ABN AFSL INTRODUCER LENDING REFERENCE MANUAL COMMERCIAL LOANS V

Transcription

1 ABN AFSL INTRODUCER LENDING REFERENCE MANUAL COMMERCIAL LOANS V NOTE: This document should be used as a guide ONLY.

2 TABLE OF CONTENTS COMMERCIAL LOANS PRODUCTS ACCEPTANCE CRITERIA LEGAL/SECURITY REQUIREMENTS LOAN TO VALUATION RATIOS (LVRS) REPAYMENT OPTIONS INTEREST RATE OPTIONS FEES SERVICEABILITY COMMERCIAL DEVELOPMENT LOANS BUILDING INSURANCE COMMERCIAL PORTABILITY LEGAL REPRESENTATIVES COMMERCIAL/BUSINESS BANKING FEES AT A GLANCE ACCEPTABLE IDENTIFICATION DOCUMENTS V Page 2 of 14

3 COMMERCIAL LOANS 1.1 Products There are two products specifically designed for Commercial customers: Commercial Term Loan Commercial Line of Credit 1.2 Acceptance Criteria Acceptable locations Loan amount Capital cities, metropolitan areas and regional centres on the Australian mainland within Local Government Areas with a population of not less than 20,000. Minimum amount for Commercial Loans $100,000, except where aggregate limit includes a Commercial Line of Credit, in which case minimum is $120,000, with the minimum limit on Commercial Line of Credit $20,000. Maximum exposure to any one Mortgagor or borrower group in aggregate is not to exceed $5 million. Loan term Maximum terms are derived from the security offered as follows: Residential security: 15 years Commercial security: 15 years Note: Commercial Line of Credit is to commence amortisation on the 10 year anniversary of establishment, and is to be repaid over the remaining term of the loan. Acceptable purposes The following purposes are acceptable: Purchase of a business (new or established); Purchase of an acceptable new property for: Own business occupation; or Investment; Purchase of a residential unit complex of up to four (4) units in the complex; Small residential or commercial development for investment or re-sale (conditions apply refer to Commercial Development Loans); Re-finance of an existing non-residential debt; Other worthwhile purposes (refer to your BDM before proceeding); Business Overdrafts; Performance Guarantees. Note: The maximum amount that can be released directly to the borrower without providing evidence as to the use of funds is $50,000. V Page 3 of 14

4 Unacceptable purposes Borrowing entities and Mortgagors The following purposes are generally unacceptable: Development and construction with the following features: o Englobo Land o Where servicing is reliant on pre-sales or asset sales o Land without all statutory approvals (DA, subdivision, etc.) in place o Significant speculative risk Where part or all of the proceeds are to pay a tax liability; Where part or all of the proceeds will be used to purchase or expand beyond the core expertise of the applicant s business and servicing is reliant upon the purchase or expansion of said business; Raising of funds for working capital for: o An existing business; or o Future undisclosed investment purposes; Purchase yet to be established business; and Any loan where servicing relies on trading income from a licensed club. The following applicants and Mortgagors are acceptable: Australian residents over 18 years of age. Where a related entity s income or profit is required to support individual borrowings the said entity will need to support legally by the execution of a Guarantee and Indemnity. Companies and Trusts, subject to: Satisfactory investigation by IMB s Solicitors; Company borrowings being supported by the personal Guarantee of the Director(s); and Company shareholdings will be investigated and should the scenario warrant the personal Guarantees of the shareholders may be required. Non residents, subject to: Debt Servicing ratio of 1.15 times; A maximum LVR of 65%; A maximum loan amount of $1 million; FIRB approval; and The appointment of an Australian agent for receipt of notices. All non-corporate Guarantors will need to provide Statutory Declaration stating they have obtained independent legal advice prior to settlement. Note: If the loan is for non commercial entity (i.e., in the name of a natural person), is less than $5m, and purpose of credit is to purchase or develop residential property, loan must be written as a regulated loan. Identification The prescribed identification verification procedure pursuant to the Anti Money Laundering & Counter Terrorist Financing Act 2006, must be adhered to for the purpose of obtaining an identification record for all individual borrowers, mortgagors and guarantors to the loan. Refer to Acceptable Identification Combinations & Documents - Section Acceptable security The following security types are acceptable: V Page 4 of 14

