RAMS Interest Only Conversion Extension Fact Sheet

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1 RAMS Interest Only Conversion Extension Fact Sheet Process Borrowers can apply to convert their existing principal and interest repayments to interest only or extend an existing interest only period. At the end of the interest only period repayments will convert to principal and interest over the remaining loan term. Note: Borrowers cannot request to convert from principal and interest to interest only within the first 12 months from the settlement date. Similarly, borrowers assessed for a part Interest Only Period will not be permitted to extend the Interest Only Period for 12 months from the settlement date. You cannot convert to interest only or extend an interest only period if the loan is in arrears or within a fixed rate period. Please note: Interest rates will be higher during any interest only period. Also, because the amount you have borrowed will need to be paid back in a shorter time frame the principal and interest repayments that will apply after the interest only period ends will be higher than if you had remained on principal and interest repayments. The longer the interest only period, the larger the increase in repayments will be. Maximum Allowed Interest Only Periods Interest only period must be in whole years e.g. 1 year, 2 years. Maximum Interest Only period for an Owner Occupied Loan is 5 years. Maximum Interest Only period for an Investment Loan is 10 years. Note: Maximum Interest Only periods listed above are inclusive of any IO periods for construction. These are the maximum period available and are only available dependant on your financial situation, and on your particular RAMS home loan terms and conditions. LVR restrictions also apply to loans converting to or extending an interest only period. Documentation All borrowers and guarantors are required to complete and sign an Application to Vary Your Loan form together with the privacy consent and supporting documentation. The Borrower Certificate of Income Declaration form for Self-Employed loans is also required from all borrowers and any guarantors. Timeframes On receipt of a fully completed application with all supporting documentation, our credit assessment team aims to process the application, within approximately 10 working days. The time taken to convert a loan to interest only will depend on several factors including your current repayment cycle. You will be advised of indicative timeframes when you apply for the interest only conversion/extension. Fees The following fees will be payable on finalisation of the request: A $295 interest Only Variation fee is payable except for home loans under the Value Advantage Package (where the fee is Nil). Lender s Mortgage Insurance (if applicable). Credit Assessment The request to convert to interest only payments or extend an interest only period is assessed using the RAMS responsible lending principles. Amongst other things, these take into consideration all borrowers allowable income against all outgoings and reasonable living expenses to assess that they will be able to repay their loan within the approved loan term. Credit Provider: Westpac Banking Corporation ABN AFSL and Australian credit licence Updated August 2018 Page 1

2 FAQs What supporting documentation do I need to provide to RAMS? Category Documentation required Income Verification Full Documentation Loans PAYG Base and Other income One current computerised year to date pay slip (no older than 60 days from date of application); covering the last 2 pay cycles OR Letter of employment no older than 60 days from the date of application (on employer letterhead stating ABN and signed by a duly authorised person) OR Copy of employment contract, no older than 60 days from date of application, detailing employment conditions including commencement date, name & position, current base remuneration, any applicable allowances, and type of employment (i.e. full time, part time, casual etc.), PLUS Either last financial year s Payment Summary (Group Certificate) or Tax Assessment and Tax Return (with all Tax File Numbers deleted) Note: If you wish us to take your Overtime into consideration, please ask your RAMS Home Loan Specialist about further supporting documentation you will need to provide. Self Employed Loans Last two years signed Personal Tax Returns and Partnership, Company and/or Trust Tax Returns and Full Financials (if applicable) AND ATO Notice of Assessment Company Last two years signed Company Tax Returns plus Full Financials Trust Last two years signed Tax Returns and Full Financials of the Trust Note: In addition to being signed, the Accountant s name and Tax Practitioner Board registration number is to be detailed on all tax returns. Alternatively an ATO Notice of Assessment(s) or a letter from a TPB registered accountant, confirming the tax returns are final, ready for submission and detailing the gross taxable income figures, may be used to validate completed tax returns. Income Verification Self Employed Loans (Low Documentation) Borrower Certificate of Income Declaration Form which includes the applicant s Accountant s Declaration (if co-borrower is PAYG, provide one pay slip or employment letter and last financial year payment summary or Tax Assessment and Tax Return no older than 60 days from date of application confirming income) OR Last 12 months BAS provided and ATO Lodgment Reference Number Note: Where applicants lodge BAS manually & do not receive ATO Lodgment Reference Numbers, you will need to provide transactional bank statements evidencing tax payment or a copy of the ATO running balance account statements. Credit Provider: Westpac Banking Corporation ABN AFSL and Australian credit licence Updated August 2018 Page 2

