Home Loan Acceptable / Unacceptable Loan Purposes

Acceptable Loan Purposes

Any reasonable housing, housing-related, personal investment or personal purpose is acceptable.

The following maximum loans to value ratios apply to following loan purposes:

• Purchase an owner occupied property 97%
• Purchase an investment property 95%
• Construct and owner occupied or investment property 95%
• Refinance (one debt only) with no cash out 95%*
• Refinance (more than one debt) with no cash out 90%
• Refinance with cash out 90%
• Debt consolidation 90%
• Cash out/equity release 90%#

• The refinance involves one existing mortgage loan with no cash out;
• The customers have a clear credit bureau report;
• Existing employment is stable, and
• The existing loan has been conducted within arrangements.

#Cash out/equity release
Cash out/equity release is any loan or component of a loan where the loan funds are released directly to the borrower/s, regardless of the proposed purpose, are subject to the following restriction:

• If the loan to value ratio is greater than 85%, the cash out component is limited to 20% of the security value.

Important: Where the loan application is for a non-resident borrower, the above quoted loan to value ratios may differ and guidelines for non-resident borrowers will apply.

Additional requirements:
Evidence of the purpose for which funds are to be borrowed must be provided.
Examples of satisfactory evidence include:

• For a purchase, the front page of the exchanged contract of sale;
• For a refinance, statements for the previous six months;
• For an investment, a copy of the investment plan from the financial adviser or a statutory declaration from the borrower containing details of the proposed investment;
• Quote for the proposed renovation;
• Evidence of purchase price of the relevant item, e.g. invoice for purchase of car.

Unacceptable loan purpose

• Loans for development finance (construction of more than two dwellings on one block of land);
• Purchase of multiple blocks of vacant land in a sub-division;
• Refinancing where the initial funds were used to fund development finance;
• Developers gearing up against residual stock to fund their next development;
• Vendor finance (WRAP finance);
• Loans secured by non-residential property,consumer credit insurance (consumer repayment insurance, i.e. loan protection insurance);
• General insurance.
• In addition to the above, other restrictions may apply as to loan purpose.

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