Hi, Please see below for the latest updates: Changes to Loan to Income (LTI) ratio: Advantedge is committed to lending responsibly, and ensuring our customers can meet their home loan repayments today and into the future (read more). Making our policies clearer and simpler: We are making some changes to some of our credit policies to ensure we continue to lend responsibly (read more). Changes to customer Loan Purpose Codes: We ve conducted a review of our home loan accounts to ensure the correct Loan Purpose Code (LPC) is assigned (read more). Variation process update: We have created a Loan Variation Form and Loan Variation Checklist for your use (read more). Change to Loan to Income (LTI) ratio Advantedge is committed to lending responsibly, and ensuring our customers can meet their home loan repayments today and into the future. Regulatory bodies have raised concerns about Australia s household debtto-income ratio, which has risen significantly over the past decade. Last year, Advantedge introduced a Loan to Income (LTI) ratio calculation for all home loan applications. From 11:59pm AEDT on Friday 16 February 2018, the LTI ratio will change. What is Loan to Income ratio (LTI)?
LTI is the ratio of the customer's indebtedness to the loan amount for which that customer applies. It is equal to the total limit, for which the customer applies, divided by the customer s total gross annual income as disclosed in the application for that loan. What s changing? Advantedge calculates the LTI ratio on all loan applications. Advantedge's policy is to decline any application on which the LTI ratio is greater than 7. What you need to know Brokers can complete a manual calculation to determine if the LTI is less than the relevant threshold via the Serviceability Calculator. Pipeline treatment The updated calculations will apply to applications assessed from 11:59pm AEDT on Friday 16 February 2018 onwards. Applications that have conditional approval prior to 11:59pm to AEDT on Friday 16 February 2018 will be honoured for the 90 day validity period. Updated Serviceability Calculator The Advantedge Serviceability Calculator has been updated to reflect these changes and you can access the calculator via your aggregator system. Making our policies clearer and simpler We are making some changes to some of our credit policies to ensure we continue to lend responsibly, and make it clearer and simpler for you to deliver a great customer experience. Effective Monday 19 February 2018, we re making the following changes: Policy Current Policy Policy, effective Monday 19 February Acceptable Residential Currently, the policy doesn t reflect all Policy requirements in relation to acceptable
Securities acceptable residential securities for home lending purposes. residential security standards will also include: Additional acceptable security types (i.e. Serviced Apartments under certain criteria) Clear guidance regarding assessment of Rural Security (i.e. Marketability Test) Unacceptable Residential Securities Currently, the policy doesn t reflect all unacceptable securities for home lending purposes. The unacceptable residential security policy will be updated to: Remove duplicated content Retain specific security exclusions (i.e. Owner Builder) Include more defined requirements with respect to unacceptable securities. Pipeline Applications The current policies will be applied to all new applications (including increases) submitted prior to 5pm (AEDT) on Friday 16 February 2018. The updated policies will be applied to all new applications (including increases) submitted after 5pm (AEDT) on Friday 16 February 2018.
Changes to customer Loan Purpose Codes We ve conducted a review of our home loan accounts to ensure the correct Loan Purpose Code (LPC) is assigned. The LPC selected for a loan must reflect the predominant purpose for which the funding is being used, to ensure customers are receiving the correct type of home loan for their purposes. As part of our review, we have compared loan information against a number of sources such as rental property databases, rental income declared in the application and identifying where the borrower is a corporate entity. Based on this review we have identified instances where a home loan is classified as being owner occupied, but the current purpose may be for investment. Where the customer cannot verify that the property is being used for owner occupied purposes, the LPC will be updated. In instances where the LPC is changed to investment purposes, the interest rate on the loan will be adjusted. There are different circumstances that may affect the classification: The current LPC classification as owner occupied may be correct and the data match may relate to another factor (so we need to confirm and verify) The loan may have been owner occupied at the time of origination, but the circumstances changed to investor at a later time (so we need to update LPC) The loan purpose stated on the application at the time of origination may have been incorrect, for a variety of reasons (so we need to update the LPC) Telling our customers Between 25 January and mid-april 2018, letters will be sent to customers whose LPC will be changed. Customers may complete the enclosed Notification of Loan Purpose Change form if they believe their existing LPC is correct, and we will contact them accordingly. The form can be returned to Advantedge Customer Care via either post or email, as detailed on the form. LPC customers identified as a trust or company will have their loan updated to Investor to reflect the predominant purpose. These customers will not receive a form. Customers with multiple loans will receive one letter for each loan. Where there are multiple borrowers on a loan, each borrower will also receive a letter.
Variation Process Update To better support you with variation requests, we have created a Loan Variation Form and Loan Variation Submission Checklist for your use. These forms will ensure we best understand your customer s situation and can process your customer s variation request more efficiently. What do I need to do? 1. We have provided you will the ability to brand these documents, please add your logo to the relevant sections. 2. When submitting a loan variation, please follow the checklist according to the type of variation. 3. Complete relevant sections of the form as per directions on page 1. 4. Complete Loan Pro4 with relevant rate breakdown. 5. Email/fax completed form, loan Pro4 and any supporting documentation to the relevant department as per directions on page 1. We would like to take this opportunity to also remind you of the Interest Only variation obligations whereby the following documentation is required: Updated Income Documentation (Payslips or Tax Returns) and employment check completed Completed Serviceability calculator with reduced remaining P&I loan term Updated ID form and ID (If loan over 2 years old and or new security is mortgaged) If you have any questions, please contact your Advantedge Business Development Manager. Regards, Brett Halliwell General Manager Advantedge Financial Services
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