The waiting period for customers seeking to switch to an interest-only repayment method has doubled from 90 days to 180 days at a major bank.
As of 31 July, customers with Commonwealth Bank (CBA) will be required to wait 180 days to change to an interest-only (IO) loan, while requests to switch within 180 days of loan funding will be sent on for credit assessment.
In addition, clients with loan-to-value ratios (LVR) of more than 80 per cent will not be able to refinance from a principal and interest (P&I) loan to IO within 180 days of funding.
Effective on the same date, the maximum IO terms have been reduced (over the life of the loan) to five years for owner-occupied home loans and 10 years for investment home loans.
CBA is also changing the application identification process for new clients, effective 31 July. Brokers will need to acknowledge that they have viewed original identification documents for all borrowers and guarantors, and brokers must provide clear copies of the original (and sighted) identification documents when the application is submitted.
Furthermore, in the case of multiple applicants, brokers must submit each applicant’s identification documents on separate pages for each loan application.
CBA warned: “Missing documentation or discrepancies may result in delays to the customers’ application.”
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