................27
14.4Progress payment requirements................................................................................................................... 27
14.4.1Construction by a licensed builder........................................................................................................... 27
14.4.2Structural home improvements by a licensed builder...............................................................................27
14.4.3Payment of extras.................................................................................................................................... 27
14.4.4Construction using a kit home/transportable............................................................................................ 28
14.5Bridging finance (Go-between)..................................................................................................................... 28
14.6Business purposes........................................................................................................................................ 29
14.7Refinances and debt consolidations............................................................................................................. 29
14.8Equity release............................................................................................................................................... 29
14.9Documentation requirements........................................................................................................................ 29
14.9.1Reserved................................................................................................................................................. 29
14.9.2Supporting documentation....................................................................................................................... 30
14.10Internet bank statements............................................................................................................................ 30
15Deposit/equity and savings history......................................................................................31
15.1Verification of deposit funds/equity................................................................................................................ 31
15.1.1‘Genuine Savings’.................................................................................................................................... 31
15.1.2Other Deposit Funds................................................................................................................................ 31
15.1.3Internet Bank Statements........................................................................................................................ 32
16Loan to valuation ratio (LVR).................................................................................................32
16.1Maximum LVR matrix.................................................................................................................................... 32
17Acceptable security................................................................................................................35
18Unacceptable security...........................................................................................................36
19Specialised security...............................................................................................................36
19.1Multiple units in a single development.......................................................................................................... 36
19.2Inner city high density units/apartments........................................................................................................ 37
19.2.1High density complexes located outside the city CBD and fringe............................................................37
19.3Serviced, resort, hotel style and university/student apartments....................................................................37
19.4 ‘Off the plan’ purchases............................................................................................................................... 38
19.5Reserved...................................................................................................................................................... 38
19.6Concentration exposure within a development............................................................................................. 38
20Security locations...................................................................................................................39
20.1Location categories....................................................................................................................................... 39
20.2Location list review........................................................................................................................................ 39
21Valuations................................................................................................................................39
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Effective December 2014
Residential Lending Credit Policy
21.1Valuation types.............................................................................................................................................. 39
21.1.1Purchase contract.................................................................................................................................... 40
21.1.1.1Verification requirements................................................................................................................... 40
21.1.2Valuer General’s assessment.................................................................................................................. 40
21.1.3Full valuations.......................................................................................................................................... 41
21.1.4Exceptions............................................................................................................................................... 41
21.2Valuer criteria................................................................................................................................................ 42
21.3Valuation requirements................................................................................................................................. 42
21.3.1Valuations completed for ‘new’ properties................................................................................................ 43
21.3.2Valuations completed on an ‘as if complete’ basis...................................................................................43
21.3.3Valuations completed on ‘off the plan’ properties.....................................................................................43
21.3.4Reserved................................................................................................................................................. 43
21.3.5Valuations completed for concentration exposure requests.....................................................................43
21.4Discrepancies between valuation and purchase price..................................................................................43
21.5Timing and frequency of valuations............................................................................................................... 44
22Second mortgages.................................................................................................................44
23Lender’s mortgage insurance (LMI).....................................................................................45
23.1Authorised mortgage insurers....................................................................................................................... 45
23.2LMI requirement matrix................................................................................................................................. 45
23.3Capitalised LMI premiums............................................................................................................................ 46
23.4Changes to existing loan contracts............................................................................................................... 46
23.4.1Credit Increases where LMI is currently in place.....................................................................................46
23.4.2Credit increases where LMI is currently not in place................................................................................46
24Redraw.....................................................................................................................................47
24.1Redraw......................................................................................................................................................... 47
25Credit Increase........................................................................................................................47
25.1Credit Increase criteria.................................................................................................................................. 47
25.1.1Applicant(s).............................................................................................................................................. 47
25.1.2Income and employment.......................................................................................................................... 47
25.1.3Credit bureau report................................................................................................................................. 48
25.1.4Credit scorecard...................................................................................................................................... 48
25.1.5Loan purpose........................................................................................................................................... 48
25.1.6Facility...................................................................................................................................................... 48
25.1.7Serviceability............................................................................................................................................ 48
25.1.8Lenders Mortgage Insurance................................................................................................................... 48
25.1.9Valuations................................................................................................................................................ 48
25.1.10Approval authority.................................................................................................................................. 49
26Product Conversions.............................................................................................................49
26.1Product conversion (no additional credit advanced).....................................................................................49
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Effective December 2014
Residential Lending Credit Policy
27Reserved..................................................................................................................................50
28Partial discharges...................................................................................................................50
28.1Applicant....................................................................................................................................................... 50
28.2Facility........................................................................................................................................................... 50
28.3Requirements upon discharge of a security(ies)........................................................................................... 50
28.4Income and Employment.............................................................................................................................. 50
28.5Serviceability................................................................................................................................................. 50
28.6Security(ies) and Valuations.......................................................................................................................... 51
28.7Lenders mortgage insurance........................................................................................................................ 51
28.8Approval authority......................................................................................................................................... 51
29Substitution of Security.........................................................................................................51
29.1Applicant....................................................................................................................................................... 51
29.2Facility........................................................................................................................................................... 51
29.3Requirements upon a substitution of a security(ies).....................................................................................51
29.4Income and Employment.............................................................................................................................. 52
29.5Serviceability................................................................................................................................................. 52
29.6Security & Valuation...................................................................................................................................... 52
29.7Lenders mortgage insurance........................................................................................................................ 52
29.8Approval authority......................................................................................................................................... 52
30Lo Doc product specific policy.............................................................................................53
30.1Acceptable/unacceptable applicant(s).......................................................................................................... 53
30.2Guarantor loans............................................................................................................................................ 53
30.3Income.......................................................................................................................................................... 53
30.3.1 Accountant requirements........................................................................................................................ 53
30.3.2Verification of Accountant’s information................................................................................................... 53
30.4Employment.................................................................................................................................................. 54
30.4.1Self Employed applicant(s)...................................................................................................................... 54
30.4.2PAYG applicants...................................................................................................................................... 54
30.5Credit history................................................................................................................................................. 54
30.5.1Credit history report................................................................................................................................. 54
30.5.2Loan statements...................................................................................................................................... 54
30.6Credit scoring................................................................................................................................................ 54
30.7Loan sizes..................................................................................................................................................... 54
30.8Loan purpose................................................................................................................................................ 55
30.8.1Construction loans................................................................................................................................... 55
30.8.2Vacant land purchase.............................................................................................................................. 55
30.8.3Off the plan sales..................................................................................................................................... 55
30.8.4Maximum cash out................................................................................................................................... 55
30.8.5Business purposes................................................................................................................................... 55
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Effective December 2014
Residential Lending Credit Policy
30.9Visa facility with an approved Lo Doc loan.................................................................................................... 56
30.10Serviceability............................................................................................................................................... 56
30.11Real estate equity/deposit........................................................................................................................... 56
30.12Lender’s mortgage insurance (LMI)............................................................................................................ 56
30.13Security....................................................................................................................................................... 56
30.14Security location category........................................................................................................................... 56
30.15Valuations................................................................................................................................................... 56
30.16Approval authority....................................................................................................................................... 56
31Visa facilities with approved residential loan......................................................................58
31.1Approval Authorities...................................................................................................................................... 58
32Reserved..................................................................................................................................59
33Equity Finance Mortgage (EFM) associated loans.............................................................59
33.1Maximum LVR............................................................................................................................................... 59
33.2Maximum loan amount.................................................................................................................................. 59
33.2.1LMI not required....................................................................................................................................... 59
33.2.2LMI required............................................................................................................................................. 59
33.2.3Minimum Loan Amount (with or without LMI)........................................................................................... 59
33.3Lender’s mortgage insurance (LMI).............................................................................................................. 59
33.3.1Additional LMI criteria.............................................................................................................................. 59
33.4Security......................................................................................................................................................... 59
33.5 Applicant(s).................................................................................................................................................. 60
33.6Serviceability................................................................................................................................................. 60
33.7Loan purpose................................................................................................................................................ 60
33.8Cash Out....................................................................................................................................................... 61
33.9Credit History................................................................................................................................................ 61
33.10Loan term.................................................................................................................................................... 61
33.11Visa with home loan.................................................................................................................................... 61
33.12Loan Variations........................................................................................................................................... 61
33.12.1Refinances & credit increases............................................................................................................... 61
33.12.2Partial discharges, security substitution & cross collateralisation..........................................................61
33.13Approval authority....................................................................................................................................... 61
33.14High Density Developments........................................................................................................................ 61
34Hindsight reviews...................................................................................................................61
Revision History.........................................................................................................................63
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Effective December 2014
Administration
Administration
1
Introduction
This is the credit policy by which Bendigo and Adelaide Bank considers and assesses proposals for residential and
consumer finance.
Application of this policy for the purpose of assessing, processing and accepting requests for residential and
consumer finance may only be completed by staff and partners who hold a delegated lending authority (DLA).
Applicant(s) that do not meet the policy requirements set out in this policy can be considered on an exception basis
with referral to the appropriate DLA level for consideration. For full details, refer to DLA Policy.
Credit policy is available only to Bendigo and Adelaide Bank staff and approved partners with distribution controlled
by Group Risk.
This policy is approved by the Bank.
This document is to be used in conjunction with the Bank’s Credit Risk Management frameworks including:
•
Delegated Lending Authority (DLA) policy; and
•
Procedure manuals.
Bendigo and Adelaide Bank reserves the right to change the credit policy at any time, without prior or subsequent
notice to any person.
2
National Consumer Credit Protection (NCCP)
The National Consumer Credit Protection Act (NCCP) requires that the Bank meets the responsible lending
obligations by the following three steps:
•
Make reasonable inquiries about the applicant(s) financial situation, requirements and objectives
•
Take reasonable steps to verify the applicant(s) financial situation, and
•
Make a preliminary assessment (credit assistance provider) or final assessment (credit provider) about whether
the credit contract is ‘not unsuitable’ for the applicant(s) based on the inquiries and information obtained, and
•
Consideration of any planned future events which may affect the borrower’s objectives and serviceability must
be explored with the borrower.
DLA Holders/Introducers must ensure the credit product is ‘not unsuitable’ for the applicant(s) by:
•
Assessing whether the credit facility meets the applicant(s) requirements and objectives.
•
Assessing the applicant(s) ability to meet the repayments without substantial hardship.
o
In doing so, DLA Holders/Introducers must also make reasonable inquiries as to any foreseen future
changes to the applicant(s) circumstances that will lead to difficulty in their ability to meet contracted
repayments.
Consideration of any planned future events which may affect the applicant(s) objectives and serviceability must be
explored with the applicant(s).
The DLA Holder assessment must be recorded, and confirm the credit contract is not unsuitable for the borrower
based on the inquiries made and information provided by the borrower. Upon request from the borrower this
assessment must be documented in the Final Assessment form and provided with 8 working days.
When providing the borrower with the final assessment ensure the borrower acknowledges all relevant liabilities
and expenses have been captured.
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Effective December 2014
Administration
To meet responsible lending obligations, approvals only remain valid for 3 months from the date of disclosure and
as outlined in the Loan Contract. After this time, the application will need to be reassessed based on updated
supporting data and the policy requirements at the time of the reassessment.
Exceptions to the above criteria must be approved by a DLA level, or higher, as per the table below.
Mortgage Manager
Processing
(refer processing)
7
All loans for domestic, household and personal purposes or for investment in residential property (including
investment purchase, renovation and improvements) where the borrowing entity is an individual, are to be
regulated.
An exception applies and the loan is unregulated if it meets all three of the following criteria:
•
It is for the purpose of investment in residential property; and
•
It is not provided for the purpose of investment in a single residence; and
•
The total amount of the loan provided is to be more than $5.0M.
For further guidance on regulated and unregulated purposes, refer to Procedures.
3
Ownership and maintenance of credit policy
Credit policy is owned and maintained by the Group Risk department. Group Risk is responsible for ensuring credit
policy is reviewed at least half yearly.
Any changes to credit policy are to be recommended by Group Risk and must be approved within relevant Credit
Committee Charters.
4
Delegated lending authority (DLA)
4.1
Responsibilities
Credit Risk is responsible for the management and administration of the Bank's DLA system in line with lending
policy.
Credit Risk will oversee the allocation of an individual’s DLA. Individual business unit managers are responsible for
the recommendation of staff and originators for a DLA. Credit Risk are responsible for the approval, review and
ongoing monitoring of the DLA’s assigned to Bank and originator staff.
Credit Risk will be responsible for notifying DLA holders of their Delegated Lending Authority criteria which will
include their dollar limit and override/exception level. Credit Risk may also issue further restrictions on DLA criteria;
these are to be communicated to DLA holders by Credit Risk as needs dictate.
DLA holders are responsible for the assessment and approval/declinal of credit in line with the Bank’s lending
policy and procedures and within their DLA dollar and override limits. Breaches of lending policy, procedures, or
delegated lending authority are not acceptable and may result in the DLA being reduced/revoked and/or disciplinary
action.
A register of delegated lending authorities held will be maintained by Credit Risk.
DLA's assigned to officers are applicable only whilst in their current position. When a DLA holder leaves the
Bank/originator, transfers or changes position, the business unit must notify Credit Risk in writing.
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Effective December 2014
Administration
All permanent and temporary DLA's must be ratified and processed through to Credit Risk who will notify the DLA
holder of their authority level in writing and update the DLA register.
4.2
DLA criteria
Individuals will be issued a DLA in line with their experience, ability and current job role.
This covers 3 areas:
•
DLA dollar limit;
•
Rule group; and
•
Approval/exception level for policy.
Applications outside the DLA's authority must be referred to a higher DLA holder.
4.2.1 Dollar limits
Approval limits (ranging from 1 - 9) apply to the total aggregation of all loans (existing and new) held by Bendigo
and Adelaide Bank, refer to section 5 Aggregation. For further information on aggregation, refer to section 13 Loan
sizes for loan size approval levels.
4.2.2 DLA rule groups
The rule group allocation dictates the types of applications the individual can approve/decline. Changes to the
assignment of rule groups forms part of the DLA recommendation process. The following table outlines the
restrictions for the Retail/Wholesale rule groups.
Application type
Rule group A
Rule group B
Rule group C
DLA levels.
Levels 0, 1 and 2.
Levels 2 and 3.
Levels 3, 4, 5 and 6.
Self employed and/or
Excluded (PAYG
Acceptable, no more than 1
Accepted, no more than 1
company applicants.
applications only).
company or 4 individual
company or 4 individual
applicants.
applicants.
Acceptable only for company
Accepted only for company
Guarantor applicants.
Excluded.
applications (e.g. directors
applications (e.g. directors
providing guarantees).
providing guarantees).
Lo Doc loans.
Excluded.
Excluded.
Accepted.
Non conforming LMI.
Excluded.
Excluded.
Accepted.
4.2.3 Approvals and exceptions to lending policy
Approval/exception levels (ranging from 1 - 9) are specified in a table below the appropriate piece of policy or
criteria throughout the lending policy.
Only an officer with an adequate DLA level may approve an exception stipulated in policy. This may be done taking
into consideration the overall quality of the application and credit risk.
All overrides must have the business case and reason for the override recorded. The DLA authorising the override must review the overall loan
application in particular the income/serviceability, security/valuation and details relating to the specific policy rule failure and is responsible for
final loan approval. If LMI is to be taken the mortgage insurer must be advised of and accept any exceptions/overrides to policy.
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Effective December 2014
Administration
5
Aggregation
Facilities that involve related parties must be aggregated as a single group for application assessment purposes.
The affect of aggregation is to recognise, as a single exposure, all risks associated with that client or a group of clients that are related in such a
way that the risk attaching to the individual entities of the group cannot be treated in isolation.
Aggregation is required if any of the following situations apply:
•
Facilities in the same name.
•
Facilities are underwritten by the same guarantor or cross guarantee.
•
Any group of entities where there is a parent/subsidiary relationship or where there is common ownership or
management.
•
Financial interdependency such that the financial soundness of one entity affects the financial soundness of
another entity.
•
A group of entities where there is ability to exercise control (the power to govern the financial and operating
policies or an entity so as to obtain benefits from its activities) whether direct or indirect.
There may also be situations where significant influence exists (the power to participate in the financial and operating policy decisions of an
entity, but not control those policy). Significant influence may be gained by share ownership, statute or agreement. Significant influence may not
be sufficient in its own right to require facilities to be aggregated, however it may be used as a persuasive factor.
For example: The business is debating whether to aggregate exposure to Company ABC & Company XYZ. There is some financial
interdependency, but the business is unsure as to whether the financial soundness of XYZ will affect ABC. The business also notes that the
directors of Company ABC also have a 20% shareholding in Company XYZ. Stand alone, neither the interdependency nor the shareholding
requires facilities to be aggregated, however when the factors are combined, aggregation is required.
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Effective December 2014
Applicant
Applicant
6
Applicant (borrowers and guarantors)
6.1
Borrower/Guarantor definition
The Bendigo and Adelaide Bank Group accepts applications from the following who are seeking funds for nonbusiness purposes. This includes applicant(s) in their own right as borrower(s) or as a guarantor(s) and are defined
as:
•
Individuals who can be held accountable for a legal contract (of legal age 18 and mentally capable);
•
Joint applicant(s)/guarantor(s) who can be held accountable for a legal contract (of legal age 18 and mentally
capable);
•
Permanent Australian residents (refer section 6.5 Permanent Australian residents);
•
Non permanent Australian residents (unacceptable as guarantor(s)) (refer section 6.6 Non permanent
residents);
•
Companies;
•
Trustees of trusts, including family and discretionary.
6.2
Aged applicant(s)
There is no restriction on the maximum age of applicant(s) however they must be able to demonstrate that they are
able to repay the loan within agreed contractual arrangement.
Proof of future income sources, such as superannuation or other investments, must be substantiated at the time of
application, for those applicant(s) who will rely on this income to repay the loan once they retire from existing
employment.
6.3
Disadvantaged applicant(s)
Applicant(s) who may be at a disadvantage due to language, age or medical capabilities must be offered the
service of an interpreter, or the ability to be accompanied by family or friend to the initial interview to translate or
explain the interview/product/contract to them. DLA holders/Introducers must advise the applicant(s) to seek
independent legal and financial advice to ensure they understand the transaction to which they are committing.
This is to be documented in the file notes.
6.4
Conflict of interest
Applicant(s) must not be disadvantaged by a conflict of interest. Refer to Conflict of Interest Policy.
6.5
Permanent Australian residents
Applicants holding permanent Australian residency status who are living/working in Australia are subject to normal
lending criteria with no further restrictions. This also applies to New Zealand citizens & residents currently residing
and intending to remain in Australia.
New Zealand citizens & residents not currently residing in Australia and purchasing an investment property must be
assessed under section 6.6 Non permanent residents.
Where at least one applicant on the security title is a permanent Australian resident the application is to be treated
as per normal lending criteria, regardless of the residency status of other applicants.
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Effective December 2014
Applicant
6.6
Non permanent residents
Applications from non permanent Australian residents (who may or may not be living in Australia on a visa) or
permanent Australian residents who are living/working overseas, are subject to the following conditions:
•
Maximum LVR without LMI is 70%;
•
All loans with an LVR greater than 70% must have full LMI cover and must be completed as an exception with
appropriate sign off as noted below. The LMI provider must be advised and accept the exception. Refer to LMI
provider guidelines for policy requirements;
•
Letter from employer as proof of income (if payslip unobtainable) with interpreter translation as required 1;
•
Foreign income to be converted to AUD at the RBA Exchange Rate on the day of application, and assessed at
90% for servicing;
•
Exchange Rate and Converted Income to be noted in case notes. Calculations to be held in the file.
•
Evidence of funds to complete must be translated into English as required**;
•
Security must be in category 1 locations only, refer Bendigo and Adelaide Bank Security Location Categories;
Category 2 and 3 locations not permitted;
•
Full valuations required in all circumstances;
•
Unacceptable as guarantor, must be a borrower or joint applicant;
•
Maximum loan size per security $1M;
•
Maximum aggregate exposure per borrowing group is $2.0M.
Applications incorporating a Visa Credit facility can not be considered for non permanent Australian residents on a
secured or unsecured basis. Refer section 31 Visa facilities approved with residential loan
Non permanent Australian applicants must provide the bank with evidence foreign investment review board (FIRB)
approval for prospective purchases.
Applications must be approved by a DLA level, or higher, as per the table below.
Mortgage Manager
Processing
3
3
Exceptions to the above criteria must be approved by a DLA level, or higher, as per the table below.
Mortgage Manager
Processing
6
7
1 **If necessary, bank staff who are fluent in a second language may be used to confirm translations, refer
Interpreters listing. External interpreters are to be used on a rotating basis and are to be officially accredited.
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Effective December 2014
Applicant
Staff lending
Refer also to People and Performance Staff Lending Policy for staff benefits.
All loans for staff and immediate family are subject to the Banks standard credit policy together with the following
additional requirements:
•
Staff cannot load their own loan applications or those of their immediate family (as outlined in the Staff Lending
Policy) and these must be recommended by a DLA holder.
