Residential Lending Policy Updated: 3 October 2012 Firstmac Limited Telephone: 1800 651 898 +61 7 3017 8888 ACN 094 145 963 (AFSL / ACL 290600) Facsimile: (07) 3002 8400 GPO Box 7001 Riverside [email protected] Page 1 Brisbane QLD 4001 www.Firstmac.com.au Contents Residential Lending Policy.............................................................................................................. 1 Updated: 3 October 2012 ............................................................................................................... 1 Contents ........................................................................................................................................ 2 1 Introduction ........................................................................................................................... 5 3 Responsibilities .................................................................................................................... 5 3. 1 Firstmac credit ................................................................................................................. 6 3.2 National Consumer Credit Protection Act (“NCCP”) ........................................................... 7 3.3 Responsible Lending provisions........................................................................................ 7 4 Security requirements .......................................................................................................... 9 4.1 High Density apartments / units ...................................................................................... 11 5 Geographic location ........................................................................................................... 11 6. Borrowers, guarantors, and mortgagors ........................................................................... 11 6.1 Age of borrower / guarantor ............................................................................................ 12 6.2 Joint borrowers ............................................................................................................... 12 6.3 Corporate borrowers & trusts .......................................................................................... 12 6.4 Hybrid Trusts .................................................................................................................. 12 6.5 Non-English speaking borrowers .................................................................................... 12 6.6 Non-resident borrowers .................................................................................................. 13 6.7 Powers of Attorney ......................................................................................................... 13 6.8 Maximum Total exposure ................................................................................................. 13 7 Loan purpose ...................................................................................................................... 13 7.1 Loan applications which require Mortgage Insurance cover ............................................ 14 8 Loan amount ....................................................................................................................... 15 8.1 Maximum LVR & Loan Amounts ..................................................................................... 16 9 Repayment types ................................................................................................................ 16 10 Loan term .......................................................................................................................... 17 11 Interest rate options .......................................................................................................... 17 12 Split loan options .............................................................................................................. 17 13 Loan-to-Valuation Ratio (LVR) .......................................................................................... 18 14 Repayments ...................................................................................................................... 18 14.1 BSB details ................................................................................................................... 19 Firstmac Residential Lending Policy Page 2 15 Redraw .............................................................................................................................. 19 16 Security Valuations ........................................................................................................... 19 16.1 Valuation variation - acknowledgement by proposed borrower(s) .................................. 20 16.2 Off-the-Plan purchases – revaluation and increased borrowing at settlement ................ 21 16.2.1 Mortgage insurance approval ..................................................................................... 21 16.2.2 Period of time from exchange of purchase contract to settlement for purchase ........... 21 16.2.3 Valuation – increased borrowings .............................................................................. 21 16.2.4 LVR (Lending Value Ratio) ........................................................................................ 21 16.2.5 Other ......................................................................................................................... 22 16.3 Valuations – sales / purchases without the intervention of an agent and non-arms-length transactions ........................................................................................................................... 22 16.3 Builder / Developer Sales in Queensland – Section 27c Certificate ............................... 22 17 Valuation panel ................................................................................................................. 22 17.1 General ......................................................................................................................... 22 18 Lender's Mortgage Insurance (LMI) ................................................................................. 23 19 Employment and income .................................................................................................. 23 19.1 Employment confirmation ............................................................................................. 23 19.2 Confirming employment and income ............................................................................. 25 19.2.1 For all loans ............................................................................................................... 25 19.2.2 Self-Certified (Lo Doc) loans ...................................................................................... 26 19.3 Evidence of income ...................................................................................................... 26 19.3.1 Salary and wage earners ........................................................................................... 26 19.3.2 Self employed applicants /companies /trusts. Except for Self-Certified (Lo Doc) loans 27 19.3.3 Self Certified (Lo Doc) Borrowers ............................................................................... 28 20 Assessing the ability to repay .......................................................................................... 28 20.1 Self-Certified (Lo Doc) loans ......................................................................................... 29 21 Acceptable income for debt service purposes ................................................................ 29 The following income sources are not acceptable: ..................................................................... 33 22 Loan serviceability calculation ......................................................................................... 33 22.1 Notional Rental Expense ............................................................................................... 34 22.2 Joint income and joint commitments ............................................................................. 34 23 Credit history .................................................................................................................... 34 23.1 Credit reports ................................................................................................................ 34 Firstmac Residential Lending Policy Page 3 24 Confirmation of debts ....................................................................................................... 36 24.1 Non-disclosure of debts ................................................................................................ 36 24.2 Current debt position .................................................................................................... 36 24.3 Outstanding rates, body corporate charges ................................................................... 36 25 Savings history and proof of deposit and source ........................................................... 36 25. 1 Evidence of funds to complete ..................................................................................... 37 25.1.1 Gifted funds ................................................................................................................ 37 25.1.2 First Home Owners Grant (FHOG) ............................................................................. 38 26 Refinances, Variations and Substitutions ......................................................................