Policies

Business Purpose

• Restricted to 10% of the total customer exposure to AMP Bank up to a maximum of $100k.
• Can be used for:
  • Purchase of an established business however servicing cannot be reliant on income from the business being purchased.
  • Refinance of existing business loans noting the customer must be the owner of the business for a minimum of two financial years and provide financial data for both years.
• For clarity, the following loan purpose is not categorised as business:
  • Refinance of a business debt that related to a closed/liquidated business where the income source to meet servicing is from an entirely unrelated entity. In other words, was self-employed but is now working as a PAYG employee.
  • Funds to invest in a commercial property if the customer is not intending to operate his/her/their own business from the premises. This is considered investment and is subject to standard commercial rental income discounts etc.
     
     

Personal

• Debt consolidation - maximum 5 debts (home loan and 4 unsecured debts, subject to a maximum of $50,000 accumulated unsecured debt). Personal and/or other loans that resulted in the acquisition of an asset (e.g.: car loan) may be excluded from the $50,000 accumulated amount. If the applicant/s are unable to provide evidence for the original use of the funds, the loan should be included in the $50,000 cap.
• Personal use (e.g. holiday, motor vehicle purchase).
• Investment (e.g. purchase shares).

Cash Out Policy

• Cash out amounts up to $500,000 up to 90%  LVR (LMI exclusive on P&I terms, LMI inclusive on I/O terms) is acceptable without documentary evidence of use of funds (declared loan purpose) provided negative gearing is not required to assist with servicing. 
• Cash out amounts greater than $500,000 and up to $1,000,000 up to 90% LVR (LMI exclusive on P&I terms, LMI inclusive on I/O terms) must have evidence of the use of funds submitted as part of the supporting documentation by way of a Stat Dec and where available, may include additional documentation as follows:
  • Contract of sale.
  • Letter from a qualified accountant/financial planner.
  • Active share trading account.
  • Quotes/contracts etc for home improvements.
• Cash out amounts exceeding $1,000,000 may be considered on an exception basis only (refer to your BDM).
• Where Base LVR >85% - Cash out component is limited to 20% of the security value, and subject to supporting documentation as per above.
• Note: Where the cash out is subject to multiple purposes, the Stat Dec must include a breakdown of each purpose and estimated cost. 

Housing 

• Purchase new or existing residential dwelling for owner occupation or investment.
• Construct new residential dwelling for owner occupation or investment.
• An extension or renovation to an existing property involving structural changes that require council approval.
• Refinance existing owner occupied/personal and investment loans.
  • Maximum LVR for purchase, increase or refinance of owner-occupied or investment housing/property debt is 90% (LMI inclusive) on I/O repayment terms and 95% (LMI Inclusive)  on P&I repayment terms.
• Refinance on a dollar for dollar basis is acceptable on both P&I repayment terms (max LVR for owner/occupied and investment purposes is 95% inclusive of  LMI and  I/O repayment terms (max LVR 90% - including Master Limits)
•  Owner-occupiers who seek 6-10 years I/O repayments on the predominant portion (greater than 50% of the total owner-occupied lending held) are subject to a maximum LVR of 70%. If the existing loan being refinanced is non-deductible and on interest only repayment terms, it is acceptable to mimic the same structure (subject to AMP Bank being satisfied the selection meets with the requirements and objectives of the applicant/s)

Bridging Policy 

If a simultaneous settlement cannot be negotiated and the purchase is required prior to the sale, we may consider bridging finance (for existing customers only) under the following circumstances:

• Existing mortgage has been with AMP Bank for > six months and repayments have been maintained per contractual arrangements.
• The incoming security satisfies acceptable property/s policy and is subject to a satisfactory valuation.
• Where the existing home is not subject to an unconditional exchange of contracts, servicing is demonstrated on the 'peak debt' should the existing home be retained and become an investment property.
  • Rental income and gearing benefits to be applied per current policy.
  • Primary LMI not required.
  • No zone 5 (Ultra-High Risk) securities regardless of LVR.
  • Max LVR subject to standard policy based on $TBE.
    
    

• If the existing home has been sold and unconditional exchange of contracts can be verified, we may consider acceptance if servicing can be demonstrated on the proposed end debt but not the peak debt subject to:
  • Unconditional exchange and payment of the deposit by the purchaser to be confirmed in writing from the borrower's legal representative.
  • The letter is also to confirm that AMP bank's borrower is entitled to retain the deposit proceeds should the sale not proceed.
  • The settlement for the sale of the existing home is to be affected within 30 days from the purchase of the new property - as confirmed via the COS and/or confirmation via the applicant/s legal representative.
  • Tracking of the sale of the existing home, within 30 days from the settlement for the new purchase of the new home, is to be maintained and monitored within bank Operations and reported to the Credit Specialist Team if not complied with.
  • Primary LMI not required.
  • No zone 5 (Ultra-High Risk) securities regardless of LVR.
  • Max LVR subject to standard policy based on $TBE.
• Where the existing home is not subject to an unconditional exchange and servicing cannot be demonstrated on the 'peak debt' should the existing home be retained as an investment property the request should be declined.
  

View Security Property Location Guide

All residential properties 

• Residential owner occupied or investment properties fully serviced by power, water/tank water, utilities and road access.
• Must be zoned residential or rural residential – (where the valuation report records the zoning as anything else i.e.: mixed business use but the valuer has confirmed the current use is residential (comments and pictures) and the zoning permits ongoing use, the zoning will be acceptable).
• Maximum land area 40 hectares (100 acres).
  
  

Vacant residential land

• Land size not to exceed 2.02 hectares (5 acres). No cross collateralisation of securities. Must be standalone security only.

Residential unit blocks on separate titles

• Maximum 4 apartments per borrower in any one development.
• Maximum total aggregate concentration of 25% in any one development up to a maximum of 10 units.
  
   

Rural residential properties

• Must not be income producing. 

Residential unit blocks on one tile.

• Maximum 4 units and 50% LVR up to $1 million.

Off the plan "purchases"

• As per standard policy.
  