•
The file is to be sent to the Processing Centre for assessment and decision by a DLA level 7 credit officer, or
higher.
•
One current payslip or an acknowledgment from Payroll via Outlook Email - Salary Confirmation (OE102) will
be sought by the Processing Centre to confirm applicant(s) gross salary/wage details.
All applications must be approved by the DLA level, or higher, specified in the table below.
6.7
Mortgage Manager
Processing
(refer processing)
7
Loans to related parties
All loans are subject to the Bank’s standard credit policy together with the following additional requirements:
6.7.1 The Bank’s Business Partners and their staff
Business Partners and their staff cannot load their own loan applications or those of their immediate family and
these must be recommended by a DLA holder.
The file is to be sent to the Processing Centre for decision.
6.7.2
Loans to family, and where a relationship is evident via shared directorship, shareholding or
proprietorship
To avoid potential conflicts of interest, staff and business partners may only be involved in the collation of
applications received from family, friends or business associates. These applications must be independently
loaded, recommended by a DLA holder and then sent, with file notes outlining the relationship(s), to the Processing
Centre for decision. Refer to Conflicts of Interest Policy.
Mortgage Manager
Processing
(refer processing)
3
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Effective December 2014
Applicant
6.8
Loans to related parties
All loans are subject to the Bank’s standard credit policy together with the following additional requirements:
6.8.1 The Bank’s Business Partners and their staff
Business Partners and their staff cannot load their own loan applications or those of their immediate family and
these must be recommended by a DLA holder.
The file is to be sent to the Processing Centre for decision.
6.8.2
Loans to family, and where a relationship is evident via shared directorship, shareholding or
proprietorship
To avoid potential conflicts of interest, staff and business partners may only be involved in the collation of
applications received from family, friends or business associates. These applications must be independently
loaded, recommended by a DLA holder and then sent, with file notes outlining the relationship(s), to the Processing
Centre for decision. Refer to Conflicts of Interest Policy.
6.9
Mortgage Manager
Processing
(refer processing)
3
Applicant structure matrix
The following table outlines the requirements for acceptable loan structures for multiple applicant(s).
Applicant relationship
Security
Acceptable structures
The loan can be structured as a single borrower with a guarantor or joint
borrowers regardless of the benefit derived as parties are considered to
Married /defacto
Owner occupied
share benefits.
or investment
If both parties are on the title they both must also be on loan as either
borrower or guarantor (if a party is not on the title they may still choose to
be on the loan as either borrower or guarantor).
Other joint applicant(s)
Owner occupied
or investment
All joint applicant(s) must have at least 20% ownership of security. If any
party has less than 20% ownership or is not receiving a direct benefit from
the loan they must be treated as a guarantor(s).
Mortgagor(s)/guarantor(s) are acceptable provided the following criteria are
met:
Third party mortgagor(s)
supported by
guarantor(s)
•
reliance on the guarantor(s) income; AND
Owner occupied
or investment
The borrower(s) must meet minimum servicing requirements without
•
The guarantor(s) must provide an asset that is not the family home;
OR
•
The guarantor(s) must be able to demonstrate the ability to meet the
borrower(s) commitments in the event of the borrower(s) defaulting.
Any structure that does not meet these requirements is considered unacceptable, although applications may be
approved under mitigating circumstances by the DLA, or higher, as specified in the table below.
15
Effective December 2014
Applicant
7
Mortgage Manager
Processing
6
7
Guarantor(s) and third party mortgages
Guarantees must be taken:
•
If any party has less than 20% ownership of security or is not receiving a direct benefit from the loan;
•
When third party security is taken in support of a loan facility;
•
For all company loans the director(s) must provide a guarantee;
•
For Trust loans the trustee company director(s) must provide a guarantee.
Non permanent Australian residents are unacceptable as guarantors; refer to 6.6 Non permanent residents
In all instances where a guarantee is taken:
•
The guarantor(s) must be interviewed separately away from the borrower(s). Should any concern arise in
regard to undue influence being exerted upon a third party mortgagor(s) the facility must not proceed.
7.1
Assessment
Guarantor(s) are to be assessed in the same manner as the borrower(s), this includes full financial particulars of
the guarantor(s), credit checks and identification checks being provided and the guarantor(s) being acceptable as if
that individual was a borrower.
7.2
Independent Legal and Financial Advice to guarantor(s)
7.2.1 Independent legal and financial advice
All guarantor(s) must obtain independent legal advice and be recommended to obtain independent financial advice.
Financial Advice: The guarantor(s) will be advised to seek Independent Financial Advice through the prominent
notice in the Guarantee and Indemnity Booklet as required by the Code of Banking Practice. Documented evidence
that they have obtained it or that they have chosen not to obtain this advice is not required by the Bank.
Legal Advice: Either a Solicitor’s Certificate (completed by the Solicitor), or Statutory Declaration (completed by
the guarantor(s), NSW only) will be completed stating that the guarantor(s) has been given this advice. Verifying
documents will be provided prior to settlement, and held on file.
In all cases, where there is doubt that the guarantor(s) understands their obligations or is uncertain, the application
must not proceed.
7.2.2 Guarantor(s) who wish to waive Independent Legal Advice.
This requirement may be waived by exception only (e.g. guarantor(s) is a financial or legal professional, a business
professional who has supplied previous guarantees or an experienced investor).
The request for waiving Independent Legal Advice can only be made once the guarantor(s) has received the
guarantee documentation. The request must be made by the guarantor(s) in writing.
The requirement to obtain Independent Legal Advice can only be waived by the DLA level (or higher) as specified in
the table below. In all cases, where there is doubt that the guarantor understands their obligations or is uncertain
the application must not proceed.
Mortgage Manager
Processing
(refer processing)
7
16
Effective December 2014
Applicant
7.3
Companies
Personal guarantees are required from Company Directors when the borrower(s) is a company.
Security may be provided by a non-borrower(s) where the security is provided by a Company with a Director or
Shareholder being borrower(s) and vice versa.
Example: A Company wishes to apply for a loan for investment purposes. The loan will be in the Company name. The Director(s) is to be treated
as a guarantor(s).
Applications outside of this criteria must be approved by the DLA level (or higher) as specified in the table below.
E.g. Where a Director has no controlling interest in the company.
Mortgage Manager
Processing
6
7
7.3.1 Multiple director guarantees
Where director guarantor(s) do not have an active involvement in the company/borrowing entity, independent legal
advice must be sought and independent financial advice must be recommended.
Where director guarantor(s) have an active involvement of the company/borrowing entity, they can waive their right
to independent legal and financial advice.
In all cases, where there is doubt that the guarantor(s) understands their obligations or is uncertain, the application
must not proceed.
7.3.2 Sole director guarantees
Where the borrower(s) is a company with a sole director:
•
The sole director can waive their right to seek Independent Legal advice without the need to complete a waiver
certificate (the sole director may obtain Independent Legal Advice, but documented evidence, e.g. solicitor’s
certificate, is not required); and
•
The Bank does not need to complete a follow up phone call to explain the obligations under the guarantee.
In all cases, where there is doubt that the guarantor(s) understands their obligations or is uncertain, the application
must not proceed.
7.4
Trusts
Listed below is the minimum requirement for guarantees involving family/discretionary trusts.
7.4.1 Individual acting as trustee in their own right for family/discretionary trust
Guarantees are not required from the individual as they are liable for the debt.
Example: John Brown ATF Brown Family Trust
John Brown is liable for the debt personally as he is the borrower hence no guarantee is required from him.
7.4.2 Company as trustee for a family/discretionary trust
Guarantees are required from all Directors of Trustee companies
Example: ABC Pty Ltd ATF ABC Family Trust
ABC Pty Ltd is the borrowing entity, so in this situation the Bank requires guarantees from the director(s) of ABC Pty Ltd in order to link them to
the debt.
Mortgage Manager
Processing
3
3
17
Effective December 2014
Applicant
7.4.3 Unit and Hybrid Trusts
Unit and Hybrid trusts are unacceptable for Residential Lending
7.4.4 Self managed Superannuation Fund (SMSF) Trusts
SMSF trusts are unacceptable for Residential Lending.
Where it is established that the applicant(s) have a SMSF, additional verification requirements must be met, refer to
8.1.4 Directorship/Proprietorship/SMSF listings.
8
Credit references
It is mandatory to do an ‘Individual Consumer and/or Commercial’ enquiry with the credit history report provider,
Veda, for all loan applications. These reports must be reviewed for any adverse listings and kept on file.
8.1
Veda and ASIC reports
8.1.1 Privacy disclosures
All individual applicant(s) must read and sign the relevant privacy disclosure form giving authority to obtain a credit
history report. Credit history reports and ASIC searches are allowed on company and business name clients
without the use of a privacy disclosure document with the proviso individual reports are not searched until the
relevant privacy disclosure form is executed.
8.1.2 Currency of reports
Residential enquiries remain valid for up to 60 days. New enquiries are required on all applicant's / guarantors /
company and ASIC reports after 60 days.
8.1.3 Company Loans
For loans in company names a company/business credit enquiry with Veda and an ASIC search must be completed
for the company, and an ‘Individual Consumer and/or Commercial’ enquiry must be completed for all company
directors guaranteeing the loan.
These searches will return data to enable you to verify/establish the following information about the clients:
•
A.C.N Number;
•
Registered office;
•
Incorporation State/Territory;
•
Principal place of business;
•
Registration date;
•
Directors information;
•
Company name;
•
Secretary;
•
Status;
•
Share structure;
•
Type;
•
Share holders;
•
Class;
•
•
Sub class;
Charges registered and related documents
such as annual returns
8.1.4 Directorship/Proprietorship/SMSF Listings
Individuals who are Self Employed or Company Directors: an ‘Individual Consumer and/or Commercial’
enquiry must be completed for individuals who are self employed or company directors. A company/business credit
enquiry and an ASIC search must also be completed for any associated company(ies) the director has listed on
their credit history report.
Individuals that have a directorship: an ‘Individual Consumer and/or Commercial’ enquiry must be completed for
individuals that have a directorship/proprietorship/SMSF listing on their credit history report. A company/business
credit enquiry and an ASIC search must also be completed on any company the applicant is listed as a director of.
For all Directorship/Proprietorship/SMSF listings that are not used as a source of income in the serviceability of the
application:
18
Effective December 2014
Applicant
•
The assessor must be satisfied that the company/business/SMSF is meeting all commitments from its own
cash flow and not relying on the applicant(s) individual income used in the loan assessment.
•
Confirmation from the accountant via phone, email or letter, is to be obtained confirming that the
company/business/SMSF is meeting its commitments without financial support from the applicant(s).
Alternatively, the latest tax return could be obtained and reviewed by the DLA holder/Introducer to ensure the
company/business/SMSF is meeting its commitments.
If it is confirmed that the individual is supporting the company/business/SMSF commitments from their current
employment income this will need to be taken into account when assessing serviceability.
8.1.5 Newly created credit history reports
Where lodging the applicant(s) details with Veda and a new credit report is created, the credit history must be
reviewed as follows.
The credit history report needs to be:
•
Validated to ensure that the full applicant(s) details have been entered correctly, e.g. first name, surname, date
of birth, current address and previous address if it exists. If the details are missing or inaccurate, this must be
corrected and a new credit history report requested.
•
Validated to ensure that the results returned are reflective of the applicant(s); and
•
Investigated for any ‘possible matches’ where the returned credit history report indicates that these exist. If it is
clear that the information from a ‘possible match’ belongs to the applicant(s), the ‘possible match’ credit history
report must be used.
Loan applications with credit files less than 3 months old must be approved by the DLA level (or higher) specified in
the table below.
8.2
Mortgage Manager
Processing
3
3
Credit history report assessment
It is the normal requirement that the credit history report is clear with no adverse credit history.
8.2.1 Adverse credit history
Defined as defaults, court writs, judgements, bankruptcy or adverse information identified (e.g. a high number of
recent enquiries or a number of address changes within short period) in a credit history report. Defaults may reflect
paid, unpaid or settled.
All instances of adverse credit history identified on a credit history report are to be investigated and commented
upon within the file notes. A letter of explanation, including reasons for the adverse history and confirmation it has
been paid/settled, is to be obtained from the applicant(s) and verified as correct before any decision is made.
Consideration can be given to proposals which have defaults provided the circumstances have been investigated
and the default(s) rectified.
Approval by appropriate DLA, based on the size and type of listing, is required as per the table below.
19
Effective December 2014
Applicant
Credit listing
DLA
DLA
Mortgage Manager
Processing
6
7
(refer processing)
7
Up to 2 Defaults, Aggregate Value Less than $1,000, Paid for at least 6 Months
Applicants with prior credit indiscretions falling outside of criteria listed above
8.2.2 Bankrupts
Undischarged bankrupts are not acceptable applicant(s).
If the applicant(s) is a discharged bankrupt, then a minimum of 3 years must have elapsed since being discharged.
A letter from the trustee for Bankruptcy confirming discharge is required.
Applications accepted outside this criteria must be approved by the DLA level (or higher) as specified in the table
below.
Mortgage Manager
Processing
(refer processing)
7
8.2.3 Declined finance due to credit eligibility information
Any applications for credit which are declined based wholly or partly on the credit eligibility information of the
individual applicant, any joint applicant or any guarantor must receive notification in writing advising this is the
reason the application has been declined. The letter must also contain the disclosures required under the Privacy
Act and the Credit Reporting Code.
8.2.4 Credit history subject to a ‘ban period’
Any application where the credit history report is subject to a ‘ban period’ cannot be assessed until the ban is
removed and the credit history report can be obtained. Any delay to assessment of the application due to a ‘ban
period’ may require updated supporting documentation to be provided to meet policy requirements.
Any exception to these requirements can only be considered by the DLA level as specified in the table below.
8.3
Mortgage Manager
Processing Centre
(refer Processing)
9
Non-Disclosure of debts & Fraud
8.3.1 Non-Disclosure of Debts
Any statements or financial documents provided as part of the application should be reviewed for potential cases of
non-disclosure of debt(s) and/or unsatisfactory credit conduct. Blatant cases of non-disclosure or unsatisfactory
credit conduct must be declined.
8.3.2 Suspected Fraud
If there is suspicion that an application may be fraudulent it is required that in consultation with a team
leader/manager the loan is referred to the Financial Crimes Unit. The Broker or Mortgage manager must not be
made aware at referral stage.
20
Effective December 2014
Applicant
9
Employment
9.1
Employment Requirements
The following table outlines acceptable employment requirements.
Type
Includes
Requirements
DLA
DLA
Mortgage
Processing
Manager
Minimum 6 months in job or the last 2
years in the same industry.
PAYG
Full time, permanent part time,
Probation acceptable subject to minimum
& contract workers.
2 years in the same industry*.
N/A
N/A
N/A
N/A
5
3
N/A
N/A
N/A
N/A
5
3
N/A
N/A
6
7
Phone verification to be completed - Per
section 9.2 Employment verification.
PAYG
Casual, second jobs &
temporary workers.
Minimum 12 months in the position or 2
years in the same industry*.
Phone verification to be completed, refer
section 9.2 Employment verification.
Borrower(s)
employed by
Family
All applicant(s) who are
employed in a family
Minimum 6 months in current position or
business/company and derive
2 years employed in the same industry*.
income from that source.
Sole traders, companies,
Self Employed
company directors,
partnerships, trustees of family
A minimum of 2 years trading.
trusts & subcontractors.
Must have sustainable long term income
and be able to service the loan within
Retirees
agreed term given their current
circumstances.
Government
payment
recipients
Must have sustainable long term income
Includes pensioners, Centrelink
and be able to service the loan within
recipients & students.
agreed term given their current
circumstances.
Family Tax
Must be entitled to receive the benefit
Benefit A & B
for the next 5 years
Other income
sources not
specified above
Share trading & speculative
developments
Outside guidelines.
*Subject to LMI approval, if applicable.
21
Effective December 2014
Applicant
Where there are mitigating circumstances applicants outside the above criteria may be approved by the DLA, or
higher, as specified in the table below.
Note: Where LMI is required the insurer must be advised and accept the exception.
9.2
Mortgage Manager
Processing
6
7
Employment Verification
All employment is required to be verified via phone verification with the employer.
Verification requirements are as follows:
•
Obtain phone number from independent source (e.g. Internet, White pages or Yellow pages);
•
Confirm that the applicant(s) is currently employed;
•
If possible, confirm the length of employment and applicant(s) occupation and income.
If the employer refuses to confirm any details an appropriate file note must be retained.
In addition to the phone verification, income verification must be obtained, refer to section 10.2 Income matrix.
10 Income
10.1 Income documentation verification
10.1.1
Payslips and PAYG payment summaries
Payslips or PAYG payment summaries provided as a form of verification must be checked for the following
information:
•
YTD figure (payslips only), broadly consistent with annualised salary;
•
Applicant(s) full name;
•
Employer’s name.
If any income verification raises any doubts as to its correctness and authenticity, seek further income verification
such as PAYG payment summaries and tax returns, and refer to the appropriate DLA level for assessment.
10.2 Income matrix
The following table outlines acceptable verifications for income sources:
Type
Restrictions
% used for
Verification Documents
servicing
PAYG Salary
For non permanent and casual
100%.
In addition to phone call verification by employer any 2
employees income is to be
of the following:
calculated as an average of the
- 1 Payslip less than 60 days old; (2 may be used)
last 12 months income.
-Three months bank statements reflecting regular salary
credits evidencing name of employer;
- Letter from employer less than 60 days old on
Company letterhead with ABN, signed & dated
- Most recent PAYG payment summary
22
Effective December 2014
Applicant
Type
Restrictions
% used for
Verification Documents
servicing
- Most recent ATO tax return;
- Most recent tax assessment notice;
- Copy of current employment contract;
All documentation provided must meet criteria detailed
in Section 10.1 Income documentation verification.
Second jobs
As per PAYG salary.
As per PAYG salary.
As per PAYG salary.
All documentation provided must meet criteria detailed
in Section 10.1.1
Self Employed
Refer section 10.3 Self employed applicant(s) income.
As per PAYG salary.
employed by family
Must be approved by:
And either of the following:
Mortgage Manager 5
•
Income tax return; or
•
PAYG payment summary.
Processing
Foreign Income
100%
•
Applicant(s)
3
As per PAYG salary.
Most recent ATO notice of assessment;
90% of converted
Verifications must be translated into English. All
income
documentation provided must meet criteria detailed in
sections 6.6 Non Permanent Residents.
Income to be converted to AUD at the RBA Exchange
Rate on the day of application.
23
Effective December 2014
Applicant
Type
Restrictions
% used for
Verification Documents
servicing
Car allowance
Must be permanent part of
100% added to gross
Acceptably verified evidence must be provided that
income.
income.
clearly demonstrates the consistency and amount of
Commitments (e.g.
payment being received. This may be done (where
lease payments) must
appropriate) via one of the following:
be included in
•
Payslip;
•
PAYG payment summary;
•
Most recent tax return;
•
Letter from employer; or
•
Phone call to employer.
serviceability.
Company car/Car
Allowed provided it is part of
$5,000 included as
in salary package
employment
after tax addback.
contract/conditions.Vehicle
must be fully maintained (e.g.
insurance, registration, petrol,
maintenance and running costs)
NB it is accepted that overtime and shift allowances for
with no restrictions on
essential services such as ambulance, fire, police nurse,
personal use.
etc. is a condition of employment and ongoing, therefore
Superannuation
Only super amounts above
100% of excess
payments
legislative requirements may be
added to gross
added back.
income.
Other salary
100% added to gross
sacrifices
income.
Permanent
Allowable for ongoing
100% added to gross
allowances
payments e.g. district, location,
income.
no further verification from the employer is required.
dangerous conditions
allowances.
NB: Payments for reimbursement
of expenses are not acceptable e.g.
travel, meal.
Permanent
Must be evident as regular for a
100% added to gross
overtime
minimum period of 12 months
income.
and a condition of employment.
Commissions and
Must be a permanent part of
100% added to gross
bonus payments
income and has been constant
income.
for at least 2 years with the
most recent years figure to be
used.
Workcover
Not acceptable.
Unemployment
Not acceptable.
benefits
Foster care
Not acceptable
Number of dependents is to be reduced by the number
allowance or other
of children in care i.e. children in foster care or other
forms of
short term care are not considered dependent(s) for
income/allowance
calculation of serviceability.
for short term care
of children under
24
Effective December 2014
Applicant
Type
Restrictions
% used for
Verification Documents
servicing
18
Austudy
Must be approved by:
100%.
Mortgage Manager 5
Processing
Must be approved by:
term pensions
Mortgage Manager 5
Processing
•
3
Centrelink long
Either of the following are required:
Statement of benefit from Centrelink (dated within
the last 60 days); OR
100%.
•
6 months statements confirming payments.
3
Family tax benefit A
Must be entitled to receive the
and B
benefit for the next 5 years.
Child Care
Can only be utilised in instances
Benefits
where Child Care expenses are
100%.
