A leading member-owned mortgage provider has responded to feedback from brokers and is consequently implementing a range of lending policy changes.
Mutual lender CUA said the changes, effective this week, will help streamline home loan applications and reduce duplication in loan processing.
CUA’s national broker manager Natasha Kelso said the changes would introduce a more consistent approach to how CUA considers issues including different types of income, periods of parental leave, lending for granny flats and the duration of interest-only loans.
“We expect these changes to significantly improve the member experience for home buyers taking out a loan through any CUA channel – whether that is in a branch, with a mobile lender, through our CUA Direct member service centre or via a mortgage broker,” Ms Kelso said.
“We are formalising a number of policies where we previously dealt with applications on a case-by-case basis, while other outdated lending policies are being brought into line with common industry standards.”
“The changes also allow CUA to be more flexible in accommodating the needs of members at different stages of their lives – whether they’re starting a family, separating from a partner, relocating overseas for work, approaching retirement or building a granny flat for family members or as a source of additional income.”
Ms Kelso said CUA had listened to feedback from members, its lenders and brokers as part of a broad review of lending policy.
Some of the policy changes include:
- Increasing the maximum loan to valuation ratio for home loan and investor refinancing applications to 95 per cent, up from 90 per cent currently;
- Introducing a more flexible approach for members with a home loan, during periods of parental leave;
- Clarifying the policy around living expenses when a parent is not a full-time carer for a child;
- Recognising granny flats and additional dwellings (maximum four residential units/dwellings on a single title) as acceptable security against a loan, as well as recognising granny flat rental income;
- Allowing investors a maximum of 10 years' interest-only, removing the current requirement to re-assess after five years. Other loans will have a maximum interest-only period of five years (compared to three years currently).
The changes apply to all home loan applications processed by CUA from Monday 17 October 2016.
[Related: CUA pays $30k off couple's mortgage]
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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