  
  
   

Unacceptable property types incl. (but not limited to)

• Units/apartments less than 45m2 living area (excluding balconies and car accommodation). (For good quality properties located in a desirable and high demand capital city metropolitan location, the minimum living area is 40m2)
• Converted hotels/motels
• Converted churches/places of worship
• Churches/places of worship
• Residential property with a commercial content
• Residential property used for a commercial purpose
• Commercial property
• Industrial property
• Retail property
• Relocatable, portable or modular homes (e.g. off-site prefabricated / manufactured homes)
• Leasehold other than Crown Leasehold
• Any property in excess of 50% per borrower in any one completed development that has a maximum of 8 properties in the development (duplexes are acceptable), or any property in excess of 4 per borrower in any one completed development where there are more than 8 properties in the development.
• Boarding houses/hostels
• Bed & Breakfast (B&B)
• Brothels
• Specialised student accommodation or university apartment
• Any property subject to a rental guarantee (State and Federal Government properties are acceptable)
• Any property that is subject to a ‘two tier’ market (e.g. sale of properties at higher prices to out-of-town buyers while offering lower prices to local buyers familiar with market values)
• Home units attached to management rights of the complex
• Any property located in a flood zone greater than 1:100 year frequency or where the known flood height level is higher than the floor level
• Any property located on a contaminated site (or currently under investigation for contamination)
• Any property directly affected by coastal erosion
• Any property having a land area greater than 40 hectares (100 acres)
• Any property that is used for the purpose of farming
• Any property with a water license/allocation
• Specialised or unique properties
• Age-Restricted / Ability-Restricted Developments (e.g. occupancy restricted to residents over the age of 55)
• Property with a capital value less than $60,000 (land and improvements)
• Any property that will require developments of more than two dwellings on it
• Any property with a shared boundary with a petrol station  
•  Any property located within 50 metres of an Electrical substation
• Boundary of property located within 50 metres of High Voltage Transmission Lines
• Properties with partly finished construction work
• Serviced apartments
• Studio apartments/bedsitters
• Any property located on an island that is not accessible by road
• Landlocked properties (e.g. land that does not have direct access to a public road or thoroughfare. The property is entirely surrounded by other properties, making it inaccessible without crossing someone else’s land)
• Any property with a “lease for life” covenant on title
• National Rental Assistance Scheme (NRAS) properties
• Display Homes (subject to leaseback by the builder)
• Apartment/Unit buildings impacted by banned (combustible) aluminium composite panelling

Types

• Torrens/Strata
• Community (only South Australia)

Restrictions

• Crown Land or Crown Leasehold acceptable with a minimum duration of the approved loan term plus 15 years.
  

Requirements

• Existing loans must be operating for at least three months and have a satisfactory loan repayment history (no arrears in the prior three months).
• Only one additional advance permitted within any three-month period.

An updated credit report must be undertaken for each applicant and must be clear of any adverse listings.

Easy increases

Requirements

• All applications must be on the AMP Bank Easy Increase Application form.
• Existing PAYG and self-employed borrowers only.
• Existing residential security only.
• Existing loans must be operating for at least 3 months and have a satisfactory loan repayment history.

Not available for:

• Low Doc Loans, Land Loans, Construction Loans, Practice Finance Loans, AMPCI Loans.
• Vacant land security.
• Loans that have been in arrears/over limit for >30 consecutive days in the last 6 months.
• Loans with a business purpose.

Features

• Maximum Loan Amount: $100,000 (no maximum $TBE).
• Maximum LVR of 80% or subject to any other product specific LVR restrictions.

Serviceability

• PAYG income details required as per standard policy.
• Self-employed income details required as per standard policy.
• All borrowers must sign the Easy Increase application form which includes a declaration that 'financial position has not adversely changed'.
• An updated Credit Bureau check is required on all borrowers. If any defaults have been lodged since the last full credit assessment, it does not qualify for Easy Increase.

Valuations

• As per standard policy.

C-L

Purpose & type

i.          For the construction of living accommodation on vacant land, zoned residential or rural residential.

ii.          For an extension or renovation to an existing property involving structural changes that require council approval.

iii.          For an extension or renovation to an existing property where the security value needs to include the proposed works (i.e. where an on completion valuation is required).

iv.          Where the loan amount for construction is ≥ $100,000.

As the value of a property being constructed is not certain until the
building/dwelling has been completed, the Bank undertakes additional steps with these loans to ensure that there is no unnecessary increase in risk to theBank.

Where a security taken is to be constructed, the total loan amount required for construction must be set up as a construction facility.  Product mixing is acceptable for existing facilities and remaining loan amounts not used for construction (cannot be combined with AMP Essential Home loans and
SuperEdge). Upon completion the existing construction facility must be closed and a new account with a different product type opened.

Construction must be completed within 12 months of loan approval.

Exclusions

i.          Owner builders.      

ii.         Labour-only contracts.

iii.        Zone 5 properties.

iv.       Split contracts (i.e. Where the land contract states that a separate contract with a specific builder must be completed).

v.          Kit homes or relocatable / transportable / modular dwellings.   

vi.         Refinances of security properties where construction is in progress (interpretation includes no funding of partly completed self-funded construction in progress).

vii.        Properties that have been strata titled (e.g. Townhouses/units).

viii.       The Bank will only finance a maximum of two dwellings simultaneously (e.g. a dual occupancy construction).

ix.        Non-arm’s length relationships (e.g. a family licensed builder purporting to undertake the construction for a relative).

Maximum loan amounts 

Security

 i.          Registered 1st mortgage over the property subject to the construction finance.

ii.          Maximum land area 2.02 hectares (5 acres).

iii.          The subject property is to have standard services available (e.g. electricity, water, utilities, road access, etc) or have acceptable services included in the construction and construction cost (e.g. Water storage).

Building Contract

The Bank will arrange a valuation for each conditionally approved construction loan. To facilitate the valuation, which will be based on an “On Completion” basis and undertaken by one of the Bank’s panel valuers, the following must beprovided to the valuer:

i.        Copy of fixed price building contract between the licensed builder and the owner(s) of the vacantland or property.

Note: The fixed price building contract may not be executed at this stage.

Generally the Building Contract will be standard documentation issued by the Master Builders Association (MBA) or the Housing Industry Association (HIA). If these contracts have been used and altered, or if other contracts have been executed, the Bank may consider either additional investigation cost and/or if there are an increased number of progress claims (i.e. above the standard four) then additional progress payment fees will be charged to the borrower.

ii.        For any exclusions from the fixed price building contract such as driveways, landscaping and fences, additional quotations from a licensed contractor must be provided to be included in the on completion valuation.

iii.        Any variations to the fixed price building contract or additional quotes that require council approval (i.e. swimming pool) are to be provided to be included in the on completion valuation.

iv.        Copy of plans and specifications.