100%
Either of the following are required:
•
disclosed in serviceability
the last 60 days); OR
•
Child support/
Must be registered with the
maintenance
Child Support Agency and
Statement of benefit from Centrelink (dated within
100%.
permanent for the next 5 years
(i.e. child under 13).
6 months statements confirming payments.
Both of the following are required:
•
Child Support Agency assessment notice; AND
•
6 months statements confirming regular payments.
Residential Rental
If a range is quoted the lowest
80%.
Untenanted Property:
income
value is to be used.
NB: input as 100% in
Rental - system will
default to 80%
Any one of the following:
Where a rental guarantee
exists, the market rent as
•
A valuation by a registered valuer stating the market
rent;
specified by the valuer is to be
•
used.
Rental appraisal from a real estate agent or licensed
valuer.
Display/exhibition homes with
Tenanted Property:
lease back arrangements, the
market rent as specified by the
Any one of the following:
valuer is to be used.
•
Current rental statement or rent receipts from the
Real Estate or Managing Agent;
National Rental Affordability
•
Scheme (NRAS) homes – use
the lower of actual NRAS rent
A valuation by a registered valuer stating the actual
rent;
or NRAS rent as specified by
•
the valuer.
Copy of the signed current lease/tenancy
agreement;
•
6 months statements showing consistent/regular
rental payments; or Current ATO tax return.
Commercial Rental
Subject to the lease having a
80%
income
minimum of 12 months to
NB: input as 100% in
expiry.
Rental - system will
NB: Can only be used where
default to 80%
A copy of the current formal lease agreement.
the property does not form
part of the applicant(s)
business e.g. rented to a
25
Effective December 2014
Applicant
Type
Restrictions
% used for
Verification Documents
servicing
related business/entity.
Board
Not acceptable
Share dividends
Acceptable provided
100% added to gross
Any one of the following:
from publicly listed
sustainable over the loan term.
income.
companies,
•
NB: Redeemable deposits,
such as funds held in at call
accounts are not
acceptable.
royalties, interest,
annuities, and
distributions from
Copy of statements from investment manager or
broker showing past earnings and current holdings;
•
Current tax return;
•
Letter from accountant stating net benefits and
period of benefits.
property trusts and
other sustainable
income from
investments.
Managed or Self
Acceptable provided
100% added to Non-
Managed Super Fund the following items:
Funded
sustainable over the loan term.
Taxable Income.
• A current superannuation fund statement (less than
12 months old)
Superannuation /
Private Pension
Income
Self Managed Super Fund
AND
Must be approved by:
Mortgage Manager
6
Processing
7
• Bank statements* showing the regular income from
the superannuation investment over 6 month
period.
Self Managed Super Fund the following items:
• Audited Financial Statements (including Profit & Loss
and Balance Sheet) and Tax Return(s), (no greater
than 18 months old)
AND
• Bank statements* showing the regular income from
the superannuation investment over 6 month period.
* Most recent statement to be no greater than 30 days
old.
26
Effective December 2014
Applicant
Where there are mitigating circumstances applicants outside the above criteria may be approved by the DLA, or
higher, as specified in the table below.
Note: Where LMI is required the insurer must be advised and accept the exception.
Mortgage Manager
Processing
(refer processing)
7
10.3 Self employed applicant(s) income
10.3.1
Self employed financial statements
Documentation provided as evidence of self employed income must contain the following information:
•
All tax returns and financials are to be no greater than 18 months old;
•
The most recent available figures are to be used to calculate self employed income except when there has
been an increase in net income of more than 20% on the previous year, where the average of the two years
should be used.
•
Accountant’s Name & details clearly stated on documents;
•
Applicant(s) ABN.
Where any individual, related company or business has evidenced turnover of greater than $75,000 the ABN must
be verified to confirm that the entity is registered for GST.
GST registration is a mandatory requirement for all entities evidencing turnover of greater than $75,000
The ABN number is to be verified to confirm the name of the business match the ABN provided and registered for
GST via the Australian Business Register website (http://www.abr.business.gov.au/).
If details listed on ABR search do not match application, or in situations where the business does not have an ABN number, a letter is required
from the accountant verifying the applicant(s) has been operating their current business for a minimum of 2 years.
Where the applicant(s) declares a turnover greater than $75,000 and is not GST registered, evidence of GST registration is required via a letter
from the tax accountant confirming that the applicant(s) has registered for GST or a GST registration letter from the Australian Taxation Office.
The tax accountant should also be verified at http://www.tpb.gov.au/tpb/agent_register.aspx.
10.3.2
Self employed income matrix
The following table outlines acceptable income verifications for self employed applicants:
Type
Acceptable Income
% used for servicing
Verification Documents
After tax add backs.
Refer section 10.3.4
After tax business add
backs.
The following is required:
Sole Trader
Partnerships &
Company Directors
•
The two most recent personal tax
returns together with the notice of
assessment.
Other forms of income as
per income matrix.
Refer section 10.2
Income matrix.
Applicant(s) salary.
100%
Both of the following are required:
Applicant(s) share of profit.
100%
•
After tax add backs.
Refer section 10.3.4
After tax business add
backs.
AND
Other forms of income as
Refer section 10.2
•
Two most recent business tax returns*
and supporting financials reflecting two
years trading;
The two most recent personal tax
returns together with the notice of
assessment.
27
Effective December 2014
Applicant
Type
Acceptable Income
% used for servicing
per income matrix.
Income matrix.
Company net profit after
100%
tax.
Company and
Trusts
Verification Documents
Both of the following are required:
Two most recent business tax returns*
and supporting financials reflecting two
years trading;
Director(s) salaries that are
providing guarantees.
100%
•
After tax add backs.
Refer section 10.3.4
After tax business add
backs.
AND
Other forms of income as
per income matrix.
•
Refer section 10.2
The two most recent personal tax
returns for all directors together with
the notice of assessment.
Income matrix.
* NB where returns are not prepared by a registered tax agent/accountant, a business assessment notice is
required.
10.3.3 Before tax business add backs
The following items can be added to before tax profit for sole trader, partnership, director and company
applicant(s).
Type
Restrictions
% used for servicing
Verification Documents
Debt must be refinanced
by new loan. Exclude
Interest on
interest on investment
refinanced debt
properties where rental
100%
income has been used
Current year’s financial statements/tax
in servicing.
returns.
Abnormal
expenses (not
likely to occur in
100%
Applicant(s) share only.
future years)
Where there are mitigating circumstances applicants outside the above criteria may be approved by the DLA, or
higher, as specified in the table below.
Note: Where LMI is required the insurer must be advised and accept the exception.
Mortgage Manager
Processing
6
7
10.3.4 After tax business add backs
The following items can be added to after tax profit for sole trader, partnership, director and company applicant(s).
28
Effective December 2014
Applicant
Type
Restrictions
% used for
Verification Documents
servicing
Vehicle expenses
As per the Profit & Loss
100%.
Statement up to a maximum of
Current year’s financial statements/tax
returns.
$5,000pa
Existing Rental
Remove the income from the
80%
income shown
financial statements
separately on
i.e. net profit less rental
NB: input as 100% as
Rental - system will
default to 80%
financial statements
income = income figure for
assessment.
Full loan repayments must be
allowed for within the system.
NB: No interest, depreciation or
any other add backs relating to the
rental property to be included.
Existing Rental
The net profit figure is to be
100% of the net
income not
used and interest and
profit in the net
separated within
depreciation added back.
profit section.
the financial
Full loan repayments must be
statements
allowed for within the system.
NB: Rental income is not to be
used as a separate amount other
than that included within the net
profit figure.
Interest on existing
Allow for full loan repayments
Term loans
on all debts including term
100%
Current year’s financial statements/tax
returns.
loans, hire purchase and leases.
Exclude debts being refinanced
by the loan application.
NB: Rental income is not to be
used as a separate amount other
than that included within the net
profit figure.
Interest on
Full overdraft commitment is
100% of overdraft
overdrafts
to be added back.
interest from the
NB: Repayment is calculated on the
total limit of the overdraft: i.e.
Limit multiplied by the interest
rate divided by 12.*
Rental income is not to be used as
a separate amount other than that
included within the net profit
figure.
financial
Must be depreciated on the
100%**
Depreciation
statements
profit and loss statement.
Excludes motor vehicle
depreciation if already added
back $5,000 for motor vehicle
expenses.
NB: Allow for full loan repayments
on all debts including term loans,
hire purchase and leases. Exclude
29
Effective December 2014
Applicant
Type
Restrictions
% used for
Verification Documents
servicing
those being refinanced by the loan
application.
* If interest rate is not known use the current residential loan benchmark rate
**Refer to LMI provider guidelines for specific criteria.
Where there are mitigating circumstances applicants outside the above criteria may be approved by the DLA, or
higher, as specified in the table below.
Note: Where LMI is required the insurer must be advised and accept the exception.
Mortgage Manager
Processing
6
7
11 Serviceability
The Net Surplus Income Method must be used to assess the serviceability of all applications.
The following minimum serviceability ratio applies:
LVR
Serviceability Ratio
≤ 90%
1.0
> 90%
1.2
Lo Doc Specific
1.25
A ratio of < 1.0 indicates that the Borrower cannot service commitments. Exceptions will only be considered where
there is justification for taking into consideration other income sources or reduced living expenses.
Exceptions must be approved by the DLA level, or higher, as specified in the table below.
Mortgage Manager
Processing
(refer processing)
7
11.1 Net surplus income method
11.2 Calculation of net income
Net income is calculated as per the following formula:
Net Income = Gross Income – Tax Payable
Gross income is income derived from any of the acceptable sources detailed in section 10 Income.
All individual income must be taxed at the current personal income tax rates and all company income at the
company tax rate. Tax payable is calculated at the current taxation schedules as per the ATO website
www.ato.gov.au
30
Effective December 2014
Applicant
The only exception to this is applicant(s) receiving rental income, who are eligible for a tax benefit if they have a
mortgage on their investment property. The tax benefit is calculated as per the following formula:
Taxable Income = Gross Income – Interest on Investment Loans
For all other applicant(s) the taxable income is equal to the applicant’s gross income.
11.3 Calculation of total income available for debt and housing
Total income available for debt and housing is calculated as per the following formula. For acceptable after tax add
backs refer section 10.3.4 After tax business add backs.
Total Income available for Debt & Housing = Net Income + After Tax Add Backs – Living Expenses
11.4 Calculation of living expenses
A household is defined as a grouping of applicant(s) reliant on the income of one or all of the applicant(s) within the
household.
The following table lists the expenses used to calculate the living expenses for a household:Household member
Living expense
Single adult
$14,144
Couple
$26,780
Each child
$ 5,200
DLA Holders/Introducers must determine whether the applicant(s) share income and/or expenditure with another
person or persons.
If the applicant(s) are from separate households, the living expenses applicable for each household must be
included when calculating available income.
For each household the number of adults and dependent children must be accounted for and the living expenses
applicable must be included when calculating total income available for debt and housing.
Married/defacto relationships share income and expenditure and must be loaded as 2 adults with living expenses
based on a couple. Dependent children, if applicable, must also be included.
Other joint applicant(s) (e.g. siblings or friends) must be treated as separate households with the corresponding
number of adults and dependent children living in each household included.
31
Effective December 2014
Applicant
For example:
Brother & Sister applying for loan:
Household 1
Household 2
Brother + partner + child
Sister + child
2 adults + 1 child
1 adult + 1 child
11.5 Calculation of serviceability ratio
Serviceability is calculated as per the following formula:
Serviceability Ratio = Total Income Available for Debt & Housing ÷ Total Commitments
Total commitments are calculated as the sum of new and existing commitments including:
•
all regular debt repayments (new and existing);
•
debt repayments on all other loans that have been approved (future commitments);
•
full commitment on any existing loans in joint names;
•
full commitment on any existing loans where the applicant provides a guarantee;
•
full commitment on any private loan agreement(s), refer section 22 Second mortgages for documentation
requirements;
•
full loan repayment for investment loans (i.e. do not shortfall as 80% rent is included as taxable income);
•
for new principal and interest loans (including amortising revolving credit limits) use repayments based on the
actual loan term;
•
when assessing serviceability for new interest only loans (including revolving credit) rolling to principal and
interest, repayments are to be calculated on a 30 year, principal and interest basis;
•
the interest only commitment on the full credit limit for existing revolving credit products (irrespective of whether
facility is Bendigo and Adelaide Bank or external);
•
3% of the total limit for all credit cards (including store accounts);
•
hire purchase/lease repayments;
•
any HECS/HELP commitment with minimum repayment determined by applicant(s) gross income multiplied by
the threshold rate as set by the Australian Taxation Office (www.ato.gov.au). The outstanding debt must also be
included as a liability;
•
rent or board that will still be applicable on loan approval; and
•
child support payments, irrespective of whether a court order exists.
Where applications are in one name only, but the applicant(s) shares income and expenditure, all commitments
(joint & several) must be used.
11.6 Qualifying rate
The new loan will be qualified by calculating repayments at an interest rate which is greater of:
•
1.5% above the standard variable rate OR
•
The ‘floor’ interest rate of 7.50%pa
32
Effective December 2014
Facility
Facility
12 Credit scorecard
The Credit Scorecard applies to all loan applications. All applications are to be processed via ABE, OLAS or DX.
All loans are scored with the result falling into the following three categories.
This resulting score segments applications into 3 categories requiring approval by the DLA level, or higher, as
specified in the tables below
Risk Level
Low Risk
Action
Can be approved if all policy requirements
are met
Moderate risk
Judgementally review before proceeding
High risk
Critically review application
DLA
DLA
Mortgage Manager
Processing
1
1
3
3
(refer Processing)
7
13 Loan sizes
All loans less than $5M, where the borrowing entity is an individual, are to be regulated facilities.
Loans greater than $5M secured by multiple residential investment properties, are to be written as unregulated
loans regardless of the borrowing entity.
The following approval limits apply to the total aggregation of residential loans (new and existing).
13.1 Processing centre DLA dollar limits.
DLA
Dollar Limit
1
$300k
2
$400k
3
$750k
4
$850k
5
$1.5M
6
$2.0M
7
$3.0M
8
$3.5M
9
$5.0M
CEO
$20M
CC
5% of Capital
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Effective December 2014
Facility
13.2 Mortgage Manager DLA dollar limits
DLA
Dollar Limit
1
$300k
2
$400k
3
$750k
4
$850k
5
$1.5M
6
$2.0M
13.3 LVR dollar limits for loans without LMI
LVR
≤ 80%
≤ 75%
≤ 70%
≤ 65%
Dollar Limit
$2.0M Single
Security
$3.0M Multiple
Securities
$3.5M Multiple
Securities
No limit Multiple
Securities
Exceptions to LVR dollar limits must be approved by the DLA, or higher, as specified in the table below.
Mortgage Manager
Processing
(refer processing)
7
14 Loan purpose and documented evidence
Loans may be used for purchase of property, construction, renovation, refinance/ consolidation of debts and equity
for investment or personal purposes.
All loans are subject to the following:
•
Refer to section 14.9 Documentation requirements.
•
Refer to section 16 Loan to valuation ratio (LVR).
•
Refer to Adelaide Bank Product guidelines.
•
Refer to section 13. Loan sizes.
•
Refer to section 17. Acceptable security.
Where a combination of LVR and exposure/loan sizes exist, the lowest level will apply.
34
Effective December 2014
Facility
14.1 Purchase of Residential property
Loans may be used to purchase dwellings or vacant land.
Purchases for short term speculative purposes are not acceptable.
Purchases of investment properties involving schemes for the tenant to purchase the property (i.e. rent to own),
sale and life tenancy agreements and vendor/wrap finance are not acceptable.
Display/Exhibition Homes purchased with a lease back arrangement are to be assessed as an investment property
using normal market rent as specified by valuer (rent paid to the purchaser may be inflated under lease). Full
valuations are required.
14.2 National Rental Affordability Scheme (NRAS)
National Rental Affordability Scheme (NRAS) investment properties are acceptable on the following basis:
•
Must be leased or managed to an affordable housing consortium that has been approved by LMI provider
Genworth which permits subsequent purchaser to not participate in NRAS and for security property to be
unencumbered by the NRAS scheme;
•
Refinances only on a $ for $ basis – no cash out permitted;
•
Full valuation required in all circumstances, with the Bank’s panel valuer instructed to comment on any adverse
issues surrounding the fact that the security is classed as an NRAS property;
•
A copy of the NRAS application and supporting documentation must be obtained and assessed in all cases;
•
Borrowers to be advised Independent Legal Advice (ILA) is strongly recommended with borrower’s signed
acknowledgement to be obtained that ILA has/will be sought or waived at borrower’s discretion;
•
LVR >80% requires LMI to a maximum 90%;
•
All loans requiring LMI are also subject to the mortgage insurer’s specific requirements. Refer to LMI provider
guidelines for policy requirements and exclusions;
•
NRAS market rental income to be used for serviceability calculations (NB input as 100% in Rental – system will
default to 80%);
•
Government NRAS Tax Offset to be excluded for servicing requirements **
**however tax offset is allowable @ 80% at the discretion of and subject to Processing Centre DLA 7 or higher sign
off.
NRAS exclusions:
•
‘Hybrid agreements’ (eg. where a third party is acting on behalf or in conjunction with an approved affordable
housing consortium) are unacceptable;
•
Vacant land purchases unacceptable
•
Apartment/unit purchases unacceptable
•
Lo Doc not available
•
QBE LMI do not provide cover (outside their guidelines).
Genworth Approved NRAS Housing Consortiums
•
4 Walls Ltd/Urban Affordable Housing
•
Affordable Community Housing Ltd
•
Affordable Housing Consulting Pty Ltd
•
Affordable Management Corporation Pty Ltd
•
Aspire Housing Group Pty Ltd
35
Effective December 2014
Facility
•
Brisbane Housing Company Ltd
•
Coast2Bay Housing Group Ltd
•
Community Housing Limited
•
Community Housing Canberra Ltd
•
Crown Property Pty Ltd
•
Ethan Affordable Housing Ltd
•
Horizon Housing Company Ltd
•
Loddon Mallee Housing Services Ltd T/As Haven
•
McKenzie Bond Pty Ltd
•
Mission Australia Housing (Victoria) Ltd
•
Mission Australia Housing Ltd
•
Places Victoria Limited
•
Providence Housing Pty Ltd
•
Quantum Housing Group Pty Ltd
•
Queensland Affordable Housing Consortium Ltd
•
Questus Funds Management Pty Ltd
•
Tremplin Limited
•
United Vietnamese Buddhist Congregation of Canberra & Surrounding Districts Incorporated
•
Yarran Residential Investments Pty Ltd
14.3 Construction of residential property or home improvements
Loans may be used for the construction of dwellings or structural/major renovations:
•
Construction works must be undertaken by licensed builder and have a fixed price building contract.
•
‘Extras’ are additional items or works that are outside the Fixed Price Building Contract. If they have been
included in the ‘as if complete‘ valuation they will also form part of the total building costs (Fixed Price Building
Contract plus Extras).
•
Loans are to be funded on a progress payment basis, refer section 14.4 Progress payment requirements for
guidelines.
•
Construction is not available for LOC products.
Non structural home improvements where the LVR is not reliant on a valuation that includes the proposed works do
not require progress payments, refer section 14.8 Equity release.
14.4 Progress payment requirements
The following requirements apply to all applications involving progress payments, regardless of the type of
construction involved:
•
All documentation requirements must be met prior to first progress payment drawdown. Refer section 14.9
Documentation requirements.
•
All applicant(s) funds must be used in the construction before any loan moneys are advanced.
•
At all times the Bank must retain the total sum required to complete the construction.
•
Funds are to be fully drawn within 12 months of the initial draw down.
In addition, the following must be observed for each construction type:
36
Effective December 2014
Facility
14.4.1 Construction by a licensed builder
• Payments are to be made at slab/floor, frame, lock up, fit out and completion stages unless specified otherwise
by the Valuer.
•
There will be 2 inspections required by the valuer to authorise payment at the frame and completion stages.
•
For other stages, progress payments can be paid to the builder provided the claim is for the amount detailed on
the building schedule of payments or less. The borrower(s) must be in a position to inspect the construction
and certify that work has been completed in order for the Bank to make the payment.
•
No additional funds are to be paid, even if work has commenced on the next stage.
•
All progress payments are to be paid direct to the builder.
14.4.2 Structural home improvements by a licensed builder
Where a major structural change to an existing property is to be completed, (e.g. roof being removed, additional
rooms being constructed, etc) or the ‘as if complete’ value is being relied upon, the loan is to be advanced on a
Progress Payment basis. Refer section 14.4 Progress payment requirements.
•
Progress inspections by the valuer are required at each claim stage.
14.4.3 Payment of extras
• Regardless of LVR, payment for extras will be made on invoice direct to the supplier.
•
A signed borrower authority is required for each payment, including any work to be performed by the owner(s);
•
Borrowings for extras that have not been included in the ‘as if complete’ valuation can be advanced as surplus
funds as required by the borrower(s), as long as cost to complete is retained at all times.
