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Better Choice reduces serviceability buffers

by Adrian Suljanovic11 minute read

The non-bank lender has announced that it has reduced its assessment buffer for one of its product ranges.

Non-bank lender Better Choice has reduced the assessment buffer for dollar-for-dollar refinances to 1 per cent for its Ultimate Product Range in an effort to help brokers in refinancing customers faced with serviceability challenges.

Additionally, Better Choice has announced that it has also increased loan sizes to $1.75 million from $1.5 million for a single security and $2 million for multiple securities from a limit of $1.75 million with a loan-to-value ratio (LVR) of 80 per cent.

This followed the non-bank lender announcing the removal of all clawbacks for brokers in August 2023 in order to assist brokers in seeking to diversify into commercial lending.


On the reduced serviceability buffer, Better Choice director Allan Savins said the non-bank lender was modelling the approach of the big four banks and stated that Better Choice was the “first lender to implement the 1 per cent buffer on dollar-for-dollar refinancing in the specialist loan space”.

Mr Savins added that will be “welcome news” for brokers and their customers who are “languishing in a mortgage prison” due to the current high interest rate environment.

“We believe this will help those customers who are credit impaired on high interest specialist loans, as well as those borrowers on high interest alt doc loans and borrowers on high interest private loans,” Mr Savins stated.

“For all other transactions, including purchases, refinance with cash out and refinances with debt consolidation, a reduced buffer of 2.0 per cent will be applied, allowing more borrowing capacity including cash out. It was previously 3.0 per cent.”

Furthermore, Mr Savins stated the non-bank lender has added another 2,000 eligible suburbs across the Ultimate Product Range.

“With our loan services team leading the industry, and our Ultimate Range product range now offering a significantly reduced assessment rate, we are confident that brokers will continue to choose Better Choice for their client’s needs, particularly those customers requiring extra support,” he said.

More buffers lowered

Better Choice is the latest non-bank lender to announce lowered serviceability customers for the sake of improving lending flexibility and serviceability.

In late September, non-bank lender Bluestone Home Loans (Bluestone) announced it has reduced serviceability buffers for all its products from 2.5 per cent to 2 per cent, along with increases to LVR and loan amounts across Australia as part of a policy overhaul.

In addition, non-bank lender Pepper Money introduced its “Red Hot Rates Package” in August to help address “real life challenges” across key areas of concern for brokers and customers. Similar to Bluestone, Pepper Money lowered serviceability buffer rates to 2 per cent across the board.

[RELATED: Bluestone lowers serviceability buffers]

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