Note: The plans and specifications may not be council approved at this stage.

v.        The Bank will accept the lower of valuer’s estimate of improvements or the fixed price building contract figure.

vi.        The builder’s progress payment schedule is to be confirmed and noted on the valuation report that it complies with the relevant state standards, otherwise an explanation is required from the builder prior to formal approval.

vii.        If council approved plans or the executed fixed price building contract are not available at the time of initial valuation, then upon receipt a second valuation will be required, at the borrower’s expense. The valuer will need to confirm there have been no changes since original approval. Any changes may require the valuer to reassess the property value. The council approved plans, specifications and the executed fixed price building contract must be supplied before settlement of the construction loan. To make sure that settlement can be affected on time the documents must be supplied at least one week before settlement which will allow enough time for the final valuation to be completed.

  viii.        If any variations to the fixed price building contract or additional quotes are provided after the settlement of funds and were not included in the initial credit assessment, these items are to be at the customer’s own cost (unless the bank has approved a loan amount that is more than the total costs to complete and there is enough redraw to pay for the variations or additional quotes).

Note: The following documents must also be supplied before the first progress paymentrequest of the construction loan:

• Copy of the builder’s licence. The requirement for a copy of the builder’s license may be waived when the builder’s registration details have been confirmed via internet with the appropriate government body. Hard copy of internet confirmation to be placed on loan file;
• Copy of the builder’s all risk and indemnity insurance policy; and
• Copy of the Homeowner’s Warranty Insurance.

Progress Payments

Progress payments are the Bank’s primary control mechanism for construction lending. Funds must only be released progressively, in line with verified construction progress and confirmation that the remaining undrawn funds are sufficient to complete the build.

i.        Borrower contribution first. The applicant’s own funds are to be utilised before any Bank loan funds are drawn.

ii.        Progress payment request and authority. Progress payment requests must be signed by all borrowers/ guarantors (where applicable).

iii.        Builder dispute declaration (prior to payment). Before paying progress payments, borrowers are required to advise the Bank if there is a dispute with the builder. In the absence of any such indication, progress payments will be made direct to the builder’s nominated bank account.

iv.        Executed building contract. The fully executed building contract is to be obtained prior to the first progress payment unless required earlier by the Bank’s panel valuation firm.

v.        Where a QS Report is not required, progress inspections must be completed in accordance with the requirements outlined in below section “Valuations and Inspections”, based on the construction loan amount. If the construction is subject to the unaltered terms and conditions of an MBA or HIA contract the valuer can complete progress inspections at:

a)   Slab/footings stage

b)   Completion of construction prior to final payment

vi.        If a non-standard building contract is used the valuer is required to complete four progress inspections.

vii.        Inspection content. Progress inspections (valuer or QS, as applicable) are to include:

a)   Value of works completed to date; and

b)   Updated estimate of cost to complete.

viii.        Final progress payment prerequisites. Prior to release of the final progress payment, the borrower is to provide evidence of building insurance, with AMP Bank noted as first mortgagee, and for an amount not less than the total construction cost or full replacement value.

 ix.        Completion evidence prior to converting out of construction facility. Prior to switching out of a Construction Loan to another loan product, the customer must provide a copy of the Occupancy Certificate (or relevant other documentation showing approval to live in the building as required in each state).

Valuations and Inspections

The valuation and inspection requirements applicable to construction loans are determined by the construction contract amount (fixed-priced building contract, inclusive of GST where applicable), as outlined below:

Cost to Complete 

At each progress payment stage, the Bank must be satisfied that the estimated cost to complete the construction does not exceed the undrawn loan fundsavailable for construction.

• If cost to complete ≤ undrawn funds available: progress payment may proceed.
• If cost to complete > undrawn funds available: further drawdowns must not be made until the shortfall is addressed (e.g. borrower contributes funds and evidence is provided, or an approved facility amendment is in place).

The final progress payment may only be made once Practical Completion is confirmed in accordance with Bank requirements (including the final QS inspection report and any required completion valuation and/or compliance/occupancy evidence).

Quantity Surveyor Report

When is a Quantity Surveyor Report (QSR) required?

QS Reports and QS progress inspections are required only where the construction contract amount (fixed-priced building contract, incl. GST where applicable) exceeds $2.0m.

A QS Report is an independent report prepared by a suitably qualified Quantity Surveyor to evaluate construction cost adequacy and progress risk, including verification of construction costs, progress, cost-to-complete and completion status throughout a construction project. This report is distinct from a valuer inspection, which primarily assesses property condition and value, rather than cost-to-complete risk.

QS inspections replace valuer ‘in-progress’ inspections for the purpose of supporting progress payments. A valuer will still be required to complete the “as if complete” and “as is” valuations.

Responsibility for ordering

A Quantity Surveyor must be engaged by a credit analyst; typically from the approved QS panel (e.g. Mitchell Brandtman or Washington Brown), at the borrower’s cost.

The Bank must obtain the borrower’s authority/consent to pay the QSR fees (including authority to deduct these expenses from loan proceeds where applicable) before ordering the QSR and before progressing to formal approval.

An “as if complete” (TBE) valuation (and any completion valuation/final inspection, where required) must be completed by one of the Bank’s panel valuers prior to the relevant drawdown.

The minimum QS responsibilities include:

 i.        Initial review (prior to first progress payment) of the fixed-priced building contract and an independent assessment of construction cost adequacy and estimated cost-to-complete.

 ii.        Progress inspections at each construction/drawdown stage required by the Bank, generally aligned to the construction contract progress payment schedule (e.g., base, frame, lock-up/enclosed, fixing, practical completion), and reporting sufficient to support each progress payment.

 iii.        At Practical Completion, a final QS inspection report, confirming:

a.    the dwelling is complete and habitable;

b.    all contracted works have been delivered;

c.    only minor, non-structural defects remain; and

d.    the defects liability / retention period applies (where relevant).

Assessment / Conduct

i.        If the construction loan is to construct an investment property, the future rental income can be included when calculating serviceability. This applies equally to construction loans funded via AMP Bank or through an external lender, subject to inclusion of the full debt (construction limit), standard income verification, rental discounts and negative gearing policy/procedure

ii.        If the construction loan is to construct an owner-occupied security the current rental expense, notional rental expense or mortgage expense is not to be included when calculating serviceability.

a)    If the applicants have a current owner-occupied property that is mortgaged, the repayments on this mortgage can be ignored if the property is going to be sold at completion of the new property.

b)    If the applicant’s intention is to retain the current occupied property and rent it out, the future rental income can be included in servicing subject to inclusion of the full existing debt, standard income verification, rental discounts and negative gearing policy/procedure.

iii.        At the time of formal approval, the cost to complete the construction is to be taken from one of the following sources:

a)    Building contract (draft or executed)

b)    Building tender

c)    Detailed cost estimate/quote from a licenced builder.