The following criteria applies for extras that have been included in the ‘as if complete’ valuation and form part of the
total building costs:
LVR
Restrictions
≤ 80%
Further progress inspections not required for the payment of extras.
> 80%
Final progress inspection required (after the builder’s final inspection) before advancing the final progress payment.
NB In situations where total extras do not exceed the lesser of 5% of the Total Building Costs (including extras) or $15,000, a final inspection is
not required.
Reimbursement for extras paid by the borrower(s): In the situation where the borrower(s) has paid for the extras themselves, reimbursement to
their nominated account will be made subject to the receipt of a paid invoice and customer authority stating the works have been completed.
14.4.4 Construction using a kit home/transportable
A kit home/transportable is defined as a building that is constructed off site and then transported to the land and
affixed to it. Final fit out and connection of services such as power and water are then done on site.
•
Funds for the full construction can be approved but cannot be released (including any deposit) until the
structure is delivered and affixed to the land held as security.
•
Loans are to be funded on a progress payment basis and subject to section 14.4 Progress payment
requirements.
•
Progress inspections by the valuer are required at each claim stage.
14.5 Bridging finance (Go-between)
Applications for bridging loans are subject to the standard Residential Lending criteria with the following exceptions:
•
Established dwelling - Interest may be capitalised on the new loan for a maximum of 6 months.
•
Construction of new dwelling - interest may be capitalised on the new loan for a maximum of 12 months.
•
Maximum 85% LVR including capitalised interest and, if applicable, capitalised LMI.
37
Effective December 2014
Facility
•
Servicing is based on the end debt.
•
Lenders must use the Go-between calculator to calculate the capitalised interest on all Go-between loans.
•
The two (or more) properties must be Collaterally Secured to ensure Bendigo and Adelaide Bank's interest is
registered on all securities.
•
Bendigo & Adelaide Bank must hold a 1st registered mortgage over the primary security (property(ies) to be
retained).
•
In all cases where LMI is required (i.e. peak debt or end debt is > 80%), cover must be obtained at loan
approval stage, refer LMI provider guidelines.
•
Where LMI applies, the premium is calculated on the peak debt.
•
Full valuation required on property to be sold. Normal valuation criteria applies on new property, refer section
21.1 Valuation types.
•
All lenders must check the valuation to ensure it is in line with the applicant(s) selling price and consideration
must be given to the saleability of the property by referring to the valuer’s comments.
•
Where the applicant(s) is using the nil end debt option (i.e. where the applicant(s) will be paying out all of their
loans with Bendigo and Adelaide Bank at the end of the bridging period) the loan must be referred to the
Processing Centre for approval.
•
The applicant(s) must be made aware of the interest capitalisation and the need to sell the property within the
agreed timeframe.
•
Applicant(s) should be encouraged to service the new loan fully or partially during the bridging period.
•
Normal repayments are to be made on the existing loan(s).
All applications must be approved by the DLA level, or higher, as specified in the table below dependant on LVR
banding.
LVR ≤ 80 %
Mortgage Manager
Processing
3
3
Mortgage Manager
Processing
(refer processing)
7
LVR ≥ 80% - ≤ 85%
Exceptions to any of the above criteria must be approved by the DLA level, or higher, as specified in the table
below.
Mortgage Manager
(refer Processing)
Processing
7
14.6 Business purposes
Loans for business purposes may only be accepted if the business purpose forms a maximum of ≤ 20% of the total
loan amount (working capital or payment of personal or business tax liabilities are not acceptable).
38
Effective December 2014
Facility
14.7 Refinances and debt consolidations
Loans are available for refinance of an existing mortgage facility or debts, either currently held with Bendigo and
Adelaide Bank or other institutions. Where multiple facilities are to be refinanced (two or more debts) the
application is to be treated as a consolidation loan.
Statements are to be reviewed for the following:
•
No evidence of late/arrears charges;
•
No arrears or over limit amounts;
•
Regular/timely repayments are being made;
•
The loan has been conducted in terms of its arrangements*
*If the loan is either increasing or has had no repayments over the last 12 months the lender must sight evidence that these funds have been
used either to reduce other debt or provide for asset accumulation.
Adverse conduct is defined as:
•
2 or more incidences for any individual credit card facility; or
•
3 or more incidences for any individual loan facility.
Variances to the above criteria must be approved by the DLA level, or higher, as specified in the table below and
must be acceptable to the LMI provider (if applicable).
Mortgage Manager
Processing
6
7
14.8 Equity release
Funds may be used for personal or investment use.
Working capital or payment of personal/business tax liabilities is not acceptable.
14.9 Documentation requirements
14.9.1 Reserved
14.9.2 Supporting documentation
The following documents must also be provided subject to the loan purpose:
Loan Purpose
Documentation Requirements
•
Copy of the purchase contract (must be fully executed
at settlement);
•
VIC Only – Section 32 certificate and a copy of
purchase contract;
Purchase of Residential Property
•
NSW Only – First page of contract together with any
Covenant and Special Conditions (if applicable);
•
QLD only – New property only - section 27c certificate;
Prior to settlement:
•
Copy of current building insurance with Bank noted as
mortgagee.
Construction of Residential Property or
Licensed Builder:
39
Effective December 2014
Facility
Loan Purpose
Documentation Requirements
Prior to first draw down:
•
Structural Home Improvements
Fixed price building contract including payment
schedule and any extras; and
(The extent of the structural home
•
Council approved plans and specifications; and
improvements and local council
•
Builder’s indemnity insurance.
requirements will determine whether
Prior to final draw down:
permits are required. If required, a
copy must be obtained)
•
Occupancy certificate as per state/territory regulations;
•
Copy of current building insurance with Bank noted as
mortgagee.
Non structural home improvements
No documentation requirements.
Purchase of Residential Property:
•
Bridging finance (go-between)
Refer to Purchase of Residential Property above.
Construction:
•
Refer to Construction of Residential Property above.
Applicant(s) must disclose use of funds.
Business Purposes
No additional documentation required.
>80% LVR:
•
The most recent 6 months statement for mortgage
loans;
Refinance and Debt Consolidation
•
(statement requirements apply to
The most recent 3 months statements on other debts.
<80% LVR:
accounts to be refinanced)
•
The most recent 3 months statements for mortgage
loans;
•
The most recent 3 months statements on other debts.
Applicant(s) must disclose use of funds.
Equity release
No additional documentation required.
Variances to the above criteria must be approved by the DLA level, or higher, as specified in the table below and
must be acceptable to the LMI provider (if applicable).
Mortgage Manager
Processing
6
7
14.10 Internet bank statements
Internet bank statements are acceptable when the following information is present:
•
The applicant(s) name;
•
The full account number;
40
Effective December 2014
Facility
•
Individual transactions are itemized and there is a running account balance;
•
The logo and name of the financial institution is displayed.
Note: If the applicant(s) name, account number or the financial institution’s logo is not displayed on the internet
statements, these must be verified against either an original bank issued statement or the internet banking
summary.
41
Effective December 2014
Other verification requirements
Other verification requirements
15 Deposit/equity and savings history
15.1 Verification of deposit funds/equity
The following criteria regarding sources of deposit funds/equity applies for standard home loan applications.
LVR > 80% (with LMI): Deposit requirements as per LMI criteria, refer LMI provider guidelines.
LVR <80% (No LMI): The full deposit required to complete the purchase must be verified as per section 15.1.2
Other deposit funds and a copy of the appropriate documentation held on file.
Only in exceptional circumstances may the above criteria be waived (the mortgage insurer must be advised if LMI
is to be taken). Exceptions must be approved by the DLA level, or higher, specified in the table below.
Mortgage Manager
Processing
5
3
15.1.1 ‘Genuine Savings’
Genuine savings are required as follows:
LVR
Restrictions
≤ 80%
5% Genuine Savings NOT required
> 80%
5% Genuine Savings required
Where ‘genuine savings’ is required, evidence of 3 months of savings must be demonstrated.
It must be verified and a copy of the appropriate documentation held on file.
Appropriate documentation in the name of the applicant(s) includes:
•
Account statements showing an established savings pattern.
•
Share certificates.
•
Superannuation statement showing available funds.
•
Deposit held in an account accumulated over a 3 month period
•
Real estate equity determined from sales contracts, agency agreements, valuations, market estimates, etc.
•
After tax bonus from employer. NB if tax bonus used as income, cannot be used as genuine savings.
15.1.2 Other Deposit Funds
Appropriate documentation in the name of the applicant(s) includes:
•
Term deposits or saving account statements.
•
Real estate agent/solicitor receipts.
•
Solicitor’s advice confirming inheritance/compensation etc.
•
Share certificates (for publicly listed stock).
•
Superannuation statement showing available funds.
42
Effective December 2014
Other verification requirements
•
Commission statements.
•
Borrowed funds must be confirmed and included as a commitment. For owner occupied loans, these additional
borrowings are to be with another institution. For investment loans using equity in an existing property as
deposit, there are no restrictions on borrowings. Where borrowed funds are from a private loan agreement,
additional documentation may be required, refer section 22 Second mortgages. For loans >80%-85% or where
LMI is required, borrowings are acceptable subject to LMI criteria.
•
Trade dollars, e.g. Bartercard, maybe be used as a deposit under the following criteria:
o
LVR must be <80% (LMI's don't usually accept Bartercard/Trade Dollar deposits);
o
5% genuine savings or 10% own funds (i.e. funds from sale of asset) must form part of the deposit;
o
Bartercard/Trade Dollars can be a form of credit. A statement must be provided to confirm if borrowings. If
borrowings, then 3% of limit needs to be added to commitments for servicing purposes;
o
A full valuation is required and the valuer is to be advised Barter/Trade dollars are being used as part of the
transaction.
•
Gifts substantiated by a Statutory Declaration from the donor, declaring that it is not repayable.
•
Real estate equity determined from sales contracts, agency agreements, valuations, market estimates etc.
•
Completed `First Home Owner Grant Application Form'.
*The First Home Owners Government Grant is available to eligible first home owners. The First Home Owners Grant for construction loans
where applicant(s) have applied (and declare that they are eligible) for the FHOG, the Bank may advance the expected FHOG fund, State
and Rural bonuses approved by FHOG, at land settlement. The applicant(s) are still required, at land settlement, to contribute all the other
agreed deposit funds. The FHOG is to be directed to the Bank at first construction draw down and the loan brought back within normal
lending guidelines. Future progress payments are to be made on a cost to complete basis. Mortgage Insurers are to be advised of this
arrangement when cover is applied for. Applicant(s) must sign an Irrevocable Authority Form prior to land settlement.
•
Funds from builder’s incentives, cash backs, or ‘save as you build’ schemes, or borrowings can not be
considered ‘genuine savings’ or form part of the genuine deposit.
Variances to the above verification criteria must be approved by the DLA level, or higher, specified in the table
below and must be acceptable to the Lender's Mortgage Insurer where LMI is being taken.
Mortgage Manager
Processing
5
3
15.1.3 Internet Bank Statements
Internet bank statements are acceptable; refer to 14.10 Internet bank statements for requirements.
16 Loan to valuation ratio (LVR)
The maximum LVR applicable is dependent on loan size, product type, purpose and security type.
The valuation figure used for the LVR calculation is the lower of the purchase price/Fixed Building Contract Price
and the Bank's Valuation. The above criteria may be varied on an exception basis only and approved by the DLA
level as specified in the table below (Mortgage Insurers to agree if LMI is to be taken).
43
Effective December 2014
Other verification requirements
Mortgage Manager
Processing
(refer processing)
7
16.1 Maximum LVR matrix
The following table shows the various product, purpose and security LVR guidelines.
For maximum LVR’s with capitalised LMI, refer to section 23.3 Capitalised LMI premiums.
Where multiple restrictions apply, the lowest LVR is applied as the maximum.
Where LMI is required, the mortgage insurer may have further restrictions on the maximum LVR, refer LMI provider
guidelines.
Category
Value
Max LVR
Max LVR
without LMI
with LMI
80%
95%
80%
90%
70%
80%
80%
90%
80%
85%
14 Loan purpose.
80%
95%
14 Loan purpose.
80%
90%
14 Loan purpose.
80%
90%
80%
90%
80%
90%
80%
90%
80%
90%
80%
85%
80%
90%
Section
Owner Occupied Principal and
interest loans
Interest only loans (line of credit or
term)
Product type
Lo Doc loans
EFM associated loans
Bridging finance (go-between)
Owner occupied (including
construction)
Investment/holiday home (including
construction)
Vacant land
Refinance
Loan purpose
Debt consolidation
Equity release
Home improvement
Bridging finance (go-between)
30 Lo Doc product specific policy
33 Equity Finance Mortgage (EFM)
associated loans
14.5 Bridging finance (Go-between
loans).
14.7 Refinances and debt
consolidations
14.7 Refinances and debt
consolidations
14.8 Equity release
14.3 Construction of residential
property or home improvements
14.5. Bridging finance (Go-between
loans).
Collateral security
Security
Category 1 locations
20.1 Location categories.
80%
95%
Category 2 locations
20.1 Location categories.
80%
95%
Category 3 locations
20.1 Location categories.
80%
95%
44
Effective December 2014
Other verification requirements
Category
Value
Section
Inner city high density
19.2 Inner city high density
apartment/unit
units/apartments.
Vacant land
14 Loan purpose.
development.
Serviced, resort or hotel style
19.3 Serviced, resort, hotel style
apartments
and university/student apartments.
University/student apartments
Units/Townhouses ≥4
Max LVR
without LMI
with LMI
70%
80%
19.1 Multiple units in a single
Units/townhouses ≤3
Max LVR
19.3 Serviced, resort, hotel style
and university/student apartments.
19.1 Multiple units in a single
development.
80%
Refer to LMI
guidelines
90%
Refer to LMI
guidelines
60%
60%
60%
60%
65%
N/A
Rural living ≤ 10ha
17 Acceptable security.
80%
90%
Second mortgages
22 Second mortgages.
70%
70%*
* Second mortgages behind a Defence Service Home Loan are acceptable to 85%.
Where an application falls outside of any of the above conditions, acceptability must be determined and approved
by the DLA level (or higher) as specified in the table below (and acceptable to the Mortgage Insurer if LMI is to be
taken).
Mortgage Manager
(refer processing)
Processing Centre
7
45
Effective December 2014
Security
Security
17 Acceptable security
Residential property, including a house, unit, duplex, townhouse, block of units/apartments and vacant land in good
condition and readily saleable will be considered suitable security, if it complies with the conditions outlined below
and sections 18 Unacceptable security and 19 Specialised security.
NRAS (Federal Government’s National Rental Affordability Scheme) housing is acceptable for ‘house’ category
only; apartments/units etc are unacceptable.
Display/Exhibition Homes purchased with a lease back arrangement are to be assessed as an investment property
using normal market rent as specified by valuer (rent paid to the purchaser may be inflated under lease). Full
valuations are required.
A residential loan may be secured by more than one property.
A security is acceptable if it meets the following conditions:
Acceptable Title types
Property requirements/restrictions
Property area does not exceed 10 hectares/24.7 acres (with improvements
or vacant);
Must have zoning/town planning classification of ‘residential’, rural
residential, ‘rural living’ or equivalent type and specifically excludes
industrial and commercial zones;
•
Torrens Title
•
Strata Title
•
Old System Title
•
Community title
•
Crown Leases (inc ACT
leases)
Must have electricity, all weather road access and water must be available;
Must not be subject to restrictive statutory interest (e.g. road widening,
housing improvement orders etc.);
Must not be subject to contamination or any adverse environmental factor;
Dwelling must be greater than 40m2*, excluding balcony & car parking;
NSW ONLY Properties subject to mines subsistence are acceptable
provided a section 149 certificate is supplied;
Maximum number of units for any one applicant is limited to 3 within a
single development whether on separate titles or on one title. (Refer 19
Specialised security for 4 or more units)
Inner city high density units/apartments, refer 19.2 Inner city high density
units/apartments.
*for dwelling <50m2, refer to LMI guidelines
Where a property falls outside of any of the above conditions, acceptability must be determined and approved by
the DLA level (or higher) as specified in the table below (and acceptable to the Mortgage Insurer if LMI is to be
taken).
46
Effective December 2014
Security
Mortgage Manager
Processing Centre
(refer processing)
7
18 Unacceptable security
The following title and property types are not acceptable security.
Unacceptable Title types
Unacceptable properties
•
Moiety titles (SA)
Property used for commercial purposes
•
Purple Titles (WA)
Income producing rural property
•
Leasehold properties other than
Units in retirement/mature age complexes
listed in acceptable securities
•
Company Titles
•
Stratum Titles
•
Miscellaneous shack leases
Mobile home
More than 10 units on one title
Property subject to the Western Lands act
Property within a scheme to purchase at a later date
Property with a lease of life covenant
Property with a valuation that has any property/market risk ratings of 5
Time share properties
Shared use property e.g. shop and house on one title
Property subject to a split contract that is part of a development where multiple
dwellings share common walls, footings or roof
NB this list is not exhaustive. Please check with Processing Centre if unsure
Exceptions to any of the above criteria must be approved by the DLA level (or higher) as specified in the table
below.
Mortgage Manager
Processing Centre
(refer processing)
7
19 Specialised security
The following properties are considered specialised security and are subject to additional conditions and in some
cases reduced LVRs.
A full valuation must be completed for these security types.
Specialised security is not acceptable for lo doc loans.
47
Effective December 2014
Security
19.1 Multiple units in a single development
Where there are 3 units or less owned by the same borrower relationship within the same development whether on
separate titles or on one title, standard lending criteria applies.
Where 4 or more units are owned by the same borrower relationship within the same development, reduced LVRs
apply. This reduced LVR applies even if the bank is not the mortgagee of all units owned by the applicant(s). Refer
section 16.1 Maximum LVR matrix.
19.2 Inner city high density units/apartments
Apartments/units located within the city CBD or fringe (defined by postcodes below) and in a complex with more
than 35 apartments are considered inner city high density units/apartments.
State
Postcode
NT
0800
NSW
2000 – 2009
Vic
3000 – 3009
Qld
4000 – 4004
WA
6000 – 6005
SA
5000 – 5005
Tas
7000
Standard lending applies to inner city properties that are not classified as high density units/apartments, e.g.
houses, townhouses, maisonettes and units in complexes less than 35 units, however full valuations are required
on these properties.
The following restrictions apply to inner city high density units/apartments:
•
Max LVR 70% without LMI (exceptions to 80% maybe considered);
•
When LMI is taken the max LVR acceptable to the mortgage insurer applies;
•
Full Valuation required;
•
Must be greater than 40m2, excluding balcony & car parking; and
•
Lo Doc loans not acceptable.
Loans with inner city high density apartments as security require approval from the DLA, or higher, as listed in the
table below.
Mortgage Manager
Processing Centre
6
7
19.2.1 High density complexes located outside the city CBD and fringe
Standard lending criteria applies to unit/apartment complexes with more than 35 apartments located outside CBD
areas, however full valuations must be completed.
19.3 Serviced, resort, hotel style and university/student apartments
These apartments are usually subject to restrictions such as management and leaseback agreements.
48
Effective December 2014
Security
Possible restrictions in the management agreement that may apply are:
•
Use as owner occupier or investor,
•
The basis for calculating and distributing rental income to the owner,
•
Rental guarantees,
•
Conditions of sale should the unit be on sold in the future.
The following additional information is required and must be forwarded with the application:
•
an approximate completion date if the complex is still under construction;
•
car park availability;
•
the total number of apartments within the development, the number of serviced apartments (if applicable) and
the nature of the management agreement;
•
price range of the apartments within the development;
•
range of apartment sizes within the development;
•
copy of the sales contract including any special conditions and any other agreements;
•
any additional information available such as rental guarantees and marketing strategy; and
Where a management or leaseback agreement exists, the following restrictions apply:
•
Max 60% LVR without LMI;
•
When LMI is taken, the max LVR acceptable to the mortgage insurer applies;
•
Market rent is to be used for servicing, not any rental guarantee amount;
•
Units must be greater than 40m2, excluding balcony & car parking;
Refer section 19.6 Concentration exposure within a development for restrictions on lending to a single
development.
Where a management or leaseback agreement does not exist, standard residential lending requirements apply.
19.4
‘Off the plan’ purchases
These include:
•
Those purchased ‘off-the-plan’;
•
Those purchased ‘during construction’;
•
Those purchased at the completion of construction in an ‘off-market’ transaction between the developer (or
their agent) and the purchaser (i.e. not at public auction/sale).
Off the plan purchases are acceptable where both the development is to be completed and the loan settles within 6
months. The valuation, approval, and loan contract is valid for a period of up to 6 months.
Developments that will not be completed within 6 months will receive a pre-approval i.e. "subject to a check
valuation and confirmation that the borrowers' circumstances are unchanged".
Formal approval and loan contracts may be issued no more than 6 months prior to completion, provided the
'subject to' conditions have been met.
Refer section 19.6 Concentration exposures within a development for restrictions on lending to a single
development.