5 Serviced industrial, commercial, retail and residential improved property and land; Medical centres (i.e. clinics, not hospitals); Certain specialised securities used may be permitted where the freehold land and buildings are not purpose built. At the time of settlement all acceptable securities must be insured under a replacement and reinstatement policy for a minimum cover as ascertained by IMB, with the interest of the mortgagee noted. Unacceptable security The following securities are generally unacceptable: Englobo land; Hotels and motels; Caravan parks; Nursing homes; Hospitals; Churches; Cinemas; Abattoirs; Heavy industrial premises; Amusement parks; Sporting centres; Retirement villages; Flood affected properties; Child minding centres; Rural properties; Service stations; Licensed club premises; Contaminated or potentially contaminated sites; Properties adversely affected by subsidence or land slip; and Properties with unusual or restrictive zoning. Acceptable titles Acceptable property titles are: Torrens Title; Old System Title; Strata Title; and Crown Lease if the unexpired term exceeds maximum loan term by 15 years. 1.3 Legal/Security Requirements IMB has panel solicitors who will be used specifically for Commercial Loans transactions due to their complexity. Legal costs differ for each application. Legal quotes can be provided at pre-approval of applications. Costs for registration fees and reasonable outgoings are at the expense of the borrower. Standard statutory enquiries for prudent mortgage lending in each State will be required. V Page 5 of 14

6 1.4 Loan to Valuation Ratios (LVRs) The LVR will be based on the lower of the purchase price or valuation. The end value used to calculate LVR will be ascertained by IMB after consultation/inspection by an IMB approved valuer. For the purposes of determining maximum LVR, Commercial Line of Credit products (a package of products including a component of Commercial Line of Credit) regarded as interest only will fall under the max LVR in this category. Commercial Loans with Commercial Securities Security Type Loan Amount Maximum LVR with P & I Repayment Commercial security or mix of commercial and residential Maximum LVR with Interest Only Repayment Up to $1,000,000 75% 70% $1,000,000 and $2,000,000 70% 65% > $2,000,000 and $3,000,000 60% 55% Commercial Loans with Residential Securities Postcode Category Loan Amount Maximum LVR A Up to $2,000,000 80% > $2,000,000 70% B Up to $750,000 80% > $750,000 70% C Up to $400,000 80% > $400,000 65% D $0 Unacceptable without LMI E Up to $1,000,000 75% Commercial Loans with Vacant Land Securities Vacant land regardless of zoning 55% Where securities comprise a mix of residential and commercial the maximum loan amount will be determined using the LVR maximum for each class of security. For example: Residential security value $500,000 80% $400,000 Commercial security value $600,000 75% $450,000 Total $1,100,000 Combined LVR 77.27% $850,000 Loans secured by commercial securities in the upper LVR band are subject to restrictions on portfolio concentrations. The upper LVR threshold is subject to change at short notice. V Page 6 of 14

7 1.5 Repayment Options Principal and Interest Monthly instalments over the term of the loan. Interest Only Converts to Principal and Interest on maturity for amortisation over the remaining term. Repayments will be on the first day of each month. The maximum interest only term over the life of the loan is five (5) years. Approval may subsequently be given to a loan variation to extend the maturity date such as for a subsequent Interest Only period (which then converts to Interest). Extension of Interest Only terms beyond 5 years to a cumulative maximum of 10 years will be considered, subject to: re-valuation of security or utilisation of existing valuation with validation fresh Privacy Act Consent being obtained and a Credit Bureau Report, reflecting no adverse credit history any adverse credit history to be treated in line with existing Credit Policy completion of short form application which will confirm there has been no deterioration in asset position and income stream Any extension beyond a maximum interest only period of 10 years or, a switch to a Commercial Line of Credit will require a new loan application. Note that Commercial Line of Credit is to commence amortisation on 10 year anniversary of establishment and is to be repaid over the remaining term of the loan. Capitalised Interest Any interest capitalisation component of a loan must be factored into the LVR calculation and must be established on a variable interest rate. ALL repayments must be by Direct Debit which must be established prior to settlement. 1.6 Interest Rate Options The interest rate options available for term loans are: Fixed terms from one (1) to five (5) years; Variable rates All interest rates will be negotiated for each individual loan. The interest rates will be determined on the market rates applicable at the time and the strength of the application. IMB s introductory rates or budget loans are not available at the time of rollover. Interest rates noted in the Letter of Offer are indicative only and will be set on the settlement date. Split options are available, however splits of greater than three times will incur an additional up front fee. The borrower(s) may redraw monies prepaid, please refer to security documentation for conditions/fees and charges. The interest rate that applies to Commercial Line of Credit is a variable rate that is determined by IMB, and reviewed regularly. V Page 7 of 14