iv.        Variations to the Building Contract/approved plans are not to proceed unless prior approval is provided by the Bank which will be subject to the borrower providing;

a)   Details of the variation;

b)   The builder’s quotation or estimate of the additional or reduced cost;

c)   An updated valuer or QS report (must be referred to original valuer), both at borrower’s cost, if the variation cost increase exceeds $10,000 or 5% of the fixed contract price (whichever is the lesser); and

d)   Borrower’s indication of how the additional cost will be met (a subsequent application for an increase in loan funds will incur the Bank’s standard fees for additional advances)

iv.        For all construction loans a schedule is to be prepared by Bank staff, listing funds available (borrower’s resources) and funds required (including interest during construction and other related costs such as QS, council fees). This should result in a surplus.

v.        During construction, interest is to be met monthly from a deposit account either opened with the Bank or from an external bank account linked. This account (if more than one account is held with the Bank/the aggregate of account balances) should hold the applicant’s cash contribution before construction commences.   

vi.        In some circumstances the Bank may agree to approve an amount to cover interest incurred during construction i.e. capitalisation. However, the expected amount of interest is to be included in the assessment of Maximum Loan Amount and LVR.

Note: AMP Bank fully participates in Comprehensive (positive) Credit Reporting also known as CCR.

A credit check is completed on all individuals/companies/directors/guarantors.

Must have a clean credit record, except:

• Borrowers who are discharged bankrupts, Part IX or Part X will be considered subject to:
  • Minimum two years discharged from bankruptcy
  • Minimum two years since debt was fully paid for Part IX and Part X agreements
  • Maximum LVR 80%
• If a credit check identifies the Borrower(s) company is either under external administration or there is a petition, the application will only be considered if the company is not a borrower or income source and we can confirm the credit issue has been resolved.
• If the credit check shows directorships, shareholding or proprietorships of companies that AMP Bank does not hold financial information for then we will request an accountant letter saying either the business is trading profitably (i.e. has not recorded any losses over the last 2 financial years) or does not trade at all and has no liabilities or debts. If this is not obtained the most recent tax returns for these companies will be required.

Applicability Criteria

Where a loan extends into, or beyond, a borrower’s anticipated retirement age, or where ongoing repayment capacity may materially change over time, an acceptable exit strategy must be identified and assessed to ensure that the borrower has a reasonable and demonstrable means of repaying theoutstanding loan balance.

The assessment of exit strategies forms part of the Bank’s broader responsible lending and prudent credit risk management framework. This includes consideration not only of the borrower’s current serviceability and their ability to repay the debt over the life of the loan without reliance on hardship arrangements, speculative future events, or uncertain refinancing, but also whether the loan structure, term and proposed exit strategy are consistent with the borrower’s stated requirements and objectives, including their intended financial position and housing needs in retirement.

The following key assumptions apply to exit strategy requirements:

*Borrowers may own an owner-occupied property, be renting or living with parents and an exit strategy is still not be required.

Core Rules

Where an exit strategy is required, the originator is responsible for obtaining and providing the exit strategy as part of the loan submission, including appropriate supporting documentation (whererequired).

The Bank must be satisfied that the borrower has a credible exit strategy to repay or materially reduce the loan balance should repayment capacity reduce in retirement.

The table below is intended to support consistent application of exit strategy requirements:

Expectations by Age Cohort

Where an exit strategy is required, the level of policy expectation and documentary evidence applies on a graduated basis according to the age of the borrower(s). For the purposes of this section, age is assessed at the time of credit application; where there are multiple borrowers, the oldest borrower’s age determines the applicable cohort.

A graduated approach is applied because the closer a borrower is to retirement, the greater the risk that servicing capacity will materially reduce during the loan term. The Bank’s expectation therefore scales from a plausible fallback for borrowers aged 40-49, to a credible retirement repayment pathway for borrowers aged 50-59, to a clear, asset-based repayment strategy supported by documentary evidence for borrowers aged 60 and over or already retired.

Repayment type (P&I vs I/O) must align with the borrower's requirements and objectives and overall suitability. Where I/O is requested, the Bank must be satisfied that the borrower(s) can service repayments during the I/O period and thereafter on the remaining P&I term.

Operational Note:

Expired pre-approvals: Where a pre-approval has expired and an extension is requested, exit strategy requirements must be reassessed based on the borrower's (or guarantor's) age at the time of the extension request. If the borrower has moved into a new age cohort (40, 50 or 60), the applicable exit strategy requirements for that cohort must now be met. Overrides should not be used to bypass new age-based requirements triggered by cohort movement.

Term

• Maximum loan term 30 years (40 years for Equity Flex Loan) for Housing/ Investment/ Personal purposes.
• Maximum interest only term is 10 years.
  Note: the interest only term is deducted from the overall loan term for servicing purposes: If an overall 30 year loan term with 5 years interest only is selected, the P&I repayments are calculated over 25 years for servicing.

Minimum loan amount

$40,000    

Definition

Unit developments with more than 10 units and located within a postcode defined as a high density location as per the Security Property Location Guide.

Restrictions

• Maximum 95% LVR (on P&I terms) and 90% LVR (on I/O terms) for owner occupied and investment purposes inclusive of LMI for existing apartments greater than 6 months old.
• Maximum 90% LVR, inclusive of LMI for all other high-density apartments.
• Maximum 2 apartments per borrower in any one development.
• No rental guarantees.
• Maximum total aggregate concentration of 25% in any one development up to a maximum of 10 units.

PAYG Income

• Full time/part time workers, casual employees and PAYG contractors must demonstrate employment stability of a minimum of 6 months with current employer. If less than 6 months with current employer, full time/part time workers (including those on probation) must demonstrate a minimum of 12 months continuous employment within the same occupation type (e.g. sales) or industry (e.g. mining). For casual employees and PAYG contractors where the length of employment is less than 6 months, AMP Bank will not accept the income for servicing. For an applicant, that is a casual/contract income worker, who has been with the current employer for a minimum of six months to be acceptable, they must have:
  • Been in the same industry AND job role/type for >= 12 months continuous employment;
  • Held no more than two separate roles within the previous 12 months**; and,
  • Be able to demonstrate consistency of earnings over the same period (prior 12 months) by way of income tax return and NOA, income statement or bank statements.

**Transient and/or seasonal casual workers that transition from role to role after only short periods of time remain an unacceptable borrower type.

• Casual Income:
  The PAYG income calculator includes functionality to calculate casual income over a maximum 46-week year to allow for unpaid annual leave, sick leave and public holidays.
  