Queensland Builder/Developer Sales - A copy of the Section 27c Certificate must be supplied to the bank, LMI
Provider and the valuer for purchases of new property in Queensland. The valuer must confirm in the valuation
report that they have sighted the Section 27c Certificate and the total commission involved in the transaction .
49
Effective December 2014
Security
Off the plan purchases are acceptable under standard residential lending with the development type determining
the maximum LVR (e.g. high density, student accommodation, etc.) refer 16.1 Maximum LVR matrix for guidelines.
In addition valuation restrictions apply, refer section 21.3.3 Valuations completed on ‘off the plan’ properties.
19.5 Reserved
19.6 Concentration exposure within a development
In instances where a partner is approached by a developer or agent to become a preferred financier within an
apartment complex or sub-division, the following conditions must be met:
•
Any potential lending volume exceeding 20% of the total units/apartments or vacant blocks of land within any
one development must be referred to the Processing Centre, who will conduct a review on the development.
•
Lending for units within a group of more than 35 units is also subject to the conditions in section 19.2 Inner city
high density units/apartments.
•
Comments on the development are to be obtained from a panel valuer, refer to section 21.3.5 Valuations
completed for concentration exposure requests and the Valuers recommendations/comments will be used to
assist in determining suitability and maximum LVR.
•
The Processing Centre will take into consideration any special conditions and LMI availability to determine
maximum exposure and criteria.
•
Each development will be assessed on its merits. The Processing Centre may place special conditions or set
maximum LVRs and exposures within a specific development/group.
•
A database is established for each development to enable the Bank to monitor the total exposure within the
development.
In all instances, where the Processing Centre has agreed to a maximum number of units with in a development,
valuations are to be spread between at least two Valuers.
20 Security locations
20.1 Location categories
Security locations are divided into three categories:
Category
Category 1
Description
Maximum LVR
Capital cities (inclusive of specified surrounding rural living areas) & major
regional cities.
95%*
Category 2
Regional centres & large country townships.
95%*
Category 3
Country townships/Other locations.
95%*
*Including LMI premium. In situations where LMI is to be taken the maximum LVR acceptable to mortgage insurer
may apply and the application approved by the DLA level, or higher, specified in the table below.
Refer Bendigo and Adelaide Bank Security Location Categories for current locations. All lending greater than 80%
requires LMI cover. However this may vary according to product specific policies.
Mortgage Manager
2
Processing Centre
3
50
Effective December 2014
Security
20.2 Location list review
It is the responsibility of Group Risk to review the list of locations and categories, annually or when required.
Changes must be recommended and approved within relevant Credit Committee Charters.
21 Valuations
21.1 Valuation types
The following table indicates the required valuation type based on the security location, LVR and loan amount:
For maximum loan amount and LVR per security, please refer to 13 Loan sizes.
Category 1
Valuation type and max acceptable loan
amount
Purchase Contract
≤ $500,000 (Maximum loan amount)
Valuer General (CV) (SA Only)
≤ $500,000 (Maximum loan amount)
Full
(No dollar limit)
Standard Loan
Lo Doc Loan
≤80%
>80%
≤ 60%
>60%












Category 2
Valuation type and max acceptable loan
amount
Standard Loan
Lo Doc Loan
≤80%
>80%
≤ 60%
>60%
Purchase Contract




Valuer General (CV) (SA Only)








Full
(No dollar limit)
Category 3/Other locations
Valuation type and max acceptable loan
amount
Standard Loan
Lo Doc Loan
≤80%
>80%
≤ 60%
>60%
Purchase Contract




Valuer General (CV) (SA Only)








Full
(No dollar limit)
Where a concern over a particular property/location exists a full valuation must be undertaken.
51
Effective December 2014
Security
21.1.1 Purchase contract
For guidelines regarding when purchase contracts can be accepted, please refer to section 21.1 Valuation types.
A purchase contract will be accepted where the following conditions are met:
•
The application is not subject to the full valuation criteria, refer 21.1.3 Full valuations;
•
A fully executed Purchase Contract is to be supplied at assessment and must not be greater than 90 days old.
An unsigned Purchase Contract may be used at assessment and the loan formally approved, subject to "receiving a fully executed Purchase
Contract dated within 90 days of the approval, being provided prior to settlement confirming that (address of property) was purchased for $
(dollar amount) by (purchasers)". The fully executed Purchase Contract details must be the same as the unexecuted Purchase Contract
submitted for assessment, if not settlement must not proceed and loan is to be re-assessed.
•
The purchase price is to be adopted and used to determine LVR and valuation type required;
•
Any Purchase Contract used for this purpose must be a bona fide, arms length transaction (e.g. no related
parties, etc.)
•
Must be negotiated through a licensed Real Estate Agent;
•
Vacant land unacceptable;
•
Not acceptable for properties subject to ‘Split’ contracts;
•
Not acceptable where purchase contracts contain restrictive conditions or covenants that may affect the
saleability of the property;
•
Not acceptable for properties with a development approval;
•
No concessional rebates can apply to the transaction;
•
Contract price must be adopted on a GST exclusive basis.
21.1.1.1 Verification requirements
Verification of purchase contract is to be done as follows:
•
The real estate agent must be verified by checking agent name, address and contact number provided against
Telstra White Pages, Yellow Pages or other reliable independent source.
•
The validity of purchase contract and sale must be confirmed by phoning the Real Estate Agent’s office, using a
verified phone number and appropriate file notes made outlining confirmation details. The real estate agent
must not be contacted via a mobile phone for confirmation, unless the agent’s mobile phone number has been
confirmed at the real estate agent’s office.
Where validity of purchase contract and sale cannot be confirmed a full valuation must be undertaken.
21.1.2 Valuer General’s assessment
For guidelines regarding when a valuer general’s assessment can be accepted, please refer to section 21.1
Valuation types.
The Valuer General’s assessment will be accepted in lieu of a valuation under the following conditions:
•
The application is not subject to the full valuation criteria, refer 21.1.3 Full valuations;
•
South Australian properties only, interstate properties unacceptable;
•
Vacant land unacceptable.
21.1.3 Full valuations
For guidelines regarding when a full valuation can be accepted, please refer to section 21.1 Valuation types.
Full valuations are required in the following circumstances:
• Full valuations as required by LMI providers;
•
NRAS (National Rental Affordability Scheme) investment loan applicants;
•
Non Permanent Australian resident applicant(s);
•
The purchaser resides in different state or country than security property;
52
Effective December 2014
Security
NB Full valuations are not required for applicant(s) purchasing within an area where it is reasonable to expect that they know the market.
•
New developments or properties that have previously never been occupied (including house and land & display
homes);
•
Display/Exhibition Homes
•
Multi-dwelling properties (i.e. where two or more residences are constructed on the one title);
•
Securities listed under Specialised Security (refer section 19 Specialised security);
•
Lo doc applications;
•
Vacant Land;
•
Purchases completed without the intervention of a real estate agent;
•
Purchase involves rental guarantees, furniture packages or other non real estate components or ‘trade dollars’;
•
Second mortgages.
All full valuations are to be undertaken by qualified valuers who are members of the Bank's panel.
Valuations must only be requested through the Bank’s automated valuation management system, unless a specific
exemption has been granted for this requirement, however all valuations provided must comply with all other
requirements as set out in section 21.3 Valuation requirements.
The DLA holder must examine the valuation report to ensure it complies with the Bank’s standard instructions.
Valuation reports are to be accepted by an appropriate DLA holder.
Valuations conducted for parties other than the Bank can only be accepted if reassigned via the automated
valuation management system.
Valuation reports are not the property of the applicant(s) and must not be provided to them.
•
Manually overriding the system allocated valuer must only be performed by a C5 or C6 level DLA holder as
these are the DLA holders with the highest credit qualifications and experience. The Bank will consider giving
authority to a lesser C level DLA holder upon receipt of a recommendation from a Business Development
Manager on a case by case basis.
•
In every override instance a valid reason must be recorded in the manner required by the Bank, allowing the
Bank to identify the DLA holder and associated reasons for the override.
Allocation of work to Panel Valuers:
•
Allocations for a valuation firm in category 1 locations are not to exceed 25% unless less than 4 panel valuers
exist.
•
Allocations for a valuation firm in category 2 or Category 3 are not to exceed 50% unless they are the sole
panel valuer.
Any allocations outside of these parameters are to be approved by the Manager of Relationships and Performance.
21.1.4 Exceptions
The DLA level, or higher, as specified in the table below may vary any of the valuation requirements by exception
(Mortgage Insurer to agree if LMI is required). Where concern over a particular property/location exists a full
valuation must be undertaken.
Mortgage Manager
(refer processing)
Processing Centre
7
53
Effective December 2014
Security
21.2 Valuer criteria
•
Must be independent and at arms length from the vendor, developer, purchaser, real estate agent, introducer
and mortgage originator or mortgage manager.
•
For properties valued at more than $1 million, the following applies:
Each valuation must be completed by a registered or licensed valuer where registration or licensing is required in
that state or territory. The valuer must also be a member in one of the AAPI CPV or FAPI CPV membership
categories or an equivalent membership category of an equivalent professional body.
However, a valuation that was not completed by a FAPI CPV or an AAPI CPV who is also a director, partner or
principal of the firm, must be countersigned by another CPV qualified valuer of the firm.
No valuation submitted for a property valued at more than $1.0M can be completed by a PMAPI RPV or AAPI in
transition valuer or an equivalent membership of an equivalent professional body.
21.3 Valuation requirements
All valuation reports must meet the following criteria:
•
Include a statement that it is for the use of Bendigo and Adelaide Bank, its Agent and the Mortgage Insurer’s
and has been prepared for mortgage lending purposes.
•
Must be completed according to API standards.
•
A property description including a title reference and/or street address confirming the identity of the property;
•
All area measurements of the building(s) (including garage, carport, outbuildings, etc.)
•
Comments regarding easements (where applicable);
•
The zoning of the land including confirmation that occupancy is permitted and restrictions should the dwelling
require rebuilding;
•
Description of comparable sales must include the number of bedrooms, living area of property and site area;
•
Where appropriate, details and evidence of current rental/sale arrangements;
•
The Market Value and the effective date of the valuation;
•
Existence of any separate planning scheme or other plans that may adversely affect value;
•
Summary comments on:
o
Location attributes;
o
Positive and negative features;
o
Impact of prevailing market conditions relevant to the property;
o
Quantification of the effects on value of foreseeable and likely changes to the condition of the
property;
o
Environmental concerns, with recommendations for appropriate audit where doubts exist.
•
Comparative sales must include resales and sales in other developments. Valuations based solely on
comparative sales of new properties within the same development are not acceptable.
•
Where the security property is part of a large complex the total number of properties (units, townhouses, etc.)
in the complex must be noted.
•
Must exclude items not related to the likely resale of the property, such as furniture, any trade dollars
component to the sale price, unreasonable marketing costs, and rental guarantees.
•
Must be carried out on a vacant possession basis.
•
Must exclude additional value attributable to development approvals.
Valuations must be approved by the DLA level (or higher) as specified in the table below.
54
Effective December 2014
Security
Application comments or notes must clearly address and mitigate these exceptions.
Mortgage
Processing
Manager
Centre
1
1
3
3
Risk rating 4 for any issue AND LMI cover is approved.
3
3
Risk ratings that do not meet criteria listed above
6
7
Risk Analysis Rating
Risk rating 3 or below
A single risk rating 4 for Environmental Issues for
Bushfire/Wildfire overlays only;
OR
A single risk rating 4 for Environmental Issues for
Flooding overlays only
21.3.1 Valuations completed for ‘new’ properties
In addition to the standard valuation requirements, the following applies:
•
The mark-up ('premium') reflecting the new state of the premises must be reasonable, exclude excessive
marketing costs and based on the local buyer market rather than absentee investor buyers.
•
Queensland Only - Valuations must confirm that the Section 27c Certificate has been sighted and the total
commission involved in the transaction has been disclosed.
21.3.2 Valuations completed on an ‘as if complete’ basis
In addition to the standard valuation requirements, the following applies:
•
In cases of new dwellings yet to be constructed and existing dwellings which are to undergo structural
extension, the Valuer is required to review building contracts (including any variations to contracts), councilapproved plans, building schedules, building specifications.
•
Comments regarding the reasonableness of the construction and payment terms must be included. If no
building contract is available and/or the contract is not with a licensed builder, it must be noted in the valuation
report.
•
In cases of existing dwellings which are to undergo renovations and/or extensions, the valuer must provide an
’as is’ and ‘as if complete’ valuation.
•
Extras which are to be completed by an independent contractor (e.g.: swimming pool, new kitchen, fencing,
paving etc) should only be included in the ‘as if complete’ calculation if formal contracts or quotes have been
sighted which clearly state the payment terms.
•
In cases of a second storey addition, notes must be included advising if an area of existing roof cover is to be
removed as part of the works.
21.3.3 Valuations completed on ‘off the plan’ properties
In addition to the standard valuation requirements, the following applies:
•
Valuation is acceptable for a period of up to 6 months, subject to LMI acceptance.
55
Effective December 2014
Security
21.3.4 Reserved
21.3.5 Valuations completed for concentration exposure requests
In addition to the standard valuation requirements, the following applies:
•
Valuer must comment on the market rent;
•
Must comment on management agreement restrictions, where applicable;
•
Must comment on the location and quality of the development; and
•
Must comment on the saleability and demand.
21.4 Discrepancies between valuation and purchase price
Variance calculation is applied as follows:
Purchase Price – Valuation = Variance
Variance ÷ Valuation = Variance %
E.g.
Purchase Price $200,000 – Valuation $180,000 = Variance $20,000
$20,000 (Variance) ÷ $180,000 (Valuation) = 11.11%
In situations where the purchase price (real estate component only, e.g. excluding furniture packages etc.) exceeds
the valuation by more than:
•
10% - the applicant(s) must be advised of the valuation amount. The applicant(s) must provide written
acknowledgement of the variation, including the dollar amount, and that they wish to proceed with the loan
before formal approval can be given. Evidence of the applicant(s) acknowledgement must be held on file.
•
15% - Will be considered on an exception basis only. In addition to the applicant(s) written acknowledgement,
an acceptable reason for the variance must also be provided.
When the application involves both land and construction, the variance rules noted above must be applied
separately to the land and construction portions.
Acceptance of these applications must be obtained from the DLA level, or higher, as specified in the table below.
Mortgage Manager
Processing
(refer processing)
7
21.5 Timing and frequency of valuations
Where LMI is required existing valuations may be utilised for up to 3 months, or such longer period as the LMI
provider’s approval may permit, where to insist upon an additional valuation will not provide any risk management
advantage to the Bank, subject to acceptability by the mortgage insurer and adherence to valuation requirements,
refer section 21.1 Valuation types.
Where LMI is not required existing valuations may be utilised for up to:
•
3 months where the loan application is for a new advance;
•
12 months where the loan application is from an existing customer for a further advance and the security is
held by the Bank, subject to adherence to valuation requirements, refer section 21.1 Valuation types.
Where a DLA holder exercises discretion to rely upon an older valuation than stipulated in this policy, the DLA
holder must justify their reason and record appropriate commentary in the loan file.
A full valuation should be undertaken in situations where there is some doubt as to the value of the security. For example, specific locations
experiencing falls due to economic circumstances, general declines in the real estate market, security type warrants special attention
56
Effective December 2014
Security
(specialised security) or higher value properties (>$3M in NSW and Vic, >$1M all other states). Loans that were previously approved at a lower
LVR based on the standard of the security and valuation comments will require a new full valuation.
Loans outside these limits must be approved by the DLA level as specified in table below.
Mortgage Manager
Processing Centre
(refer processing)
7
22 Second mortgages
Second Mortgages are only acceptable in the following cases:
•
Limited to maximum aggregate LVR 70%;
•
Behind a Defence Service Home Loan (acceptable to max 85% LVR), subject to LMI, refer to LMI provider
guidelines for criteria;
•
For bridging finance (go-between) where a mortgage exists over the property(ies) to be sold;
•
Full valuation has been obtained;
•
Over collateral security to strengthen the Bank's recourse position where Bendigo and Adelaide Bank holds first
mortgage over the primary security.
Second Mortgages are not acceptable behind Private First Mortgages.
If a private loan agreement or arrangement exists but is not registered as a First Mortgage then the following must
occur:
• If no formal agreement is held, then a Statutory Declaration must be obtained confirming any repayment
arrangements and that no formal loan agreement exists which identifies the property offered as security to
the Banks as security;
• If a formal agreement exists, a copy must be obtained and the following steps taken:
If the agreement includes any reference to the property offered as security to the Bank, a Deed of Priority noting
Bendigo and Adelaide Bank must be obtained to ensure the Bank holds first mortgage position.
If the agreement does not include any reference to the property offered as security to the Bank, no further action is
required.
Applications must be approved by DLA level (or higher) as specified in the table below; and
Mortgage Manager
Processing
2
3
Applications outside the above criteria must be approved by the DLA level, or higher, as specified in the table
below, e.g. stand alone second mortgage behind another bank or building society.
Mortgage Manager
Processing
(refer processing)
9
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Effective December 2014
Security
23 Lender’s mortgage insurance (LMI)
23.1 Authorised mortgage insurers
The Banks current authorised Mortgage Insurers are:
•
QBE Mortgage Insurance Ltd
•
Genworth Financial Mortgage Insurance Pty Ltd
Refer to LMI provider specific policies, maximum loan amounts, LVRs and location guides
Click to view the QBE policy and to view the QBE Location Guide.
Click to view the Genworth policy and to view the Genworth Location Guide.
23.2 LMI requirement matrix
The following table shows the LVR at which LMI is required. Where multiple restrictions are applicable the
restricting with the lowest LVR is used to determine LMI requirements.
Loan Type
Fully Verified
Product
LVR
LMI Required
Section
Standard
> 80%
Yes
N/A
Specialised
Varies
Security
Yes - subject to LMI
providers
19 Specialised security
30 Lo Doc product specific
Lo Doc
> 60%*
Yes
Lo Doc Plus
> 60% and < 70%
No
Standard >70%
Yes
6.6 Non permanent
Lo Doc – unavailable
As Above
residents.
Lo Doc
policy
30 Lo Doc product specific
policy
Australian citizen
living/working
overseas & Non
All
permanent residents
* Lo Doc plus products acceptable to 70% LVR without LMI, refer section 30 Lo Doc product specific policy.
23.3 Capitalised LMI premiums
LMI premiums may be capitalised onto a loan provided the resultant LVR, including premium, does not exceed
95%.
Any exception to this requirement can only be considered by DLA level as specified below:
Mortgage Manager
Processing
(refer processing)
9
Lo Doc loans with LMI are limited to 80% LVR plus any capitalised LMI premium.
Bridging finance (go-between) loans with LMI are limited to maximum 85% LVR inclusive of any capitalised LMI
premiums.
All existing policies where LVRs or loan sizes are limited to a maximum, (i.e. loan purpose and security restrictions)
are based on the LVR or loan amount not including the LMI premium.
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Effective December 2014
Security
23.4 Changes to existing loan contracts
Renegotiation of loan conditions to an existing Mortgage Insured loan, must be approved by the relevant Mortgage
Insurer unless continuation of LMI is not required.
23.4.1 Credit Increases where LMI is currently in place
Applicant(s) must pay a premium on any increase/additional advance above the original loan amount. This
excludes any redraws on the original loan.
For additional or increased loan requests the following also applies:
•
Insured loans may be increased by an increase to an existing loan or a new separate loan against the same
security. If the additional loan amount is to be insured, a premium will be payable. Refer LMI premium
calculators;
•
An updated valuation is required if it is greater than 3 months old unless the LMI provider is prepared to accept
otherwise;
•
Cover for the additional loans must not extend beyond the maturity date of the originally insured loan. If
necessary an application may be forwarded to the original LMI provider requesting approval for an extension to
the maturity date of the original LMI policy.
Exceptions
•
Where the original loan was LMI insured and any subsequent increase no longer requires LMI cover (refer
security and product restrictions) no LMI is payable.
•
Where an increase was written for a category 3 location prior to September 2010 LMI will be in place. Any
subsequent increases/additional loans using the same security and where the proposed LVR is under 80% LMI
will not be required.
This policy does not apply to loans with Blanket LMI cover. These loans are subject to separate processes. Please
contact the Processing Centre should the loan being increased fall into this category.
23.4.2 Credit increases where LMI is currently not in place
Where approval is granted for a further advance to an existing facility that is not currently LMI insured, or creates a
new loan using the existing security and the new LVR now requires LMI cover, a proposal for the total loan amounts
(existing and new) must be submitted.
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Effective December 2014
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Post Settlement
24 Redraw
24.1 Redraw
Borrowers may withdraw all or any of the amount paid above the agreed repayments on their loan. Borrower(s) can
redraw via Online Banking or by completing a manual redraw form.
For Principal and Interest Loans:
•
The total amount less one scheduled payment may be withdrawn.