3 Other Income Rental income (for investment properties) The most recent copy of Rental Statement (no older than 3 months from the date of application) OR Tenancy/ Lease Agreement (no older than 12 months from the date of application) OR A minimum of 3 months account statements or statement plus transaction listing (latest transaction must not be dated more than 6 weeks from the date of application) OR Letter from Real Estate Agent (no older than 3 months from the date of application) OR Latest completed Tax Return and ATO Notice of Assessment (refer specifically to the rental property statement in the Tax Return) Centrelink payments current full Centrelink letter no older than 60 days from date of application (e.g. Family Assistance Part A & B) Child Support/Alimony Court order and/or Child support agency confirmation, supported by evidence of regular payments to a bank account over current 3 month period Lending Commitment and Account Statement Requirements For each non-rams credit contracts listed most recent statement of at least one continuous month with the end of the period dated within 6 weeks of the date of application The most recent three months of the RAMS deposit account transactions For existing bridging loan a copy of loan contract (non RAMS loan) and a copy of Contract of Sale (if this is in place) Credit Provider: Westpac Banking Corporation ABN AFSL and Australian credit licence Updated August 2018 Page 3

4 Expenses Outgoing Rental or Board Verification Documents If the applicant will be renting/boarding post settlement, the following verification documents will be required: Renting Current signed and dated lease/rental agreement (dated within 12 months of the date of the application) detailing the rental amount, frequency/cycle, property address and name/s of tenants OR Letter from licensed property manager/agent (dated within 12 months of the date of the application) detailing the rental amount, frequency/cycle, property address and name/s of tenants OR Rental ledger from licensed property manager/agent (dated within 6 weeks of the date of application) detailing rental amount, frequency/cycle and name/s of tenants OR Bank statement or transaction listing (dated within 6 weeks of the date of application), covering 2 payment cycles, with a detailed narrative which aligns to the rental outgo and detailing the rental amount and payment date. Account number/account name must be able to be matched to the applicant Boarding Bank statement or transaction listing (dated within 6 weeks of the date of application), covering 2 payment cycles, with a detailed narrative which aligns to the board. Name on document must be able to be matched to the applicant OR For Non Standard Verification Where living with spouse / de-facto who is not an additional borrower / guarantor Water Rate Notice/Council Rate Notice/Strata Notice/Signed and executed contract of sale (dated within 3 months at the date of application), showing the Spouse/de-facto owner s name and confirming a matching address to the applicant s post settlement address OR Where not living with parents or spouse Statutory Declaration (must be dated within 6 weeks of the date of application) detailing applicant s name, property address, signed by the applicant making the declaration & witnessed by an independent authorised party Child Maintenance/ Alimony Where there is evidence of a Court Order and/or Child Support Agency confirmation, evidence of regular payments over 3 months is required: Copy of the court order or child support agency letter (no older than 12 months) OR Bank statement or transaction listing (covering 2 payment cycles and statement end date must be within 6 weeks of the date of application) OR Two consecutive payslips (dated within 6 weeks of the date of application) Credit Provider: Westpac Banking Corporation ABN AFSL and Australian credit licence Updated August 2018 Page 4

5 Expenses You will need to provide expense amounts for the following expense types and any other expenses incurred Childcare Clothing and personal care Education Groceries Insurance Life Insurance and total permanent disability insurance (TPD) Medical and health Recreation and entertainment Telephone, internet, pay TV and media streaming subscriptions Transport Owner Occupied and/or investment property related expenses (against each property asset) Rented Property Utilities and Related Costs Note: Additional supporting documentation may be required. Please refer to your RAMS Home Loan Manager. FAQ s Will I be advised of the outcome of my application to convert my repayments to interest only or extend my existing interest only period? Yes, you will be advised in writing if your application is approved or declined. What happens to my interest only repayments after the interest only period ends? At the end of the interest only period your repayments will convert to principal and interest. You will be notified in writing of your new repayment amount and interest rate applying to your loan. Credit Provider: Westpac Banking Corporation ABN AFSL and Australian credit licence Updated August 2018 Page 5