  For casual teachers that are not employed under a fixed term contract, the income must be calculated on a maximum 40-week year to cater for unpaid school holidays (refer to the PAYG income calculator).
• PAYG Contractor:
  Where the analyst is able to determine, via the terms of the current contract, that the applicant is entitled to paid leave and other general entitlements associated with a permanent employee, they may proceed with the income assessment based on a full 52-week year subject to being satisfied with the applicant’s employment history and ongoing prospects of continued employment via a contract extension or new contract. In this regard, the analyst must seek a copy of the full employment contract to verify the terms of employment in addition to the standard forms of acceptable income verification documentation.
• Income evidence must be provided from:
  • Two consecutive computer generated payslips confirming at least 3 months YTD income with the employer and employees names (Allow acceptance of emailed payslips as long as they contain (as a minimum) borrower name, employers name and ABN, and year-to-date income.). The most recent payslip must be less than 60 days old at the date the loan was submitted. (use PAYG income assessor to calculate the income that can be used for serviceability) OR
  • Where the most recent payslip shows less than 3 months YTD income, we require the two current payslips plus one of the following:
    • Latest year's income statement OR
    • Latest year's tax return and ATO Notice of Assessment OR
    • The last payslip from last financial year showing at least 3 months YTD income OR
    • An employment contract signed and dated that provides the employment conditions OR
    • An employment letter that is dated within the last 60 days that provides the employment conditions
  • Borrowers working for family/family companies must supply:
    • Most recent personal tax returns; and
    • Latest year's ATO Notice of Assessment.

Parental leave

• We now accept 100% of the base income including annual/long service leave or employer/Government funded parenting payment (whichever is the lower) received during the parental leave period.
• Casual employees may also be accepted where the Government funded parenting payment (or any employer funded payment if applicable) covers the parental leave period and we have written confirmation from the employer for the return to work date.
• For both permanent and casual employees, we will now also accept savings to cover a gap of no more than 12 months between settlement and the verified return to work date where the parent is not receiving an income.
• Evidence of the parental leave period (start and return to work date), income paid during the period and employment terms upon return to work (hours, income etc) must be provided prior to unconditional approval.
• Parental leave must not exceed 12 months.

PAYG - overtime/ commissions/ bonus payments

• Applicable to PAYG employees only
• A maximum of 80% overtime / commission income is acceptable for serviceability, subject to the consistency verified on payslips provided
• For applicants employed in ‘essential services’ (classified as Police, Doctors/Nurses, Paramedic/Ambulance, Firefighters, Public Transport Operations (train/bus/ferry) and Power/Energy Technicians (for example: linesman but excluding electricians) it is acceptable to consider 100% of overtime for servicing evidenced by current payslips plus prior year income statement to evidence consistency.
• A maximum of 80% of bonus payments are acceptable for serviceability, subject to
  • The most recent company bonus letter (up to 12 months old) confirming the amount of bonus paid for the period; or
  • A payslip evidencing the bonus payment (up to 12 months old): or
  • the most recent completed financial year's tax return; or
  • the most recent income statement with the bonus payment included. 

PAYG - salary packaging/ vehicle allowance

• Applicable to PAYG employees only
• Pre or post tax deductions on payslips will be excluded from income used in serviceability. AMP Bank may consider adding back deductions if they can be converted to cash at any time.
• Salary package can be included for serviceability subject to an employment letter confirming it can be converted to cash at the borrower's option
• Vehicle allowance is acceptable for serviceability (lease or hire purchase payments must be included in assessment)
• If we have used HEM for living expenses, $7,500 can be added to gross salary for borrowers that receive a fully maintained company car as a condition of their employment (to be confirmed by employment contract of employment letter)

Self-employed (sole trader/ partnership/ company/ trust income)

• Minimum self-employed period 2 years.
• All applicants (including directors and trustees) must provide Individual (personal) and Company (business) tax returns for the most recent year, and the latest notice of assessment for each income source.
• Latest year’s tax returns must be provided for all applications received after 31 March.
  
• Income projections and cashflow forecasts or income from a business being purchased are not acceptable for serviceability assessment.

Self-employed addbacks

• The following may be added back to the net profit figure:
  • Director's salary.
  • Interest charges on any loan being refinanced.
  • If the analyst is including the full repayment for all debt in the business name to calculate the adjusted NPBT available for distribution, then all interest charges may be included as an addback.
  • Superannuation payments in excess of legislative requirements.
  • Non recurring expenses.
  • Amortisation of goodwill.
  • 50% of depreciation (excluding short term items such as computer equipment etc).
  • Only the following distributions from a discretionary trust are allowed to be added back for serviceability:
    • Trustees distribution (Individual or Company)
    • Husband/Wife or defacto of the trustee
    • Dependent children of the trustee

Rental

• Evidence from:
  • Current lease or tenancy agreement; or
  • Estimate of rental from AMP Bank valuation; or
  • Estimate of rental in writing from licensed real estate agent (must be less than 60 days old); or
  • Current rental statement from a real estate agent (must be less than 60 days old); or
  • Most recent lodged individual tax return(s), supported by the corresponding Notice of Assessment; or
  • Contract of Sale; or
  • Where multiple sources of income are supplied and one of them is a Lease Agreement, then rental income on the Agreement supersedes all other evidence held and will be used for serviceability purposes.
  • For the first point above only, it is acceptable to use bank statements to support ongoing receipt of rental income if the documentation has recently expired and the applicant/s are in the process of renewing with the tenant. The receipt of the rental income must post date the expired lease agreement. If however, verification of rental income is available from points (ii) to (iv), bank statements are not required.

• Where a private lease or tenancy agreement is in place (e.g.: there is no real estate agent involved), then in addition to a copy of the lease or tenancy agreement we also require the last 6 months of bank statements evidencing rental income.
  
• The maximum gross rental return included in servicing must be less than or equal to 6%. This applies to all acceptable rental income regardless of whether we take that property as security or not. For example, the annual rental income is $26,000 and the property value is $250,000 we would calculate the rental yield as: Annual Rental Income / Property Value x 100 = Rental Yield $26,000 / $250,000 x 100 = 10.4%. In this example, the rental yield is > 6% therefore we could only use 6% of the property value as the rental figure. Property Value x Floor Rate = Rental Included in Assessment $250,000 x 6% = $15,000 pa. Therefore $15,000 (or $288 per week) can be included as the gross rental income. This amount needs to be discounted further as we will only take 80% of this amount.
• The following percentages of rental income will be used for serviceability assessment:

¹ Most recent 12 months’ rental statements provided from the managing agent. Most recent statement must be less than 60 days old.

• Rental guarantees (e.g. for display homes) are not acceptable.

Guarantor income

• Not acceptable except in the case of:
  • Spouse/partner of the borrower and they comply with guarantor policy;
  • Directors/trustees as guarantors for company/trust borrowings.
    
