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The major bank will increase the maximum loan-to-value ratio for construction loans later this month in a bid to “create more opportunities for Australians”.
The Commonwealth Bank of Australia (CBA) has confirmed that it will increase the maximum construction loan-to-value ratio (LVR) on construction loans from 24 May 2025.
Currently, CBA construction loans enable customers to borrow up to 90 per cent for securities valued under $3 million and up to 75 per cent for securities valued between $3 million and $5 million.
However, from Saturday (24 May), the major bank will increase the LVR brackets for both owner-occupied and investment securities to 95 per cent for securities valued at under $3 million.
It will also increase the maximum LVR limit to 80 per cent for securities over $3 million in value and raise the maximum security value for this LVR bracket to $6 million.
Speaking to The Adviser about the change, CBA’s general manager, third party distribution, Baber Zaka, said: “We’re constantly updating our home loan policies to better serve our customers, while maintaining prudent lending standards.
“The recent expansion of our construction loan policy is designed to create more opportunities for Australians to achieve their dream of home ownership.
“We are also always seeking opportunities to improve and advance our third-party service offerings in response to feedback from our brokers.
“We believe that broadening our construction loan policy will help brokers to have discussions with customers who are interested in building their homes, while also helping our brokers to expand their portfolios and grow their businesses.”
The major bank has made a range of tweaks to its offering in recent months, including excluding Higher Education Loan Program (HELP) debt from home loan servicing calculations for borrowers who can repay their HELP debt within 12 months, expanding its lenders mortgage insurance (LMI) waiver policy, and introducing policy changes designed to improve access to finance for customers purchasing a prefabricated home.
Earlier this year, it also updated the offering it provides brokers through its tiering system: Platinum, Elite, and Essential.
[Related: CBA pilots LMI waiver expansion]
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