8 1.7 Fees Commercial Loan facilities will be charged an establishment fee. The amount of the fee will be determined at the time of the application. Fees will be determined according to the risk and amount of work associated with the loan application. Refer to your BDM for indicative fees. Loans fully discharged or where the loan balance is reduced to an amount which is 75% or less of the original approved loan amount, within three (3) years of the settlement date, will incur two (2) months penalty interest, calculated on the approval loan amount at the interest rate at settlement of the loan. Valuation Fees Refer to IMB who will arrange for a quote from an IMB panel valuer. Legal Fees Refer to IMB who will arrange for a quote from an IMB panel solicitor. 1.8 Serviceability The ability to service is assessed using IMB s Debt Servicing ratio which includes the following calculations: Debt Servicing Ratio Actual term; Principal and Interest repayments on proposed and actual repayments on all other loan, HP or leasing commitments at IMB or with other lenders; Servicing capacity will adopt the higher of a) the actual product rate plus 2%, or b) current commercial variable rate (applying to residential security) at the tine if assessment subject to a minimum floor assessment rate of 8.75%; Rental income will be assessed at 75% of the gross rental for commercial properties and 80% for residential properties, as per taxation returns and lease documents or agreements; The Debt Servicing ratio uses the prescribed IMB Living Allowance as an expense. Where income to service commitment is derived under this method, capacity to service will require as a minimum: or 1.15 times Debt Servicing Self Servicing Securities Serviceability of self servicing transactions based upon future rentals of the security are considered as follows: LVR should not exceed 60%; Net rentals are to be used in establishing servicing capacity; Normal servicing guidelines apply based upon the net rental income from the security only; A full copy of the executed Lease must be provided; Lease terms are to be no less than 5 years and the tenant should be a well recognised entity (e.g. Public Listed company, Government Agency or department, an ADI under APRA guidelines etc.). All proposals will be considered on a case by case basis within the credit assessment process; A full valuation is to be obtained in every instance with the valuer to sight the existing or proposed Lease and make comment on the marketability of a replacement tenant; The proposed loan must be supported by a 1 st Mortgage security. V Page 8 of 14

9 1.8.3 Adverse commentary on Valuation There is no limit to the commentary that may come back on a valuation, however, this commentary must be considered in any credit decision. Most features of a property, including negative features, will be reflected in the value provided by the valuer. Commentary relating to minor maintenance issues (eg. Painting, worn carpets, holes in plasterboard) should be considered and may be accepted by the assessor. Valuations may be supplied based on certain assumptions or with conditions. The most common of these are:- - Subject to satisfactory pest inspection - Subject to satisfactory building inspection - Verification against full Contract of Sale (we obtain copy of contract or copy of Transfer, so no additional actions required for this condition). If a valuation recommends a pest or building inspection, a condition will be inserted into the contract to ensure we receive copy of satisfactory inspection report prior to settlement. 1.9 Commercial Development Loans The following is a guide for development loans: Not to exceed an LVR of 75% (based on land + construction costs) refer table below; Maximum lending is < $2m at peak LVR; For loans where the construction or development costs exceed $1,000,000 a Quantity Surveyor is to be appointed to prepare an initial report prior to commencement of construction and to report to IMB on progress of the project, work to date and cost to complete; Loans with construction/development costs greater than $1,000,000 are still required to provide a full valuation; For loans less than $1,000,000 IMB will instruct an IMB Panel Valuer to report on work expenditure and cost to complete; Funds will be advanced by progress payments against cost to complete as determined by IMB; Costs for all Valuations and/or Quantity Surveyor reports are borne by the borrowers. Loans will initially be set up as variable interest only loans. Fixed rate loans will not be available until construction is complete Maximum LVR Commercial Development Loans The table below indicates maximum LVRs for development loans Single security with up to 4 units Strata Title property Maximum LVR for Development Loans Commercial security Residential security Commercial security Residential security 75% land & construction costs 75% as above 75% as above Refer to your BDM V Page 9 of 14