    Note: when director's/trustee's income is included a minimum surplus is required to be included in the assessment.

Superannuation/ annuity income

• Evidence of this income must be verified by the following:
  • A statement of holdings dated within the last 6 months, and
  • Confirmation of the current balance dated within the last 30 days, and
  • Bank account statements dated within the last 60 days showing the payment amount.
• Commonwealth Superannuation Corporation pension income:
  • A Commonwealth Superannuation Corporation statement or similar statement issued by the appropriate scheme dated within the last 12 months.

Permanent pensions

• Only the following Centrelink payment types are acceptable:
  • Age pension.
  • Family Tax Benefit Part A*
  • Family Tax Benefit Part B*
• * Family Tax Benefit part A and B are only acceptable if the borrower can verify that it will be received for a minimum of 5 years. Therefore, Family Allowance will be allowable for all children who are under the age of 13 years.
• Evidence of this income must be verified by the following:
  • A Centrelink statement dated within the last 60 days.
• All other Centrelink pension types are not acceptable income types
• Only the following Department of Veterans Affairs income types are acceptable:
  • Service and Age pension.
  • War Widower's pension.
  • Permanent disability payment (refer ‘Unacceptable Pension/Benefit Types’ for more information).
• Evidence of this income must be verified by the following:
  • A Department of Veterans Affairs statement dated within the last 30 days.
  • Bank account statement dated within the last 30 days.
• All other Veterans Affairs pension types are not acceptable income types.

Unnaceptable income/ pension/ benefit types

• The following pension/benefit types are not acceptable:
  • Unemployment/sickness benefits.
  • Non-permanent pensions.
  • Worker's compensation.
  • Accommodation/student allowance.
  • Emergency benefits.
  • Scholarship income.
  • Higher Duties payments.
  • Disability Pension:
    • This does not include TPD payments through acceptable reputable insurers (i.e.: not administered through Centrelink) where the payment is representative of a material portion (if not full cover) of the customer’s original earnings. Disability income of this nature, including Dept of Defence, Police Force etc may be considered for servicing subject to verification in writing of the terms of the payment including permanency, annual increases, expiry date (expected to be typical retirement age) and confirmation the payment is NOT conditional upon regular medical check-ups.
  • For selected Dept of Veterans' Affairs pensions, we may accept the following as permanent and not subject to ongoing medical checks:
    • Disability Compensation Payment (payable under Veterans' Entitlements Act 1986 VEA)
    • Permanent impairment Payment (payable under MRCA)
  • DVA Income Replacement Payments including 'Incapacity Payments' and 'Special Rate Disability Payments' are both subject to change depending on the individual circumstances (medical checks and/or other compensation paid via the DVA) and should NOT be considered as a permanent payment when verifying income during the assessment.
  • Foster care payments

Child support/ maintenance

• Acceptable for dependents under the age of 13 years, registered with Child Support Agency (CSA) and verified by a copy of current years CSA Notice of Assessment and 6 months Bank statements.

Investment income

• Maximum of 80% investment income is acceptable (including dividends from publicly traded companies).
• Minimum 1 year investment/interest evidenced from the most recent tax returns. Income assessment is the same as described in Self Employed (above).
• Capital gains on sale of assets is not acceptable income.

Note:

Where bank account or loan statements are required to verify repayment conduct, external debts, salary credits etc, statements sourced via ‘BankStatements.com’ or similar providers are acceptable subject to all information including account name, account number, balance, limit, interest rate, transaction history etc being readily identifiable.

Interest expense deductibility (previously known as Negative Gearing)

• Gross rental income is as per 'Rental' above. In addition to rental income, interest expenses applicable to loans for residential or commercial investment purpose are to be calculated and this figure to be used to reduce the borrower's taxable income. The interest expense is to be included in serviceability as a non-taxable addback.
• Interest expense deductibility is not to be included for debt over vacant land or loans in the name of a company or trust.

Foreign income

Note: All new to bank customers must be living and working in Australia. Lending to existing AMP Bank customers living and working overseas (ex-pats) may continue subject to current policy and procedure parameters.

• Maximum of 80% foreign income (salary, investment, rental) is acceptable as long as it is paid in one of the following currencies:

*Chinese Yuan (CYN): To a maximum of USD$50,000 or equivalent.

• Foreign self-employed income is not acceptable
• The conversion will be based on the day of the initial credit assessment and the exchange rates published by the Reserve Bank of Australia as per the following site: http://www.rba.gov.au/statistics/frequency/exchange-rates.html
• Confirmation of the income must be via a translated employment contract and the most recent 3 months bank statements showing the salary credits. All other standard employment and income policies are to apply.
• Applicants with foreign income:
  • Maximum 70% LVR for Tier 1 currencies
  • Maximum 50% LVR for Tier 2 currencies

Zoning

Refer to the Security Property Location Guide for zoning
 

Maximum loan amount

• Zone 1 (Ultra-Low Risk) and Zone 2 (Low Risk) - $600,000
• Zone 3 (Medium Risk) - $400,000
• Zone 4 (High Risk) - $200,000

Maximum LVR

• Maximum LVR is 90% if on P&I repayment terms.
• Maximum LVR is 80% if on I/O repayment terms.

Restrictions

• Land size not to exceed 2.02 hectares (5 acres).
• Must be zoned residential, rural residential or rural.
• Property must have all weather road access and have electricity connected.
• No cross collateralisation of securities, must be standalone security.
• Not available for Low Doc Loans or debt consolidation.
• Construction Loan may be added as an extra split to the Land Loan, once construction is ready to commence.

Providers

• Helia.

Capitalisation of LMI Premium

• Allowed on loans ≤ $2.0 million.
• For full doc loans maximum LVR is 95% inclusive of LMI premium for owner occupied/personal purpose and investment property related purpose.
  

In accordance with the Banking Code of Practice, AMP Bank will provide a fact sheet that contains information outlining the key policy features where Lenders Mortgage Insurance (LMI) is required – including eligibility (or otherwise) for a premium refund.

AMP Bank does not charge the borrower/s more for LMI than the actual cost incurred for the policy and does not receive a commission for any LMI policy established with the loan.

For insured loans settled after 20 April 2020, customers may be eligible for a partial refund of the mortgage insurance premium if the loan is discharged within 0-24 months of the settlement date. This information is now included in the LMI Fact Sheet provided to customers as part of their documentation pack.

Refer to your BDM for further information.