•
Minimum redraw amount $500.
For Interest Only Loans:
•
The total amount prepaid by the borrower(s) may be withdrawn.
•
Minimum redraw amount $500.
Only accounts where an ‘all monies’ mortgage is in place are eligible for redraw, however application can be made
to loan services for an adjustment to documentation should the security not be an ‘all monies’ mortgage.
25 Credit Increase
A Credit Increase may be applied to Principal and Interest, and Interest Only Term Loan or Line of Credit Facilities.
25.1 Credit Increase criteria
The reduced documentation requirements outlined in this section are subject to:
Satisfactory Bendigo and Adelaide Bank payment history:
•
The account is not currently in arrears;
•
The account is conducted within the terms of the contract.
Credit Increase criteria is as follows:
25.1.1 Applicant(s)
•
The applicant structure and names of the applicant(s) cannot be changed.
•
Where a company or trust exists, the structure cannot be amended e.g. Directors and/or Trustees.
•
Where an existing loan facility with a guarantee in place is being increased and the only change is the
increase of credit limit (i.e. Loan number, security and guarantor(s) remain the same) a new guarantee is not
required. The guarantor(s) must receive a copy of the guarantee extension and written acceptance must be
received from the guarantor(s).
•
If the increase is loaded as separate loan or the existing loan refinanced, then the application must be treated
as a new loan and a new guarantee provided by the guarantor(s).
25.1.2 Income and employment
PAYG:
No minimum employment period, if consistent employment history evident.
Income verified by one of the following:
•
Regular salary credits of consistent amounts, and identifying the name of the customer’s employer;
•
Current payslip showing YTD figures;
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Effective December 2014
Post Settlement
•
Employment contract or letter from employer; or
•
PAYG income and employment details verified by phone.
Self Employed, Company or Trust:
Require both of the following:
•
One company or business tax return and financials dated no older than 18 months; and
•
Each director, sole-trader and partner on the loan must also provide their recent tax returns with the most
recent Notice of Assessment no older than 18 months.
Rental Income:
•
Current verifications (if applicable) as per section 10.2 Income Matrix.
Lo Doc applicant(s):
•
A new Lo Doc declaration and accountant’s verification to be completed, signed and dated.
25.1.3 Credit bureau report
The credit history report for the applicant(s) (and any associated companies) must be clear of any defaults paid or
unpaid, judgements or bankruptcy listings since original application.
25.1.4 Credit scorecard
Should an application have a ‘Credit Risk’ or Declined Credit’ decision, a full assessment of the application will be
required.
25.1.5 Loan purpose
All standard residential loan purposes are acceptable.
Cash out is limited to $100,000.
25.1.6 Facility
Loan product and term cannot be changed.
Existing loans cannot be increased if they are:
•
In a fixed or discount variable rate period;
•
Subject to capitalised repayments;
•
The account is uninsured and now requires LMI;
•
Bridging finance (go-between) and construction loans or where progress payments are being used;
•
Or requires a Deed of Priority.
Where these circumstances apply, a full new application is required.
25.1.7 Serviceability
Refer section 11 Serviceability for minimum requirements.
Applications must meet serviceability requirements without relying on the clearance of any refinancing or
consolidation of external debts.
25.1.8 Lenders Mortgage Insurance
If existing LMI is held, refer to section 23.4 Changes to existing loan contracts.
25.1.9 Valuations
If LMI is required the valuation must satisfy the mortgage insurer requirements, refer LMI provider guidelines. A
new full valuation is required if the existing valuation is > 90 days.
Where LMI is not required, existing valuations that meet requirements, refer section 21 Valuations, may be used.
If valuation falls outside the Valuation policy or LMI exists/required, a new valuation will be required.
Credit Increase Applications must be approved by the DLA level, or higher, as specified in the table below.
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Mortgage Manager
Processing
2
3
25.1.10 Approval authority
Applications must be approved by the appropriate DLA level, or higher, for the total Bank exposure.
Exceptions must be approved by the DLA level, or higher, as specified in the table below.
Mortgage Manager
Processing
(refer processing)
7
26 Product Conversions
26.1 Product conversion (no additional credit advanced)
Product conversions allow borrower(s) to switch all or part of the remaining loan balance (including any redraw) or
limit for revolving credit to a new product.
It is only available for residential owner occupier/investment loans, and excludes:
o
Business Line;
o
Interest Only loans (1-5 year term loans);
o
Original loan term 10 years or less.
If the facility does not meet these requirements, a full assessment will be required.
The product conversion does not require a complete reassessment, but is subject to the following criteria:
•
No additional credit is approved or advanced above normal amortised limit of the account(s) to be converted.
Any government or refinancing costs incurred cannot be added to the new account;
•
No additional credit is approved or advanced above normal amortised limit of the account(s) to be converted
however accrued interest from existing facility may be added to new facility;
•
All contractual requirements must have been met on the account(s) to be converted prior to settlement (e.g.
bridging finance, progress payments);
•
No change to the original structure of the account(s) to be converted (e.g. security, borrower(s) and
guarantor(s)). All applicant(s), including guarantor(s), must complete and sign the relevant form;
•
The elapsed term of the account(s) to be converted, plus the term of the new account must not collectively
exceed the maximum product term; and
•
The current LVR must meet the LVR restrictions of the new product.
•
The LMI cover on the account(s) to be converted must be continued. Approval from the LMI provider must be
sought and a copy held on file.
•
Switching from regulated to unregulated is not available.
Where borrower(s) seeks amendment due to hardship, they must be referred to Mortgage Help for assistance.
Exceptions to the above criteria must be approved by the DLA level (or higher) as specified in the table below.
Each loan will be assessed on a case by case basis, and must be acceptable to the mortgage insurer.
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Effective December 2014
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Mortgage Manager
Processing
(refer processing)
3
27 Reserved
28 Partial discharges
A partial discharge occurs when one (or more) of multiple securities linked to a loan(s) is released with the debt(s)
continuing to be secured by the remaining security(ies).
28.1 Applicant
The borrowing structure, including the names of the borrower(s), cannot be changed.
Where the loan(s) is supported by an existing guarantee, any release of a guarantor(s) must meet policy and
documentation requirements. All guarantor(s) must complete and sign the relevant form(s).
28.2 Facility
The loan(s) product and term cannot be changed. Security, LVR and product restrictions must be met. The loan(s)
cannot exceed the current loan amount or limit (including any redraw available).
If the existing loan(s) is subject to progress payments, then calculations must allow for full draw down of loan.
If the existing loan(s) is subject to bridging finance conditions, the loan(s) must be reduced to the loan amount
specified in the loan contract, or lower.
28.3 Requirements upon discharge of a security(ies)
The following table sets out the verification requirements based on the type of partial discharge completed.
Partial Discharge conditions
Security(ies) discharged and full net
proceeds applied to outstanding debt
Security(ies) discharged and LVR
remains the same or reduced
Verification requirements
Income &
Employment
(refer section
28.4)
Servicing
(refer
section
28.5)
Valuation
(refer
section
28.6)
6 months
clear conduct
on
mortgage(s)
held**
Acceptable
for Low
Doc




















Security(ies) discharged and LVR
increased to maximum uninsured
level as determined by security,
product and loan type.
Bridging Finance*
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Effective December 2014
Post Settlement
Partial Discharge conditions
Verification requirements
Income &
Employment
(refer section
28.4)
Servicing
(refer
section
28.5)
Valuation
(refer
section
28.6)
6 months
clear conduct
on
mortgage(s)
held**
Acceptable
for Low
Doc
* Residual debt must be reduced to the loan amount specified in the loan contract, or lower.
**Refer to 14.7 Refinances and debt consolidations for definition. Existing mortgage(s) subject to hardship must be
referred to Mortgage Help.
Where mortgage insurance applies, additional conditions may be required, refer to LMI provider guidelines.
28.4 Income and Employment
Where indicated in section 28.3 Requirements upon discharge of a security(ies), income and employment must be
verified, refer to 10.2 Income matrix for acceptable verification requirements.
For Lo Doc applicant(s), a new Lo Doc declaration and accountant’s verification to be completed, signed and dated.
Where the loan(s) is LMI insured, income and employment verifications must meet the insurer’s requirements, refer
to specific LMI guidelines for criteria.
28.5 Serviceability
Where indicated in section 28.3 Requirements upon discharge of a security(ies), a Net Surplus calculator must be
completed by the partner/lender/DLA holder in conjunction with the applicant(s).
The net surplus ratio must meet minimum product requirements on the residual debt, refer 11 Serviceability for
further guidelines.
28.6 Security(ies) and Valuations
The remaining security(ies) must meet standard security and product guidelines.
Where indicated in section 28.3 Requirements upon discharge of a security(ies), the remaining security(ies) must
meet the following valuation requirements:
•
Existing full valuation can be used if LVR is ≤65%; or
•
Standard valuation requirements must be met, refer 21 Valuations.
Where the loan(s) is LMI insured, security(ies) and valuation(s) must meet the insurer’s requirements, refer to
specific LMI guidelines for criteria.
28.7 Lenders mortgage insurance
Renegotiation of loan conditions to an existing mortgage insured loan must be approved by the relevant mortgage
insurer unless continuation of LMI is not required.
Updated valuation(s) is required if greater than 3 months old unless the LMI provider is prepared to accept
otherwise.
Additional conditions and verifications may be required, refer to LMI provider guidelines.
28.8 Approval authority
A partial discharge must be approved by the DLA level, or higher, as specified in the table below.
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Effective December 2014
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Mortgage Manager
Processing
(refer processing)
3
Exceptions to the above criteria must be approved by the DLA level, or higher, as specified in the table below.
Mortgage Manager
Processing
(refer processing)
7
29 Substitution of Security
Substitution of security occurs when a security(ies) is released and is replaced by an alternative security(ies).
29.1 Applicant
The borrowing structure including the names of the borrower(s) cannot be changed.
Where the loan(s) is supported by an existing guarantee, any release of a guarantor(s) must meet policy and
documentation requirements. All guarantor(s) must complete and sign the relevant form(s).
New guarantees cannot be completed. If new guarantees are required, the application must be processed as a new
loan application with full assessment required.
29.2 Facility
The loan(s) product and term cannot be changed. The loan(s) cannot exceed the current loan amount or limit
(including any redraw available).
If the existing loan(s) is subject to progress payments and/or bridging finance conditions, these must be finalised
before the substitution can be processed.
29.3 Requirements upon a substitution of a security(ies)
The following table sets out the verification requirements based on the type of substitution completed.
Substitution conditions
Security(ies) substituted and LVR
remains the same or reduced
Verification requirements
Income &
Employment
(refer section
29.4)
Servicing
(refer
Valuation
(refer
6 months
clear conduct
on
mortgage(s)
held**
Acceptable
for Low
Doc
section
29.5)
section
29.6)










Security(ies) substituted and LVR
increased to maximum uninsured
level as determined by security,
product and loan type.
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Effective December 2014
Post Settlement
** Refer to 14.7 Refinances and debt consolidations for definition. Existing mortgage(s) subject to hardship must be
referred to Mortgage Help.
29.4 Income and Employment
Where indicated in section 29.3 Requirements upon a substitution of a security(ies), income and employment must
be verified, refer to 10.2 Income matrix for acceptable verification requirements.
For Lo Doc applicant(s), a new Lo Doc declaration and accountant’s verification to be completed, signed and dated.
Where the loan(s) is LMI insured, income and employment verifications must meet the insurer’s requirements, refer
to LMI guidelines.
29.5 Serviceability
Where indicated in section 29.3 Requirements upon a substitution of a security(ies), a Net Surplus calculator must
be completed by the partner/lender/DLA holder in conjunction with the applicant(s).
The net surplus ratio must meet minimum product requirements, refer 11 Serviceability for further guidelines.
29.6 Security & Valuation
New security(ies) offered for substitution must meet security, valuation and product guidelines.
The new security must be in the name of at least one of the applicant(s) and/or guarantor(s) on the loan account.
The borrowing structure cannot be changed – refer to 29.1 Applicant for further guidelines.
Where the loan(s) is mortgage insured, (excluding blanket cover), the valuation must meet the mortgage insurers
requirements, refer to LMI guidelines.
Where the loan(s) is not mortgage insured, then the valuation must meet standard valuation requirements, refer 21
Valuations.
29.7 Lenders mortgage insurance
Where mortgage insurance is held, approval of the change to security must be obtained from the insurer and the
insurer conditions must be met, refer to LMI guidelines.
29.8 Approval authority
A substitution must be approved by the DLA level, or higher, as specified in the table below.
Mortgage Manager
Processing
(refer processing)
3
Exceptions to the above criteria must be approved by the DLA level, or higher, as specified in the table below.
Mortgage Manager
Processing
(refer processing)
7
66
Effective December 2014
Product Specific Policy
Product Specific Policy
30 Lo Doc product specific policy
Lo Doc loans require a modified level of supporting evidence of income for self employed and PAYG applicant(s)
(additional income only), for acceptable loan purposes.
Lo Doc loans may be Principal and Interest, Interest-only converting to Principal and Interest or Line of Credit
Facilities.
The applicant(s) in conjunction with the DLA holder/Introducer will need to determine which of the following three
alternatives will be most suited to their situation (refer to Adelaide Bank product guidelines for specific details):
•
LVR ≤ 60% without LMI - Bendigo and Adelaide Bank Policy
•
LVR > 60% ≤ 70% without LMI - Bendigo and Adelaide Bank Policy with restrictions on PAYG (refer to 30.4.2
PAYG Applicants) and cash-out (refer to 30.8.4 Maximum cash out). For Lo doc Plus limitations refer to Lo Doc
product specific guidelines.
•
LVR > 60% ≤ 80% with LMI – subject to LMI provider criteria.
All loans requiring LMI are also subject to the mortgage insurer’s requirements. Refer LMI provider guidelines.
30.1 Acceptable/unacceptable applicant(s)
The following applicant(s) are acceptable / unacceptable:
Type
Includes
Conditions
Sole traders, companies,
Self Employed
company directors,
partnerships, trustees of family
Acceptable
trusts, subcontractors.
All PAYG income including full
PAYG
time, part time, contract
workers, Casual, Second Jobs,
Temps
Government payment recipients
Non Permanent Australian
residents
Includes Pensioners, Centrelink/
Students, Unemployed/Welfare
Only Acceptable when part of a
joint application with Self
employed applicant(s).
Unacceptable
Non permanent Australian
residents and Australian
Unacceptable
residents living overseas
There is no restriction on the maximum age of applicant(s) however they must be able to demonstrate that they are
able to repay the loan within agreed contractual arrangement.
Proof of future income sources, such as superannuation or other investments must be substantiated at the time of
application, for those applicant(s) who will rely on this income to repay the loan once they retire from existing
employment.
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Effective December 2014
Product Specific Policy
30.2 Guarantor loans
Guarantor loans are acceptable for married/defacto and other joint applicants and are subject to standard policy
requirements, refer section 6.9 Applicant structure matrix.
Loans with third party security are only acceptable, provided a company or trust is the borrower and are subject to
standard policy requirements, refer section 6.9 Applicant structure matrix.
All other third party security structures are unacceptable.
30.3 Income
Applicant(s) are required to complete and sign (in their own writing) the Bank’s declaration of income and
employment stating that the facility is within their ability and capacity to service and meet reasonable living
expenses without substantial hardship. These declarations are also to be signed by the applicant(s) accountant.
30.3.1 Accountant requirements
• The applicant(s) must have used the same accountant/accountancy firm for a minimum of 2 years; and
•
The accountant/applicant(s) relationship must be arms-length.
If either of the above requirements are not met, or the applicant(s) complete their own tax returns/financials, the
application must only proceed as a fully verified loan.
30.3.2 Verification of Accountant’s information
The assessment officer must obtain the accountant’s phone number from an independent source (i.e. Internet,
White or Yellow Pages) and phone the accountant to confirm the following:
•
Verify that the information declared/supported by the accountant is the same as when the accountant
signed the form;
•
Whether the accountant is to receive any referral fees/commissions due to the placement of the loan
application; and
•
Verify they have signed the declaration.
In situations where there is some doubt regarding the statement of income or employment, or where the asset
position does not reflect the stated income, the application must only proceed as a fully verified loan.
30.4 Employment
30.4.1 Self Employed applicant(s)
All self employed applicant(s) must have been operating their current business for a minimum of 2 years, in order to
establish a reliable income stream.
The lo doc declaration provided as evidence of self employed income must contain the following information:
•
Business or Company Name; and
•
Applicant(s) ABN.
Where any individual, related company or business has turnover of greater than $75,000 the ABN must be verified
to confirm that the entity is registered for GST.
GST registration is a mandatory requirement for all entities evidencing turnover of greater than $75,000.
The ABN number is to be verified to confirm the name of the business match the ABN provided and registered for
GST via the Australian Business Register website (www.abr.business.gov.au/Index.aspx).
The accountant must also be verified at http://www.tpb.gov.au/tpb/agent_register.aspx
30.4.2 PAYG applicants
PAYG income applicant(s), including full time or part time employees and contract workers, must have been
employed in line with the Banks standard employment requirements, refer section 9.1 Employment requirements.
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Effective December 2014
Product Specific Policy
Verification of employment must occur in line with 9.2 Employment Verification.
•
For LVR ≤ 60% PAYG applicant(s) must provide standard income verification (refer to section 10.2 Income
matrix for the primary PAYG employment; however they may submit a declaration for other sources of income.
•
For LVR > 60% and ≤ 70% with no LMI, no PAYG borrower(s) unless joint with a self employed applicant(s).
PAYG applicant(s) must provide standard income verification for all sources of income used in servicing (refer
section 10.2 Income matrix).
•
Where LMI is taken the LMI provider may impose some restrictions, refer LMI provider guidelines.
30.5 Credit history
30.5.1 Credit history report
The credit report for the applicant(s) (and any associated companies) must be clear, no defaults paid or unpaid,
refer section 8.2 Credit history report assessment.
Defaults Paid or Unpaid of any amount are not acceptable.
Applications from previous Bankrupts are not acceptable.
30.5.2 Loan statements
The most recent 6 months statements for the mortgage loan(s) being refinanced and the most recent 3 months
statements for all other debts being refinanced (e.g. credit cards and personal loans) must be reviewed.
Loan statements of the debt(s) being refinanced must verify regular and timely payments, no arrears, and operated
within limit arrangements.
Internet statements are acceptable provided they meet the requirements as per section 14.10 Internet bank
statements.
30.6 Credit scoring
Applications that are scored as “high risk” are not acceptable.
30.7 Loan sizes
The following table outlines maximum loan size acceptable for lo doc loans with or without LMI. For LMI restrictions
refer specific LMI criteria on the lending policy home page.
LVR
Dollar Limit
≤ 60%
$2.5M
> 60% and ≤ 70%
$1.5M
> 70% and ≤ 80%
$1.0M
The maximum exposure to all products without LMI is $2.0M. The maximum exposure to all products with LMI is
$2.5M.
30.8 Loan purpose
Loans may be used for purchase of property, construction, renovation, refinance/consolidation of debts and equity
for investment or personal purposes.
NRAS properties (Federal Government’s National Rental Affordability Scheme) are unacceptable security
properties for Lo Doc.
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Effective December 2014
Product Specific Policy
30.8.1 Construction loans
Construction of dwellings for owner occupation or long-term investment purposes is acceptable subject to the
following conditions:
•
All normal construction criteria apply, refer section 14.3 Construction of residential property or home
improvements.
•
Speculative loans for builders or developers are not acceptable (i.e. where the principal nature of their business
or income generation is property development).
•
Owner builders are not acceptable.
•
The applicant(s) must inject all their funds/equity before loan drawings commence.
•
No payment of builder’s deposits at land settlement.
•
Maximum of 2 dwellings in total.
For progress payment requirements, refer to section 14.4 Progress payment requirements.
30.8.2 Vacant land purchase
The purchase of vacant land is acceptable subject to the following conditions:
•
All normal land purchase criteria applies.
•
Speculative purchases for future development are not acceptable (i.e. where the principal nature of their
business or income generation is property development).
•
Maximum of 2 blocks of vacant land.
30.8.3 Off the plan sales
Off the plan sales are unacceptable.
30.8.4 Maximum cash out
Where applicant(s) are requesting the proceeds are to be either fully or partially released directly to their account,
the applicant(s) intention for the use of the ‘Cash Out’ funds needs to be disclosed in all instances.
•
For LVR ≤ 60% cash out is limited to 20% of the loan amount up to a maximum of $100,000.
•
For LVR > 60% and ≤ 70% with no LMI, cash out is not available.
Where LMI is taken the LMI provider may impose some restrictions, refer specific LMI policy on the lending policy
home page.
30.8.5 Business purposes
Up to 20% of the total loan amount is acceptable for business purposes, however loans for working capital or
payment of personal or business tax liabilities are not acceptable.