10 1.10 Building Insurance Building insurance is required in all instances where IMB is taking a mortgage over a security where a building is erected thereon. This insurance is compulsory and evidence of building insurance renewal must be provided to IMB each year. Where the security is a strata unit adequate cover must be taken out by the Owners Corporation and evidence provided prior to settlement of the loan Commercial Portability Portability provisions apply only when there is a simple substitution of same State security. Where the new security offered is in a different State, or where additional funds are required, a new application must be written re-financing the existing loan. There are two important factors that must take place in every instance for IMB to approve portability: a. The transfer of mortgage MUST take place simultaneously. b. The customers must have already paid Mortgage stamp duty on the existing security property otherwise they will be subject to paying it on the transfer. Where a portable loan application is submitted which reflects a change in the general location of the security, which could result in an unreasonable commute for work purposes (greater than 150 kilometres) and/or the borrowers employment has changed in the past 3 months. The servicing capacity of the borrower must be re-established under the prevailing conditions and under lending guidelines at the time of application for the substitution of security. The fees and charges for commercial portability will vary dependent upon the valuation amount Legal Representatives The Solicitors shown below act on behalf of IMB and advise with respect to Commercial Loans. They represent IMB during the process of preparing loan documentation and Mortgage documents, settlement of the loan through to registration and return of security documents. Firm Address Contact number Kells The Lawyers (Wollongong) Lavan Legal * Level 5, Market Street Wollongong NSW 2500 DX 5162 Wollongong G.P.O. Box F338 Perth WA 6841 Phone: Fax: Phone: Fax: NOTE:* Lavan Legal only act on behalf of the Investor where security property is situated in Western Australia V Page 10 of 14

11 1.13 Commercial/Business Banking FEES at a Glance Commercial FEES at a Glance Effective from 12 September 2011 Name of Fee or Charge Fee Amount (if ascertainable) When Payable/Description Advance Repayment Costs Agency Registration Fee Amendment Fee Australia Post Deposit Service Fee $2.40 per deposit Payable to us when you are under a fixed rate option and at any time during the fixed rate period, you make extra loan repayments such that the total loan repayments that you have made to date exceed the schedule monthly repayments to date by twelve (12) times the scheduled monthly repayment. Payable to our agent for attending to registration of any documents on our behalf. Payable to us for re-issuing facility documents because you requested alterations to any of your facility details or other information contained in those documents. The fee represents our external fees for processing the amendment. This fee is debited to your facility account when you use a bar-coded IMB deposit card to make loan repayment at any Australia Post outlet. Bank Cheque Fee $11.00 per cheque Payable on or before the settlement date for each cheque required at settlement. Break Costs Payable to us when you are under a fixed rate option and before the end of the fixed rate period you: * repay the whole of the total amount owing; or * convert to the variable rate option; or * convert to another fixed rate option; or * are in default and the total amount owing becomes immediately due for payment; or * partially repay the total amount owing and have your minimum monthly repayments recalculated. Closure Fee $50.00 per account Payable to us if you repay the total amount owing in full before the end of the facility term for variable rate facilities. Commitment Fee Courier Fee Default Fee $50.00 per month Default Notice Fee $30.00 per default Discharge Fee $ Discharge Attendance Fee Dishonour Fee $25.00 each security released maximum per dishonour A commitment fee commencing ninety (90) days from the approval date. The fee will be charged at a rate of 0.25% per annum on the undrawn balance of the facility limit calculated daily and debited to your facility account monthly on the first calendar day of the month. These fees may change from time to time and additional fees and charges may become payable in connection with the facility. Payable when we courier documents to you. Payable to us when you are in default because you do not pay on time all amounts due under this facility offer (see conditions 8.10 to 8.11 of the Business and Commercial Facilities Terms and Conditions). Payable to us when you are in default and we issue a notice demanding monies. Payable to us each time you request us to release and discharge a security on your behalf. Payable to us each time we are required to attend a discharge settlement outside of IMB premises, including those times we attend, but settlement fails to occur. Payable to us if a payment you make in or out of your account (such as a direct entry, salary deduction or cheque) is dishonoured. V IMB Ltd Introducers Lending Reference Manual - Commercial Loans Page 11 of 14