Refer to the Security Property Location Guide for zoning

The following table sets out the maximum LVRs by zone and loan amount, including where LMI is required and where referral to HDLA is mandated. They apply to loans with either an owner occupied/personal or investor loan purpose:

Note: Additional details related to column labelled “Max LVR (with LMI)" below: 

i.        Zones 1-4: For owner occupied/personal or investment purposes:

·     P&I terms: Max LVR 95%, LMI inclusive

·      I/O terms: Max LVR 90%, LMI inclusive

     
ii.        Zone 5:
For owner occupied/personal or investment purpose:

·      P&I terms: Max LVR 90%, LMI inclusive*

• I/O terms: Max LVR 80%, LMI inclusive*

¹Zone-Based single security value cap: Where the loan exceeds the standard zone thresholds ($2.0m for Zones 1/2, $1.0m for Zone 3, $750k for Zone 4) AND any individual security value exceeds the applicable cap ($5.0m to Zones 1/2, $3.5m to Zone 3, $2.5m for Zone 4), referral to HDLA is required, irrespective of whether other securities are withinlimits.

 ²Zone 5 securities are accepted case-by-case. Primary LMI is required in all instances, regardless of LVR, and the LMI premium is payable by the borrower. The “No LMI Premium” pathway does not exist for Zone 5. The stated maximum LVR (90% P&I / 80% I/O) applies across the entire LVR range, not only LVRs above 80%.

Other LVR restrictions

The following LVR restrictions apply in addition to the zone-based limits set out above. Where more than one LVR restriction applies to a loan – including across splits within a single facility – the most restrictive (lowest) applicable LVR is the binding maximum.

(a)  Security,borrower and product-type LVR restrictions

i. Residential unit blocks on one title - max LVR 50%.

ii. Business Loans - max base LVR 90%.

iii. Low Doc Loans - max LVR 80% (Grandfathered– not available for new borrowers).

iv.  Self-Managed Superannuation Funds (SMSF)- max LVR 80%.

v. Company Title securities - max LVR 80%, no LMI applicable (existing business only). 

(b)  Repaymenttype, loan purpose and product LVR restrictions

The following table sets out the maximum LVR by repayment type, loan purpose and product. 

¹Max 80% LVR forSuperEdge (SMSF) product (Investment only; P&I or 1-5 year I/O term).

²Max 70% LVR where; a) the predominant product is owner-occupied, and b) the I/O repayment type constitutes >50% of the loan size, and c) the I/O term
requested is 6-10 years.

³Max 90% LVR for Pro-Pack loan product (Investment; optional 6-10 year I/O term).

⁴Max 80% LVR for Equity Flex loan product (Investment only; mandatory 6-10 year I/O term).

(c) Foreign income LVR restrictions

Maximum 70% for Tier 1 currencies.
Maximum 50% for Tier 2 currencies.

Refer to the Income section for full currency details.

M-Z

Assessment Criteria

• The sum of limits of all splits (called sub-accounts) must be equal to the approved Master Limit.
• Maximum LVR with LMI inclusive is 80%.
• Refer Acceptable Loan Purpose and Refinance Requirements if the application involves the refinance of an owner occupied loan.
• Not allowable on Construction loans or AMP SuperEdge loans.
• Master Limit expires after 10 years.
• Line of Credit must be primary split on all Master Limits.
• Serviceability assessment of the Master Limit feature is to be based on the entire Master Limit amount requested assessed over a maximum term of 20 years (where the Master Limit is 10 years) or 25 years (where the Master Limit term is 5 years) on Principal and Interest repayments.
  

Contract of sale requirements

A copy of the completed front page of Contract of Sale and any special conditions must be provided prior to formal approval, contract could be unsigned at this stage. A copy of the full Contract of Sale signed and dated by the vendor must be provided prior to settlement.

Funds to complete

Property Purchase Base LVR <= 85%

• No supporting evidence of savings required. Borrowers should disclose evidence of savings in the asset position of the loan application form plus details of deposit already paid (holding deposit, 5% or 10% of the contract price).

Gifted funds to complete

• The AMP Gift Declaration Letter must be from the person(s) giving the gift.
  
  

Property Purchase Base LVR > 85% with savings

• Total funds to complete must include a minimum genuine contribution of 5% of purchase price
• Funds cannot be borrowed (personal loans, credit cards or loans from family members)
• Funds must be held in the borrower's name(s)
  
  

Acceptable forms of savings include:

• Funds held in bank accounts/term deposits.
• Listed securities (e.g., shares).
• Equity available in residential property.
• Sale proceeds from residential property.
• Sale proceeds from other assets (e.g. motor vehicle).
• Deposit already paid for the property.
• Accelerated loan repayments (where savings have been redirected to additional loan repayments and can be evidenced).
• Employer paid bonus.
• Tax Refund.
• First Home Owner Grant (FHOG).
• First Home Super Saver Scheme (FHSSS).
• Gifted funds that are non-repayable.
• Funds released from Superannuation.
• Inheritance.
• The following additional underwriting requirements apply:
  • Owner occupied purchases only
  • All 'funds to complete the purchase' (deposit plus settlement disbursements minus the FHSSS) must be evident at the time of the application

Debt consolidation - maximum 5 debts (home loan and 4 unsecured debts subject to a maximum $50,000 of accumulated unsecured debt). Personal and/or other loans that resulted in the acquisition of an asset (e.g.: car loan) may be excluded from the $50,000 accumulated amount. If the applicant/s are unable to provide evidence for the original use of the funds, the loan should be included in the $50,000 cap.

Loan Statements
Where the current lender fully participates in comprehensive credit reporting and all data (facility limit, repayment history information (RHI and FHI), loan term, repayment type etc) is up to date, we will use CCR to verify account conduct and/or verify declared liabilities remaining with the other lender. Where the full information is not available on the customer/s bureau report, the following documentary requirements still apply:

• Six months loan statements (including those sourced via ‘BankStatements.com’ or similar provider) on all secured loans being refinanced must be provided. The most recent statement must be less than 30 days old from the date of application submission.
• The Bank will not refinance any loan, which has been subject to poor repayment conduct.
• For consolidation of personal debt a minimum of the last account statement (within 32 days old at the time of application submission) for credit cards or unsecured facilities must be provided. When applications require primary LMI mortgage insurers will require the last three account statements.
• For unsecured facilities where latest loan statements are not available, transaction statements are acceptable in conjunction with last loan statements.

For more information, please refer to the Distributor Newsletter issued 31 July 2020 to access FAQs or contact your BDM.

