NEW: Reduced Serviceability and Special Refinance Buffer

11th Oct, 2023 | Broker News, Essentials Product

1. General Interest Rate Buffer reduced

Offer your clients an increased borrowing capacity with a reduced serviceability buffer of 2% (Reduced from 2.5%).

This NEW reduced buffer is available across our full range of loan products (including loans subject to lenders mortgage insurance) and is also permitted to be used in conjunction with our other initiatives which help your borrowers access the loan amounts they need, including:

• Common Debt Reducer Policy
• 10% Shading on Rental Income
• 40-year loan terms across the range

Combined with these other policy elements, Resi are well positioned to help more of your client’s achieve their property goals.

2. Special Refinance Buffer

Resi can now assist more clients looking to refinance for a better deal.

Under certain circumstances, Resi will assess servicing based on a lower 1% buffer for clients looking to refinance their current loan along with all existing debts to a better deal.

To qualify for this special assessment buffer the following conditions must hold true:

1.     LVR must be at or below 80%.

2.    Customer seeking a refinance transaction with a maximum equity release of $50,000.

3.    The proposed loan repayments (at actual interest rate) must be lower than the current loan repayments (including any cash out component).  We will operate off stated repayment amounts but do reserve the right to request the most recent statement if clarification is required.

4.    The borrower must have clear repayment history of all loan facilities for the past 12 months.  This means clear CCR history for at least the last 12 months, no adverse RHI, no defaults, judgements or writs within the last 12 months and no evidence of financial hardship.  We reserve the right to request statements for any finance facilities not covered by CCR reporting.

5.    Borrowers have displayed a stable financial position over the past 12 months and have displayed a capacity to service their debts and other liabilities during this time.  (Newly acquired debt facilities, accumulation of additional tax debts or substantial adverse changes to a borrower’s employment or income position will likely exclude the use of the special refinance buffer)

Which Product is this available on?

The special refinance buffer is available to be utilised across the entire range of Essential Options products, repayment types and loan terms.

Submission

Submission is required to be accompanied with the updated RESI Essential Options serviceability calculator (which can be accessed from the Resi website (broker portal), the updated calculator will have an option to select a special refinance buffer, to avoid borrower disappointment, please ensure the above conditions are met before utilising the lower buffer, otherwise a standard 2% buffer will apply.  It is also very important to accurately note the current loan repayments, balance and remaining loan term within the A&L statement.

3. New Essential Options Serviceability Calculator

The Resi Essential Options Serviceability Calculator has been updated to include the above enhancements and can be located on the Resi Website.

Other changes to the calculator include:

  • Fix to bank statement message requirement
  • Update to include latest HEM (Q2 2023 – 15 Aug 23) values

For more details, please reach out to your Resi BDM, or send an email to [email protected]