12 Name of Fee or Charge Document Registration Fee Duplication/Retrieval of Archived Documents Fee Commercial FEES at a Glance Effective from 12 September 2011 Fee Amount (if ascertainable) As charged by State Government Titles Office $20.00 per copy When Payable/Description Payable to the relevant government land registry for any document which must be registered on title. This fee may be changed by the relevant government land registry at any time. Payable to us if we produce a copy of any statement, notice or other document at your request. Early Termination Fee Establishment Fee As quoted in Facility of Offer As quoted in the facility offer. Payable to us when you apply for this facility or for an additional loan. The fee represents costs for the preparation and processing of loan documentation. Legal Fee Mortgage Stamp Duty Occupancy Lease Progress Payment Fee $ Real Property Enforcement Notice Fee $75.00 every progress payment per request Payable to our legal representative for preparation of mortgage(s) and related documents. Payable to the Office of State Revenue on or before settlement. (If you are eligible for any rebate for stamp duty the amount indicated may not be required to be paid in full). Additional loans generally attract upstamping costs. Payable if IMB's legal representative is requested to review lease documentation a charge is payable by you prior to settlement. Payable to us each time you request us to make a progress payment. Payable to us when you in default and we issue a Real Property Enforcement Notice for recovery of secured real property. Redraw Fee $50.00 per redraw Payable to us when you redraw money that you have prepaid. Research Fee $30.00 per hour Payable to us when you request us to research any aspect of your facility account. Search Fee Payable to IMB's representative following preparation of security documents. Section 109 Certificate Subsequent Mortgage Consent Fee $ Switching Fee $ Third Party Fee maximum per request per rollover/ switch Payable when the security provided is a strata title. Payable to us each time you ask us to consent to a subsequent mortgage. Payable to us if you switch your facility to another rate or repayment option. Payable to us when we incur fees from any third party in administering your facility or any security after the settlement date. Title Production Fee Updated Valuation Fee Valuation/Quantity Surveyor Fee Payable to us should you ask us to produce a title document for any reason. Payable to us if at anytime during the facility term we require an updated valuation of the security for this facility. * Payable to an independent valuer as determined by IMB when a valuation is required. * Payable to an independent quantity surveyor as determined by IMB, when a quantity surveyor is required by IMB. * Also payable to us each time you request us to make a progress payment and we require a report of work completed. V IMB Ltd Introducers Lending Reference Manual - Commercial Loans Page 12 of 14

13 1.14 Acceptable Identification Documents ACCEPTABLE DOCUMENT COMBINATIONS Individual Members (OVER 18) Two class A documents One class A document + One class B document One class A document + One class C document One class B document + Two class C documents Two class B documents + One class C document Individual Members (UNDER 18) One class A document One class B document + One class C document One class B document + One class A or class C document (in the parent/guardian s name if the child is living with the parent/guardian & the document contains the parent/guardian s address) One class C document + One class A or class B document (in the parent/guardian s name if the child is living with the parent/guardian & the document contains the parent/guardian s address) Examples of Acceptable Document Combinations Combinations OVER 18 A + A = Passport + Driver s Licence A + B = Driver s Licence + Birth Certificate A + C = Driver s Licence + Medicare Card B + C + C = Birth Certificate + Medicare + Financial Benefit Card B + B + C = Birth Certificate + Medicare + Council Rates Notice Combinations UNDER 18 A = Passport B + C = Birth Certificate + School Letter of Introduction B + A = Birth Certificate + Utility Bill in parent s name C + A = School letter of introduction + Driver s Licence in parent s name V IMB Ltd Introducers Lending Reference Manual - Commercial Loans Page 13 of 14