Note:
Lodgement Centre (via the supporting docs checklist) still requires an originator to upload a document labelled as ‘Bank Statement’ remains a mandatory doc. In the interim, originators may upload a printout of the customer’s bureau report and label it as a bank statement to enable the application to be submitted

Australian Taxation Office Debts

• If a borrower has a debt payable to the Australian Taxation Office, AMP Bank require:
  • Include the agreed repayment arrangement with the ATO or where no repayment arrangement exists calculate the monthly repayments based on the full tax debt over a max 12 month period using a 12% p.a. assessment rate; or alternatively.
  • Obtain confirmation that the debt has been paid.

Borrower living rent free

• If a borrower is said to reside rent free with family/friends an amount of $150 per week is to be included in the borrower's expenses. The notional rental expense is to be included for each applicant who is living rent free.
  • The minimum notional rent also applies to rent and board where the declared expense is less than $150 per week.
• Where borrowers are in a spousal or de facto relationship and live in the same household, a single notional rent expense will apply per household, rather than per individual. This amount will be apportioned proportionally between both borrowers for assessment purposes.
• If a borrower is provided with free accommodation by their employer, documentary evidence (i.e. employment contract, letter from employer) confirming the arrangement terms is required.

Borrowers approaching retirement or borrowers already retired and/ or aged 60+

All AMP Bank and other bank loan repayments are assessed using a margin of 3% above the actual loan interest rate with a minimum factored rate of 6% or the actual declared repayment (whichever is higher).

 

Credit cards

3.80% of the credit card limit is included in serviceability.

Charge cards

Limit set based on the highest balance recorded in the most recent 3 months, from bank statements. If there has been no usage during this period, the limit is set to zero. 

Exclusion of Dependants

• Can be excluded from servicing where the dependant is more than 16 years of age at application date, and the borrower(s) provide a signed letter / self-declaration or statutory declaration confirming that the person listed as a dependant in the documents provided is not a dependant and is self-supportive with their own earned income.

Exclusion of non-loan party spouse

• Can be excluded from servicing when, for HEM purposes, can demonstrate an independent annual income of minimum $45,000.
  • Multiple sources of income (e.g. Payslips, Tax Returns, Centrelink,...) can be used for verification purposes.
  • Where the source of income is work-derived (PAYG, Self-employed), the most recent payslip or most recent tax return is required.

Note: Mutual dependants (if any) are to be included in the application and servicing calculator.
Note: All joint liabilities from the borrower and the non-loan party spouse to be included in full.
Note: The share of living expenses contributed by the borrower is to be accounted for.

External Debt

• The loan repayment amounts used for the surplus of external mortgages, personal loans, overdrafts, margin loans & lines of credit will be calculated by the higher of:
  • The total limit of the external Home Loan, Investment Loan, Margin Loan and/or Line of Credit factored at the loan assessment rate over a 30-year Principal and Interest term on a monthly basis with any interest only period discounted (where known);
  • The total limit of the external Personal Loan (secured or unsecured) and/or Equipment Finance (Lease, Chattel Mortgage or Hire Purchase excluding the balloon or residual payment) factored at the loan assessment rate over a maximum 5-year Principal and Interest term on a monthly basis, and any Interest Only period discounted from the remaining term (where known), and
  • The borrowers declared monthly repayment amounts.

Note: where known, the actual ‘loan term remaining’ should be captured in the relevant fields (online and/or the manual servicing calculator) to determine the appropriate repayment for servicing.

For all external debt that is not being refinanced/repaid with the new loan funds, the supporting documentation must now include, as a minimum, the most recent statement (within 60 days of the date of the application or if older, supported by an internet banking printout and/or snapshot) for all declared liabilities. The statement/internet banking printout/snapshot must include the current limit/balance and any available redraw, the current interest rate plus the minimum required repayment per month unless the details are available vie the customer bureau report under CCR.

Factored rate

All AMP Bank and other bank loan repayments are assessed using a margin of 3% above the actual loan interest rate with a minimum factored rate of 6.5% or the actual declared repayment (whichever is higher).
 

Minimum Net Monthly Surplus

The approval of a home loan application will require evidence of sufficient disposable income to enable the borrowers to maintain living expenses after meeting all AMP Bank home loan application commitments and any other regular monthly commitments.

Loan purpose: Owner Occupied / Personal Use or Investment

Note: All loans with an LVR > 90% (inclusive of capitalised LMI premium) will be subject to a minimum NMS of $500 (regardless of the DTI). 

For clarity; if the base LVR is less than 90%, however, the total LVR exceeds 90% once the LMI Premium is capitalised, then NMS threshold of $500 applies.

Common debt reducer

Where rental income from a property is received by two or more parties, the Bank will include the borrower’s portion of rental income/loan repayment for serviceability (e.g. borrower and brother have an equal split investment property loan with another bank. The Bank would include 50% of rental income and 50% of corresponding loan repayment in the serviceability assessment). To enable the Bank to proceed under this arrangement, the co-borrower/s on the existing investment debt must provide evidence of their ability to meet their portion of the debt. Refer ‘Statutory Declaration for Non-Borrowing Related Party’ available in the forms section (Home Loan Application Forms) on this site. Where the non-borrowing related party refuses to complete the declaration, the Bank will include 100% of the liability and 100% of the rental income but continue to apply negative gearing based on the relevant % ownership of the property.

For apportionment of external debt, we will use the higher of:

• Actual share of property ownership, or
• Their share of debt based on the number of borrowers (e.g., 4 borrowers = 25% share)

Note: The provisions above do not apply for ‘owner occupied’ debt/rental expense held jointly with the applicant’s spouse/partner or another party or ‘investment’ debt held with the applicant’s spouse/partner. Where apportioning of debt is required in a spouse/partner scenario to achieve servicing, the spouse/partner must be considered as a servicing guarantor. Where the other party to the loan is not a spouse/partner, the full debt must be included in servicing. When submitting a loan that includes ‘common debt reducer’ for servicing, you must prepare and include the Bank’s manual serviceability calculator as part of your supporting documentation. This is to ensure the correct Debt to Income Ratio is also calculated – for further information, please refer to the Distributor Newsletter published on 11 December 2020 (available in the Newsletters/Awards section of this page).
 

Monthly living expenses

When there is an individual borrower who has a spouse/partner, and that spouse/partner is not a party to the loan as co-borrower, for calculating serviceability, the ‘applicant type’ is to be assessed as ‘joint’. If the inclusion of joint living expenses (inclusive of dependents) results in a negative monthly servicing position, the spouse/partner must be included in the application as a ‘servicing guarantor’ to ensure the household position is assessed in its entirety.
 

Foreign liabilities

All foreign liabilities and expenses are to be included in serviceability at 100%. The conversion will be based on the day of the initial credit assessment and the exchange rates published by the Reserve Bank of Australia as per the following site: http://www.rba.gov.au/statistics/frequency/exchange-rates.html