Adelaide Bank lowers floor rate

Accordingly, the lender has also revised its method for qualifying repayments on existing home loans.

For existing home loans with a contracted interest rate of less than 5.25 per cent, the bank will apply the higher of a 2.50 per cent buffer or the 5.25 per cent floor rate.

The higher of a 2.25 per cent buffer or a 7.75 per cent floor rate will apply for loans with a contracted rate above 5.25 per cent.

Changes to company and trustee applications

Adelaide Bank has also updated its lending policy for applications involving a company, which includes a family or discretionary trust with a company as trustee.

Such applicants must now meet the following requirements:

• must operate solely for non-business or non-trading purposes;
• must have less than five mortgaged residential properties;
• the loan(s) must be guaranteed by an individual(s), or in the case of a family or discretionary trust, all trustees or beneficiaries must be individuals; and
• personal guarantees must be obtained from all directors, or in the case of the trust, all adult beneficiaries.

Moreover, loans to company applicants are restricted to:

• purchase of residential investment property (including vacant land);
• construction, renovation or maintenance of residential investment properties
• refinance of loan(s) for either or both of the above purposes

These latest revisions come less than a month after Adelaide Bank tightened requirements for bridging finance applications.

The bank also joined several other lenders in requiring brokers to ramp up their serviceability probes for self-employed applicants.  

[Related: Adelaide Bank tightens serviceability policy]