14 OVER 18 CLASS A DOCUMENTS Australian Passport Must be current or expired no more than 2 years ago. Must contain name, address & photo. Foreign Passport Must be current or expired no more than 2 years ago. Must contain name, address & photo. Australian Driver s Licence Must be current. Must contain name, address & photo. Proof of Age Card Must be current. Must contain name, address & photo. Foreign Driver s Licence Must be current. Must contain name, address & photo & is issued by a Government Authority. OVER 18 CLASS B DOCUMENTS Australian Citizenship Certificate Foreign Citizenship Certificate Australian Birth Certificate Foreign Birth Certificate NSW Birth Card Must have been issued within previous 5 years. Boat Licence Must be current. Must contain name, address & photo or signature. Gun Licence Must be current. Must contain name, address & photo or signature. Financial Benefit Card Must be current. Must contain name, address & photo or signature. Credit Reference Association of Australia Check Must be obtained by IMB with written permission of member. Must be issued within the previous 3 months. ADI/Credit statement, passbook or card Must be current or issued within the previous 3 months. Must contain name & address or signature. OVER 18 CLASS C DOCUMENTS Student Identification Card Must be current. Must contain name & address, photo or signature. Utility Statement (Energy, Gas, Water, Telephone provider) Must be issued within the previous 3 months. Must contain name & address. Medicare Card Must be current. Council rates Must be issued within the previous 3 months. Must contain name & address Electoral Roll Search Must contain name & address. Australian Taxation Office Notice of Assessment Must be issued within the previous 3 months. Must contain name & address. Government Financial Benefit Notice Must be issued within the previous 3 months. Must contain name & address. UNDER 18 CLASS A DOCUMENTS Australian Passport Must be current or expired no more than 2 years ago. Must contain name, address & photo. Foreign Passport Must be current or expired no more than 2 years ago. Must contain name, address & photo. Australian Driver s Licence Must be current. Must contain name, address & photo. Proof of Age Card Must be current. Must contain name, address & photo. Foreign Driver s Licence Must be current. Must contain name, address & photo & is issued by a Government Authority. UNDER 18 CLASS B DOCUMENTS Australian Citizenship Certificate Foreign Citizenship Certificate Australian Birth Certificate Foreign Birth Certificate NSW Birth Card Must have been issued within previous 5 years. Boat Licence Must be current. Must contain name, address & photo or signature. Gun Licence Must be current. Must contain name, address & photo or signature. Financial Benefit Card Must be current. Must contain name, address & photo or signature. Credit Reference Association of Australia Check Must be obtained by IMB with written permission of member. Must be issued within the previous 3 months. ADI/Credit statement, passbook or card Must be current or issued within the previous 3 months. Must contain name & address or signature. UNDER 18 CLASS C DOCUMENTS FOR UNDER 18 MEMBERS ONLY - School Letter of Introduction. - Must be issued within the previous 3 months. Must contain name & address & be signed by a school officer. Student Identification Card Must be current. Must contain name & address, photo or signature. Utility Statement (Energy, Gas, Water, Telephone provider) Must be issued within the previous 3 months. Must contain name & address. Medicare Card Must be current. Council rates Must be issued within the previous 3 months. Must contain name & address. Australian Taxation Office Notice of Assessment Must be issued within the previous 3 months. Must contain name & address. Government Financial Benefit Notice Must be issued within the previous 3 months. Must contain name & address. Other Bank, Building Society or Credit Union Letter of Introduction Must certify member as a customer & contain signatures of both the ADI representative & member. Must be on ADI letterhead. Must be issued within the previous 3 months.