Equity Home Loan Acceptable / Unacceptable Loan Purposes

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Equity 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 70%
Purchase an investment property 70%
Construct and owner occupied or investment property 70%
Refinance (one debt only) with no cash out 70%
Refinance (more than one debt) with no cash out 70%
Refinance with cash out 70%
Debt consolidation 70%
Cash out/equity release 70%

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

Rate Star prohibits the use of funds advanced to fund the following loan purposes:

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.

In addition to the above, other restrictions may apply as to loan purpose.