30.9 Visa facility with an approved Lo Doc loan
A Secured Visa facility may be automatically approved in conjunction with a Line of Credit product. The maximum
credit limit is $20,000 per borrower relationship regardless of how many borrowers there are or how many separate
Lines of Credit are established. Increases to an existing limit are not available. Refer to section 31 Visa facilities
approved with residential loan.
Unsecured Visa facilities are not available with Lo Doc Loans however applications may be accepted upon receipt
of evidence of income at a later point. Standard lending policy applies.
30.10 Serviceability
The Net Surplus Income Method (using the applicant(s) stated income) is to be used to assess the serviceability of
all Lo Doc applications, refer section 11 Serviceability. A minimum Serviceability Ratio of 1.25 applies.
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Effective December 2014
Product Specific Policy
30.11 Real estate equity/deposit
The full deposit required to complete the purchase/construction must be verified, at application, and a copy of the
appropriate documentation held on file.
30.12 Lender’s mortgage insurance (LMI)
The maximum LVR without LMI is 70%.
All loans with an LVR greater than 70% must have full LMI cover. The maximum acceptable LVR with LMI is 80%
plus any capitalised LMI premium.
Bridging Finance (Go-Between) must meet criteria above with maximum peak debt and end debt not to exceed 70% without LMI and 80% with
LMI - subject to LMI approval.
30.13 Security
Registered first mortgage only. Must be a standard residential security (vacant land included) refer section 17
Acceptable security. Unacceptable and specialised securities are not acceptable.
NRAS properties (Federal Government’s National Rental Affordability Scheme) are unacceptable security
properties for Lo Doc.
30.14 Security location category
The security must be in a category 1 or category 2 location; refer Bendigo and Adelaide Bank Security Location
Categories.
30.15 Valuations
Full valuations are required.
30.16 Approval authority
Applications must be approved by the DLA level, or higher, as specified in the table below.
Mortgage Manager
Processing
3
3
Exceptions to the above criteria must be approved by the DLA level, or higher, as specified in the table below.
Mortgage Manager
Processing
(refer processing)
7
In addition, the following exceptions must be approved by the DLA level as specified in the table below:
•
waiving of LMI;
Mortgage Manager
Processing
(refer processing)
9
71
Effective December 2014
Product Specific Policy
31 Visa facilities with approved residential loan
The following options and criteria apply when a Visa is assessed in conjunction with an approved residential facility.
Note the visa monthly commitment is to be included in overall serviceability test under the Residential Net Surplus
Method.
Unsecured limits up to $10,000 are auto approved. Limits greater than $10,000 approved under Residential DLA
based on strength of residential application.
Note: The Secured Visa facility will be unavailable from 10/11/2014 for loan applications submitted above
80%LVR (Refer MM686 dated 10/11/2014).
A Secured Visa facility may be automatically approved in conjunction with a Wholesale Line of Credit. The
maximum credit limit is $20,000 per borrower relationship regardless of how many borrowers there are or how
many separate Lines of Credit are established. Increases to an existing limit are not available.
31.1 Approval Authorities
Visa must be approved by the DLA level (or higher) as specified in the table below.
Visa Limit
Mortgage Manager
Processing Centre
≤$10,000 Unsecured
Auto Approved
Auto Approved
>$10,000 Unsecured
(refer processing)
7
Auto Approved
Auto Approved
≤$20,000 Secured
72
Effective December 2014
Product Specific Policy
32 Reserved
33 Equity Finance Mortgage (EFM) associated loans
Bendigo and Adelaide Bank residential loans that are associated with an EFM loan are subject to standard
residential lending criteria with the following additional restrictions.
33.1 Maximum LVR
The total LVR (i.e. Bank Debt + EFM Component) is restricted to 90% LVR. Maximum LVR for EFM associated
loans as per the table below.
Prime Loan LVR
EFM LVR
<70% LVR
10%, 15% or 20%
70% to 75%
10% or 15%
75% to 80%
10%
33.2 Maximum loan amount
33.2.1 LMI not required
The maximum total borrowings (EFM and EFM associated loans) is $1.5M. The EFM component is restricted to
$400K where no LMI is required. (Subject to standard DLA dollar limits).
33.2.2 LMI required
The maximum total borrowings (EFM and EFM associated loan) for loans requiring LMI, is $1.0M. The EFM
component is restricted to $210K (refer section 23 Lender’s Mortgage Insurance (LMI)).
33.2.3 Minimum Loan Amount (with or without LMI)
The minimum total borrowings (EFM and EFM associated loan), is $100K. The EFM must be at least $15K. Total
Minimum Borrowings is $115K ($100K +$15K)
33.3 Lender’s mortgage insurance (LMI)
LMI is required on the EFM loan where the total borrowings (EFM and EFM associated loan) exceed 85% of the
security value.
33.3.1 Additional LMI criteria
For loans that require LMI, the following restrictions apply to EFM associated loans in addition to Bendigo and
Adelaide Bank policy requirements.
Type
Criteria
Restriction
A minimum deposit from the applicant(s) of at least 5% must
Equity
Deposit
be provided with 5% genuine savings evidenced over a 6
month period.
Income
Self Employed
If income varies by more than 20% between 2 years financial
data provided, the lower figure must be used
73
Effective December 2014
Product Specific Policy
Type
Criteria
Restriction
Depreciation is subject to QBE requirements
PAYG
Employment
Overtime
Austudy & Child Maintenance are not acceptable forms of
income
Overtime only acceptable after 12 months with employer
33.4 Security
Bendigo and Adelaide Bank must hold 1st registered mortgage for all EFM associated loans.
EFM Criteria is per Bendigo and Adelaide Bank standard lending criteria with the following additional restrictions:
Criteria
Rule
Exception
Security must be located in metropolitan area
Security Location
in mainland Australia – refer to the EFM
postcode listing Bendigo and Adelaide Bank
Cat 1 or 2 Location
Vacant Land, Rural Zoned and warehouse
Security Type
converted properties are not permitted
Apartments considered where plan size is
>40m2, excluding car park and balcony
Exceptions may be considered for
Age of Security
Must be >12 Months old
securities outside of new subdivisions
or housing estates.
Security Size
Must be less than 2.5Ha
Not permitted for all Bendigo and Adelaide
Specialised Securities
Bank Specialised Securities (refer section 19
Specialised security),
Refer section 19.2 Inner city high density
High Density Developments
units/apartments & 33.14 High Density
Developments
Title Types
Leasehold Securities
Purple, Moiety and Company titles
unacceptable
Only Permitted within ACT
Consideration will be given on an
exception only basis, where the
Heritage Listings
Generally not acceptable
restrictiveness of the heritage listing
can be fully ascertained.
Highly restrictive Heritage listings will
not be accepted.
74
Effective December 2014
Product Specific Policy
Criteria
Rule
Exception
Standard Valuation where <$1.0M
Full Valuations where loan > $1.0M.
Valuations must include:
Valuation Requirements
- Photographs of front & rear of security;
- 4 Comparable Sales with at least 1 superior
and 1 inferior security;
- Valuations are only valid from 3 months
from the date of the report.
- Securities must not be listed as in ‘poor
condition (either internally or externally) or
need of repair’;
Security Quality
- Securities evident of need of repair from
photos provided are not acceptable;
- EFM Provider retains authority not to accept
security.
Where multiple valuations are taken due to dispute between the EFM Funder and the applicant(s) Bendigo and
Adelaide Bank will adopt the agreed valuation amount resulting from the dispute process.
33.5
Applicant(s)
Criteria for EFM associated loans is per Bendigo and Adelaide Bank standard lending criteria with the following
additional restrictions:
Criteria
Rule
Exception
Individuals only. Borrower(s) must also be
Applicant Type
mortgagor(s).
Companies & Trusts applicant(s) excluded.
Guarantor Structures
Not permitted.
Number of Applicants
Maximum 2 borrowers.
Age Restrictions
Must be between 18 and 64 years of age.
Austudy not acceptable.
Income Type
Acceptable per Bendigo and Adelaide Bank
Centrelink pensions not acceptable.
income matrix.
Child Support / Maintenance not
acceptable.
Employment Type
Pensioners, Unemployed and Students
Applications will be considered on an
specifically excluded.
exception only basis, where the
All other employment types acceptable per
student applicant is the secondary
standard lending policy.
applicant.
Self funded retirees are not acceptable
NB Student income is not acceptable
employment type.
for serviceability purposes.
75
Effective December 2014
Product Specific Policy
Criteria
Rule
Exception
Must have been in same job for minimum 6
Length of Employment
months and not be subject to probation
period.
Applications will be considered an
exception only basis for cases where
Residency Status
Non-Permanent residents not permitted.
the non-resident is the secondary
Loan applications from Australian Residents
applicant, but primary applicant is a
who are currently living and/or working
permanent resident.
overseas will not be accepted.
NB Non-Permanent resident income is
not acceptable for serviceability
purposes.
33.6 Serviceability
The Net Surplus Income Method is to be used to assess the serviceability of both the new loan application and the
EFM loan. The EFM loan repayment is to be calculated on a P&I basis over the same term as the prime loan using
the benchmark rate. Refer section 11 Serviceability for requirements.
33.7 Loan purpose
New EFM associated loans must be primarily for owner occupied purchase, debt consolidation or refinance
purposes only.
Construction loans are not permitted.
NB: Exceptions may be considered for properties less than 12 months old within established areas, new subdivisions are generally
unacceptable.
33.8 Cash Out
Applications for cash out may be approved subject to the approval of the Mortgage Insurer and the EFM provider.
33.9 Credit History
Applicant(s) with a poor financial history are generally considered unacceptable. Applicant(s) with a paid default
may be considered on an exception basis only. Refer section 8.2.5 Approval matrix.
33.10 Loan term
The maximum term of the EFM associated loan is 25 years.
33.11 Visa with home loan
Unsecured Visas may be approved in conjunction with the EFM associated loan as per normal lending
requirements. Secured Visas are not permitted on EFM associated loans.
33.12 Loan Variations
33.12.1 Refinances & credit increases
Refinances/credit increases on EFM associated loans and subsequent loans where the security is already being
used for an EFM associated loan must be done in accordance with requirements from the EFM funder.
Serviceability must be calculated for both the Prime loan and the EFM loan using the Net Surplus Income Method.
The EFM loan repayment is to be calculated on a P&I basis over the same term as the prime loan using the
benchmark rate, refer to 11 Serviceability for requirements.
Product Conversion to Interest only accounts after settlement are not acceptable. In the instance of internal
76
Effective December 2014
Product Specific Policy
refinance, to ensure that no Bendigo and Adelaide Bank loans can be interest only, all loans against an EFM
security are to be refinanced as part of the application. Refer Bendigo and Adelaide Bank Operations Manual for detailed
requirements.
33.12.2 Partial discharges, security substitution & cross collateralisation
Partial discharges, substitution of securities and cross collateralisation of securities is not permitted for an EFM
associated loan
33.13 Approval authority
Applications must be approved by the DLA level (or higher) as specified in the table below.
Mortgage Manager
Processing Centre
2
3
Exceptions to any of the above criteria must be approved by the DLA level (or higher) as specified in the table
below.
Mortgage Manager
Processing Centre
(refer processing)
7
33.14 High Density Developments
EFM High Density policy applies to all developments where there are more than 30 units or 4 stories in the
development. The maximum exposure in any high density development, unit or group sub-division is restricted to
20% of that development regardless of location. The maximum LVR that can be considered for High Density
lending is 80% LVR.
Where the security falls under the Bendigo and Adelaide Bank Inner City High Density Policy the maximum LVR
that can be considered is 70%, subject to security postcode availability from the EFM provider.
34 Hindsight reviews
The objective of the hindsight process is to review whether holders of Delegated Lending Authorities (DLA) are
making credit decisions that were sound in the circumstances in which the decisions were made and are exercising
same in accordance with the Bank’s DLA Hindsight Review Process.
•
Reviews cover:
•
Data integrity.
•
Compliance with policy, procedures and authority criteria.
•
Credit decision and file notes.
•
Correct supporting documentation held on file.
Breaches of policy or consistent unsatisfactory reviews may result in the withdrawal/reduction of the authority
and/or disciplinary action.
Refer to DLA Policy for further details.
77
Effective December 2014
Revision History
Revision History
Date
Author
Change
Section
18/12/2006
S Barlow
Initial release in revised format.
25/01/2007
S Barlow /
Addition of refinance / consolidation requirements
15.7.3
P Nayda
Waiver of legal and financial advice for guarantors
6.4
-
Clarification of guarantor structure requirements.
23/03/2007
P Nayda
6.1.2
EFM – additional income & employment restrictions when LMI is required.
Acceptability of non-permanent residents.
24.5
Full Valuation requirements list updated.
15/05/2007
P Nayda
24
28.1.4
Defined verification criteria for all supporting documentation (Memo 4571)
9.2
EFM Prime Loan LVR increased to 80% LVR & Aggregate LVR restricted to
06/04/2007
25/07/2007
P Nayda
P Nayda
95% LVR (Memo 4594)
24.1
Lo-Doc Lending requires clear credit history
23.5
GST Registration threshold increased from $50,000 to $75,000
9.2
EFM Policy update
24
Tax Scale Changes (Memo 4661)
16.1.2
EFM High Density (Memo (4662)
24.7
EFM Cash Out Changes (Memo 4662)
24.13
No Valuation Policy Update
28.1.2
GST Reg requirements for S/E applicants extended to related entities where
income >$75,000
10/10/2007
P Nayda
9.3.2
Full Documentation Credit History Requirements
10.2.5
Benchmark increased to 9.32% from 8.82%
15.2
Lo-Doc Net Surplus Ratio Increased to 1.25x from 1.20x
16.1
Uninsured Lo-Doc Product >60% LVR unavailable from 22/10/2007 (Memo
23
#4740)
1/3/2008
P Nayda
Benchmark Rate increased 9.32% to 11.25%
16.2
1/8/2008
P Nayda
Benchmark Rate reduced to 10.9%
16.2
Tax Scales Updated
16.1.1
Living Expenses Adjusted
16.1.1
EFM Update
Low Doc PAYG Update
3/3/2009
L Barnes
Benchmark Rate reduced to 7.40%
24
23.3.1
16.2
78
Effective December 2014
Revision History
Date
Author
Change
2/11/ 2009
L Barnes
Age of Applicant
6.1.1
Applicant Structure Matrix
6.1.2
Family Trusts
6.3
Foreign Investors
7..2
Income Matrix
9.1
Self Employed Applicant income
9.2
Credit Bureau Report Assessment
Approval Matrix
10.2.5
11
Credit Scoring
12
13.3
Owner Occupation
15.1.1
Investment
15.1.2
Go-between loans
15..5
LMI requirement matrix
18.1
PAYG Applicants
23..3.1
Constructions loans
23.8.1
Vacant Land Purchase
23.8.2
Lenders Mortgage Insurance (LMI)
23.12
Security
23.13
Equity Mortgage Finance – Maximum LVR
Equity Mortgage Finance – LMI not required
24.1
24.2.1
Equity Mortgage Finance – Security
24.4
Equity Mortgage Finance – Applicant
24.5
Acceptable Security
L. Barnes
10.2
Loans to related parties
LVR Dollar Limits for loans without LMI
1/12/2009
Section
25
Serviced, Resort, Hotel and retirement/mature age style apartments
26.3
Location List review
27.2
Desktop Valuations
28.1.3
Second Mortgages
29
Cross Collateralisation
30
Calculation of Net Income
16.1.2
Benchmark Rate
16.2
01/02/2010
L. Alford
Redraw
19.1
28/02/2010
L. Alford
Currency of Valuation
28.2
Credit Increase – Valuations.
Partial Discharges – Valuations
19.2.4
31.2
79
Effective December 2014
Revision History
Date
Author
Change
01/07/2010
L. Alford
Purchase of Residential Property (House or Unit) – Qld Requirements
Section
15.1
Credit Increases – original facility must be operational for a minimum of 3
months
19.2
After tax business add backs - to a maximum of 20% of Business Taxable
income
9.2.3
Taxable Income Rate Adjustments
23/08/2010
L. Alford
16.1
Maximum LVR Matrix – Owner Occupied Loans to 95% LVR
14.1
Visa Limits with Home Loans Increase $10,000 to $20,000 secured, from
$5,000 to $10,000 unsecured
23.9
Category 3 Security Locations – acceptable to 95% therefore Category 3
location specific policy removed.
27.1.1
Policy for Visa Facilities Approved with Residential Loans has been added to
this policy document
27/09/2010
S. Morrow
Lo Doc loans to 70% LVR do not require LMI
25
23
No Cash out with Lo Doc loans >60% to 70% LVR
23.8.4
PAYG borrowers must fully verify income by normal policy requirement
23.3.1
Lo Doc on additional income only if joint borrower with self employed borrower
(ie bonuses, commission etc)
23.3.1
Accountant verification of the borrowers’ declaration of income and
employment is required on all Lo Doc applications.
01/12/2010
M. Hamoy
23.3
Income requirements for Retirees and Home Duties updated
Permanent overtime requirements expanded
8.1
Benchmark rate increased to 9.30%
9.1
Reference numbering updated throughout entire document
16.2
Multiple
01/01/2011
L. Alford
(Administration
New Section – Introduction. This section provides an overview of the Bank’s
and DLA Holder’s requirements under the National Consumer Credit Protection
Act (NCCP).
New Section – Conflict of Interest. Borrowers cannot be disadvantaged by a
conflict of interest.
Applicants
Overview of Responsible Lending Requirements at the beginning of the
1
4
Applicant Section. Also Language Capacity to be considered when assessing
borrower’s ability to understand the contract.
New Section – Disadvantaged Borrowers. Covers the requirements for all
8
disadvantaged borrowers.
Facility
8.1.2
Overview of Responsible Lending Requirements at the beginning of the Facility
80
Effective December 2014
Revision History
Date
Author
Change
Section
Section.
Purchase/Construction of Residential Property for investment purpose is now
Regulated under NCCP.
14
18.1.2
FHOG – Removed reference to $7000 of the FHOG and reworded to Bank
may advance the expected FHOG, Sate and Rural Bonuses at land
Settlement.
When refinancing or consolidating debt the DLA Holder must ensure the new
18.3.1
contract does not place the borrower in any substantial hardship.
Requirement to make borrower aware of potential break or exit costs for
18.7.1
refinanced facilities.
Deposits must be held in an account accumulated over a 6 month period.
18.7.4
The facility must be assessed to ensure the credit increase satisfies the
20.2.1
borrower’s objectives and does not place the borrower in any substantial
hardship.
The product conversion must be assessed to ensure that it satisfies the
22.2
borrower’s objectives and does not place the borrower in any substantial
hardship.
Section of policy referring to Interest Only for the full term of the loan, has been
22.3
removed as this product is no longer available.
Overview of Responsible Lending Requirements at the beginning of the Lo Doc
25
Section.
1/03/2011
M. Hamoy
Overview of Responsible Lending Requirements at the beginning of the EFM
26
Section.
27
Depreciation after tax business addbacks increased to 100%
11.2.3
Capitalised LMI section updated to note that Lo Doc loans can capitalise over
80% LVR
21.4
Inclusion of hyperlink to Lo Doc Plus product guidelines
26
Desktop valuations for Lo Doc applications acceptable to maximum 60% LVR
26.15
Block of flats removed as ‘Acceptable Security’, retained as ‘Specialised
Security’
30
Purchase contracts removed as an acceptable valuation type for LVR’s above
80%
23/03/2011
M. Hamoy
33.1.1
Correction to Mortgage Manager approval authority DLA. Backdated to
26.16
2/11/2009
4/07/2011
M. Botten
Employer ABN verification requirements incorporated reflecting current
procedures
11.3.1
Reference to credit checks etc being conducted for Directorships expanded to
include Proprietorships.
12.1.2
Clarification of the way LMI premiums can be capitalised to ensure consistency
throughout policy.
81
Effective December 2014
Revision History
Date
Author
Change
Section
Statement requirements – Refin & Debt Consol – ‘no statements’ <75% LVR
17
removed from policy
Net Surplus Living Expenses Updated
18.7.3
HECS/HELP debts are already included as a commitment and liability for
19.1.2
servicing requirements. Now included in the commitment list reflecting current
procedures.
Amendment required to Lo Doc Construction Loans to maintain consistency
19.1.3
with other sections of policy. A cross reference and hyperlink to 18.3.1
Progress Payments has also been added.
Clarification re limitation on the number of approved Secured Visa facilities
26.8.1
available per customer.
Amendment required following a change to QLD legislation and a ValEx
26.9 &28
system upgrade. Also, final bullet point reworded to ensure consistency
throughout policy.
15/8/2011
M. Botten
33.1.4
Income matrix updated to reflect recent legislative changes to Family Benefits
part A & B Parenting Payments. Age reference has been deleted.
11.1
Payslips – due to a number of Government Departments, Hospitals etc not
having an ABN, policy requirement of Employer ABN’s being shown on all
payslips has been removed
11.3.1
Loan sizes - Reference to Credit Committee authority and requirement of
Credit Risk Officer review and support removed. Requirements added relating
16
to (1) loans < $5M and (2) loans > $5M
Lo Doc product specific policy amended/reworded to maintain consistency with
other sections of policy and provide clarity in order to ensure correct
26
interpretation.
