Effective from 18 October, Adelaide Bank has reduced the time frame for off-the-plan valuations, added an additional commitment to its serviceability ratio and tweaked its policy for apartments.
The following policy changes will impact applications submitted to the bank received “after close of business” Wednesday, 18 October:
Valuation time frame change
The time frame in which the bank will accept valuations for off-the-plan purchases will reduce from six months to three months.
This change has been made “to better reflect the risk attached to these purchases and to align the time frame with policy on acceptance of applications and Valuers PI cover”.
Calculation of serviceability ratio
An additional commitment has been added to the calculation of serviceability ratio, whereby the minimum notional rent expense of $150 per week ($650 per month) must be included where the board/rent commitment will continue after settlement of the loan.
The bank has said that this will apply even if the applicant has advised that their rent or board is less than this amount or is zero due to living arrangements with friends or relatives.
This change has been made “to ensure that if [borrower] living arrangements change, they can continue to support themselves without undue hardship”.
Following a review, Adelaide Bank has revealed that this policy has been updated to “provide further definition to minimum requirements”.
These definitions include:
Any applications received from this evening must meet new supporting documentation requirements.
Any applications currently in the pipeline and seeking formal approval will be exempt from the new policy requirements.
The new changes cover applications submitted to the bank up to close of business Wednesday, 18 October 2017.
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