Accountant verifications requirements amended for Lo Doc applications
necessitating actual contact to be made with Accountant to verify they have
signed Lo Doc declaration
12/10/2011
M. Hamoy
26.3
Wording amended with variance calculations to be applied to separate land
and construction components for house and land applications.
33.4
19.2
28/11/2011
L. Barnes
Benchmark Rate reduced to 9.05%
5/12/2011
M. Botten
Residency
Permanent Australian residents residing overseas and Non permanent
9.1
residents will be subject to the same lending restrictions which have been
9.2
modified and added to as follows:
Category 1 security locations only
Power of Attorney required
Evidence of funds to complete and income verifications must be translated into
English
Full valuations required in all circumstances
82
Effective December 2014
Revision History
Date
Author
Change
Section
Maximum loan size - $1M per security
Maximum aggregate exposure per borrowing group - $2.0M
11.1
Foreign income to be converted to AUD and assessed at 90%
21.1
Maximum LVR – 70% without LMI
30/12/11
L. Alford
Benchmark Rate reduced to 8.80%
19.2
21/2/2012
L. Alford
Benchmark Rate increased to 8.95%
19.2
27/3/2012
A Byrne
Genuine savings term reduced to 3 months.
20.2.1
Valuer and valuation criteria amendment to section to remove instructions for
33.3
panel Valuers
30/5/2012
L. Alford
Living Allowances adjusted in accordance with the HPI:
19.1.2
Single
$15,003 to $16,005
Couple
$21,117 to $23,268
Subsequent Adult
$ 6,812 to $ 7,263
Dependant
$ 5,602 to $ 5,656
Benchmark Rate reduced from 8.95% to 8.60%
19.2
The Introduction and Applicant sections have been enhanced to cover the
1&8
NCCP requirement for consideration of any planned future events which may
affect the borrower’s objectives and serviceability to be explored with the
borrower.
18/6/2012
M. Botten
NRAS – National Rental Affordability Scheme investment loan criteria included
covering:
Income Matrix – rental income & Federal Government tax offset treatment
Loan Purpose – NRAS criteria fully detailed
11.1
18.1.2
Lo Doc – NRAS investment properties specifically excluded
26.8
Acceptable security properties – ‘house’ category only; apartments/units etc
are unacceptable
30
Full valuations required in all circumstances
29/6/2012
L. Alford
33.1.4.2
Loans to related parties – This policy has been update, the new policy
13
incorporates ‘The Bank’s Business Partners and their staff’ and ‘Loans to
family, and where a relationship is evident via shared directorship,
shareholding or proprietorship’.
Tax Scales amended to the following:
19.1.1
Tax payable
Nil
$18,201 – $37,000
19c for each $1 over $18,200
$3,572 plus 32.5c for each $1 over $37,000
$80,001 - $180,000
$17,5470 plus 37c for each $1 over $80,000
$54,547 plus 45c for each $1 over $180,000
83
Effective December 2014
Revision History
Date
Author
Change
Section
Benchmark Rate changes from 8.60% to 8.40%
19.2
21/9/2012
L. Alford
33.3 Valuers and Valuation Criteria
Reference to Internal Valuers removed.
10/10/2012
A Byrne
33.3
26.8.4 Maximum Cash Out
26.8.4
A limit of 20%, up to a maximum cash out of $100,000 has been added to the
low doc policy for LVR ≤ 60%
21/12/2012
L. Alford
Non Permanent Residents
Guidance added around conversion of foreign income and process required.
9.2
Income Matrix
- Guidance added around conversion of foreign income and process required.
11
- ‘No verification of overtime or shift allowance requirement for essential
services’.
- Child Care Benefits added to Income Matrix with guidance when to allow use
of this form of income.
Serviceability
Living Allowances adjusted in accordance with the HPI:
19.1.2
Single
$16,005 to $13,728
Couple
$23,268 to $25,428
Subsequent Adult
$ 7,263 to $11,700
Dependant
$ 5,656 to $ 4,888
Benchmark Rate reduced from 8.20% to 8.00%
15/02/2013
M. Hamoy
19.2
Hindsight reviews
6.
Details of hindsight reviews to be completed relocated to separate hindsight
review policy.
Serviceability
19.
Inclusion of DLA authority levels for exceptions to minimum servicing levels.
Interest only product specific policy
25.
Inclusion of maximum loan terms for P&I and LOC products.
08/05/2013
M. Hamoy
Employment requirements
10.1
Unemployed/welfare removed as an acceptable employment type.
“Genuine Savings”
20.2.1
Minimum term for deposits held in an account reduced to 3 months.
Valuation requirements
33.1
Purchase contract
33.1.1
Clearer guidelines included directing lenders to ensure that the full valuation
criteria are checked prior to acceptance of a purchase contract.
Valuer General’s capital value
33.1.2
Clearer guidelines included directing lenders to ensure that the full valuation
84
Effective December 2014
Revision History
Date
Author
Change
Section
criteria are checked prior to acceptance of a Valuer General’s capital value.
Desktop valuations
Clearer guidelines included directing lenders to ensure that the full valuation
33.1.3
criteria are checked prior to acceptance of a desktop valuation.
Kerbside valuations
Clearer guidelines included directing lenders to ensure that the full valuation
33.1.4.1
criteria are checked prior to acceptance of a kerbside valuation.
27/05/2013
M. Hamoy
Calculation of available income
19.1.2
Living expenses increased in line with cost of living as follows:
First adult: from $13,728 to $13,780
Couple: from $25,428 to $25,636
Each additional adult: from $11,700 to $11,856
First child: from $4,888 to $4,940
Each additional child: from $4,888 to $4,940
Benchmark rate
19.2
Reduced from 8.00% to 7.75%
26/08/2013
M. Hamoy
Non permanent residents
9.2
Requirement for Power of Attorney for non permanent residents has been
removed.
Staff lending
13.1
Inclusion of a new staff lending policy
Investment
18.1.2
New wording added excluding hybrid agreements for NRAS applications.
Benchmark rate
19.2
Reduced from 7.75% to 7.50%
Product conversion (no additional credit advanced)
22.3
Reference to 30 year term amended to maximum product term.
Loan sizes
26.7
Maximum LVR for lo doc loans corrected from 76% to 80%.
Development exposures
31.1
Responsibility for completing assessment on development exposures has
been amended from Credit Risk to the Processing Centre.
Location categories
32.1
Footnote amended to note that maximum LVR is exclusive of LMI premiums.
Full valuations
33.1.4.2
Inclusion of requirement to ensure that the valuation report complies with the
Bank’s standard instructions and that the valuation must be accepted by an
85
Effective December 2014
Revision History
Date
Author
Change
Section
appropriate DLA holder.
01/10/2013
M. Hamoy
Introduction of the Integrated Bendigo and Adelaide Bank
Residential and Consumer Policy into the Third Party Mortgage
Lending Credit Policy
The following is a high level list of material amendments made to the
policy. Records of all amendments made are held by Group Risk.
Introduction
1.
Section reworded with all NCCP related material relocated to separate
NCCP section.
2.
National Consumer Credit Protection (NCCP)
All NCCP related policy from throughout the document relocated to this
section.
N/A
Distribution of Policy
Included under Introduction section.
7.
Applicants
Borrower/guarantor definitions consolidated into single section;
wording amended to remove age references; table expanded to allow
third party mortgagors with applicable restrictions included.
Guarantor(s) and third party mortgages
8.
Inclusion of clear guidelines when a guarantee must be taken;
inclusion of guidelines for borrowing entities with multiple directors –
previously guidelines only given for sole director entities; Unit trusts no
longer acceptable; references to company applicants has been
relocated to Borrower/Guarantor definition section
9.
Employment
Expanded to include Borrower(s) employed by family and to excluded
share trading & speculative developments
Income matrix
10.2
Now includes Borrower(s) employed by family; verifications for
Centrelink recipients expanded to allow use of 6 months statements;
Child support payments must be verified with both CSA assessment
notice and 6 months statements; travel and meal allowances are
specifically excluded.
10.3.3
Before tax business add backs
New section allowing interest on refinanced debt and abnormal
expenses to be added back prior to tax.
10.3.4
After tax business add backs
Section expanded to include rental income, interest on existing term
loans and interest on overdrafts.
Self employed financial statements
10.4.1
GST registration required if turnover is greater than $75,000,
86
Effective December 2014
Revision History
Date
Author
Change
Section
previously required if income was greater than $75,000.
Credit references
References to Veda Advantage amended to Veda or replaced with
‘credit history report’; explanation of default listings and default
judgments consolidated into single clause Adverse credit history.
11.
Credit scorecard
Existing table expanded to include reference to ‘Low Risk’ applicants
and the associated DLA sign off requirements.
Loan to valuation ratio (LVR)
Explanation how to calculate LVR has been removed. Maximum LVR
matrix has been expanded to include additional security types and the
maximum LVR that the Bank will consider before requiring LMI cover.
12.
14.
Loan purpose
Section simplified and consolidated where possible: Purchase of
residential property now covers owner occupied, investment and
vacant land purchases; Construction of residential properties and
Home improvements have been combined; Progress payment
requirements has been expanded to include specific construction
types, including a new section for kit homes; Business purposes has
been simplified to cap at 20% of total loan amount; Refinances and
debt consolidation now includes a definition of adverse conduct; new
inclusion for Equity release; all documentation requirements for each
loan purpose now located in Supporting documentation table.
15.
Serviceability
Table included listing minimum servicing ratios; taxable income rates
removed and replaced with link to ATO website; living expenses
simplified with examples of how to load applications for different types
of household structures; qualifying rate replaced with, “qualified by
calculating repayments at an interest rate 1.5% above the standard
variable rate”
16.
Deposit/equity and savings history
Applicants utilising borrowed funds for applications less than 80% LVR
no longer require evidence of 10% own funds.
Lender’s mortgage insurance (LMI)
LMI requirement matrix expanded to include additional products;
Bridging finance (Go-between) now notes max LVR 85% including
capitalised LMI; Changes to existing loan contracts expanded to
include further guidelines for credit increases; Level of cover,
Mortgage Protection Insurance (MPI) premiums, Prudential limits,
Master policy agreement, and Review and monitoring have been
removed.
Redraws, credit increases and product conversions
17.
18.
19.
87
Effective December 2014
Revision History
Date
Author
Change
Section
Minimum redraw amount $500 included; requests for product
conversions due to hardship must be referred to Mortgage Help for
assistance
Interest capitalisation, Principal and interest product specific
policy and Interest only product specific policy
N/A
Sections of policy removed as product related.
Lo Doc product specific policy
Inclusion of new table outlining acceptable/unacceptable borrowers;
Off the plan purchases no longer acceptable
20.
Final assessment
N/A
Section relocated to NCCP section.
Acceptable security
Inclusion of new table outlining acceptable security types/requirements
23.
Unacceptable security
24.
New section included with multiple security types noted as
unacceptable, previously was not clearly defined.
25.
Specialised security
Retirement/mature aged complexes no longer acceptable security;
university/student apartments accepted subject to additional
parameters; Blocks of flats replaced with limits on lending for more
than 4 units; LVR limitations relocated to Maximum LVR matrix.
Valuations
Inclusion of tables consolidating acceptable valuations type for security
category locations, product type and loan amount; Purchase contracts
in SA must now be verified with real estate agent; Desktop and
kerbside valuations no longer acceptable; required information to be
present on valuations has been expanded; valuations with risk rating 4
or higher can only be accepted by higher DLA; further valuation
requirements included for ‘new’, ‘as if complete’, ‘off the plan’ and
concentration exposure requests.
Second mortgages
Wording simplified; LVR limited to 70% (85% for Defence Service
Home Loan & go-between); full valuations required.
18/12/13
Marny
Gardner
National Consumer Credit Protection (NCCP)
27.
28.
2.
Updated to include clear guidelines regarding Final Assessment.
Unit Trusts
8.4.3
Heading and policy updated to include Hybrid trusts.
Loan to valuation ration (LVR)
14.
Updated to reflect that the less of the purchase price/fixed building
contract or the Bank’s valuation is to be adopted for LVR purposes.
88
Effective December 2014
Revision History
Date
Author
Change
Section
Purchase of residential property (house of unit)
Updated to include display/exhibition homes.
15.1
Acceptable Security
Display/exhibition homes added to the policy including additional policy
requirements. A reminder included to check LMI requirements for
securities <50m2.
23.
National Rental Affordability Scheme (NRAS)
List of Genworth approved consortiums added to policy.
15.2
Second Mortgages
Private loan agreements and supporting documentation requirements
added to policy.
28.
Multiple units in a single development
Separate policy included for multiple units in a single development. Up
to & including 3 units – maximum LVR 80% (refer to LMI guidelines for
higher LVR’s), four or more units – maximum LVR 65% applies.
Full valuations
Updated to include display/exhibition homes.
25.1
27.1.3
Maximum LVR matrix
Policy udpated for multiple units in a single development. Up to &
including 3 units – maximum LVR 80% (refer to LMI guidelines for
higher LVR’s), four or more units – maximum LVR 65% applies.
14.1
LVR requirements upon sale of a security
Wording amended to use ‘available redraw’ rather than ‘ahead
amount’.
31.1
Ownership and Maintenance of Credit Policy
Policy revised to reflect change to ECC/MCC process following
introduction of CPC.
3.
Location list review
Policy revised to reflect change to ECC/MCC process following
introduction of CPC.
26.2
Calculation of serviceability ratio
Updated to include repayment on any private loan in commitments
Other deposit funds
16.1.4
Updated to note requirements to be met if a private loan is provided as
part of the deposit funds.
17.1.2
Valuer criteria
Wording amended in line with LMI provider QBE’s requirements for
signing of valuations over $1M. These valuations need to be signed off
by a registered or licensed valuer who is a member of AAPI, CPV or
PAPI CPV or equivalent. Where this requirement is not met, the
27.2
89
Effective December 2014
Revision History
Date
Author
Change
Section
valuation must be countersigned by another CPV valuer unless they
are a director, partner or principal of the firm.
18.3
Capitalised LMI premiums
Reference to maximum LVR of 90% for LOC’s with LMI deleted to
reflect TPM product which includes P & I LOC with LVR up to 95%
available with LMI enhancement.
10/12/13
Marny
Gardner
Unacceptable security
24
Policy updated to note that properties subject to a ‘split’ contract that
are part of a multi-dwelling development that share common walls,
footings or roof are unacceptable security
Purchase contract
Policy updated to note use of a purchase contract for property subject
to a ‘split’ contract is not acceptable
Valuation requirements
Policy updated to provide discretion for DLA 3 and above to accept
valuations with a single rating 4 that is directly due to bushfire/wildfire
or flooding overlays.
27.1.1
27.3
21.6
Serviceability
New policy added to the EFM requirements to include both the prime
(ADL) loan and the EFM loan in serviceability calculations. This has
been included to meet Rismark Credit Policy amendments.
Loan variations
21.12.1
Policy has been updated to include both the prime (ADL) loan and the
EFM loan in serviceability calculations. This has been included to meet
Rismark Credit Policy amendments.
“Off the plan” sales
Guidelines relating to valuations, approvals and loan contracts, preapproval and formal approval conditions have been reinstated.
5/3/14
Marny
Gardner
Staff Lending
25.3
7.7
Clarification that staff cannot process applications for themselves or
their immediate family.
Loans to related parties
7.8
Clarification that business partner and their staff cannot process
applications for themselves or their immediate family. Applications from
family, friends to business partners must be loaded independently.
After tax addbacks
Clarified to note that the vehicle addback for self employed applicants
is to be obtained from the profit and loss statements.
10.3.4
Declined finance due to credit eligibility information
Updated to include Privacy Act requirements regarding applications
11.2.3
90
Effective December 2014
Revision History
Date
Author
Change
Section
declined due credit eligibility information.
Credit history subject to a ‘ban period’
11.2.5
New policy added for applications where a credit ban is in place.
Application cannot proceed until the ban is removed and updated
documentation may be required.
Internet banking statements
15.10
An original statement or internet banking summary may be used to
confirm internet statements where the account name, account number
or financial institutions logo is not evident
17.1.3
27.1.3
Full valuations
Multi dwelling properties added list of property types requiring a full
valuation.
27.3
Valuation requirements
Policy updated to allow acceptance of a valuation with a rating 4 with
approved LMI cover.
05/04/2014
Marny
Gardner
National Consumer Credit Protection (NCCP)
2
Update to include confirmation that approvals remain valid for 3
months from the date of disclosure.
Non permanent residents
7.6
Non permanent residents noted as being unacceptable as a guarantor.
Guarantors and third party mortgages
8
Non permanent residents noted as being unacceptable as a guarantor
Trusts
Self Managed Superannuation Funds (SMSF) are not acceptable for
residential lending. Additional verifications are required to confirm that
SMSF is not reliant on applicant(s) income.
8.4
11.1.4
Directorship/Proprietorship/SMSF Listings
Requirements added to complete Veda and ASIC searches for SMSF’s
and if held, confirmation that SMSF is not reliant on the applicant(s)
income (in line with company and business policy requirements).
Calculation of living expenses
Living expenses increased in line with cost of living as follows:
16.1.3
Single adult: from $13,780 to $13,988
Couple: from $25,636 to $26,312
Each child: from $4,940 to $5,096
Valuation requirements
DLA sign off levels consolidated into single table. No change to policy
content or requirements.
25.3
Lo Doc product specific policy
Relocated to Product Specific Policy subsection. No change to policy
91
Effective December 2014
Revision History
Date
Author
Change
Section
content or requirements.
29
Equity Finance Mortgage (EFM) associated loans
Relocated to Product Specific Policy subsection. No change to policy
content or requirements.
24/04/2014
M Hamoy
Capitalised LMI premiums
30
18.3
LMI premiums may be capitalised onto a loan provided the resultant
LVR, including premium, does not exceed 95% (previously 100%).
Location categories
24.1
Maximum LVR 95% including LMI premium.
22/05/2014
M Johnson
Valuation Types
25.1
Further clarification regarding maximum loan amount dependent on
valuation type.
25/06/2014
M Johnson
Non Permanent Residents
7.6
Loans with an LVR greater than 70% require DLA7 approval.
Employment Requirements
9.1
PAYG applicants that are full time, permanent part time and contract
workers now only require minimum 6 months in current job. Casual,
second jobs and temporary workers still require minimum 12 months
Income Matrix
10.2
Additional types of PAYG verification documents has been added.
Use of Foster Care allowance is not acceptable.
Rental Income has changed to Residential Rental Income and the
verifications split to Untenanted or Tenanted Property.
A new section covering Commercial Rental Income has been added.
Self Employed Applicant(s) income.
This section has been reordered and a Self employed income matrix
has been added.
10.3
15.2
National Rental Affordability Scheme (NRAS)
Update to Genworth approved Housing Consortiums listing.
20
Credit Increases
This policy has been fully rewritten and relocated from section 19.
24.4
‘Off the Plan’ Purchases
Policy clarified to note that the LVR applicable is determined by
development type.
26.1.1
Purchase Contract
Additional clarification where restrictive conditions / covenants are part
of the purchase contract or a property has a development approval.
28
Partial Discharges
This policy has been fully rewritten.
29
92
Effective December 2014
Revision History
Date
Author
Change
Section
Substitution of Security
This policy has been fully rewritten.
30.3
Lo Doc Income
Accountant’s requirements and verifications have been amended.
30.10
Lo Doc Serviceability
Policy wording changed to include Lo Doc applications.
14/07/2014
M Johnson
Qualifying Rate
16.2
Introduction of minimum ‘floor’ limit for serviceability of 7.50%pa
11/08/2014
M Gardner
Capitalised LMI premiums
18.3
Policy updated to include the override level of Processing Centre 9 .
This is already the rule in OLAS with policy updated to outline this
requirement
20/10/2014
M Johnson
*Integration changes were made to the policy document. This
changed section numbering and added some ‘Reserved’
sections.
Currency of Reports
8.1.2
Veda Reports are now valid fro 60 days, previously 90 days.
Newly Created Credit History Reports
Policy wording changed from ‘files less than 3 months old’ to ‘new
credit report’.
Adverse Credit History
8.1.5
8.2.1
The table of defaults has been integrated to this section and the PC
Shell rule failure wording updated. Override levels remain the same.
11.4
Calculation of Living Expenses
Living expenses increased in line with cost of living as follows:
Single adult: from $13,988 to $14,144
Couple: from $26,312 to $26,780
Each child: from $5,096 to $5,200
Credit Scorecard
New Credit Scorecard implemented. Previously unscored occupation
types of pensioners, students, retirees and home duties are now
scored.
03/12/2014
S Schreiber
Income matrix
12
10.2
Introduction of income requirements for Superannuation
Visa facilities with approved residential loan
31
Note added re secured visa facility being unavailable from 10/11/2014
for loan applications with LVR >80%
93
Effective December 2014

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