Advertisement
Powered by MOMENTUM MEDIA
lawyers weekly logo
Lender

CBA to raise maximum LVR on construction loans

7 minute read

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]

house construction ta rzpaps

Annie Kane

AUTHOR

Annie Kane is the managing editor of Momentum's mortgage broking title, The Adviser.

As well as leading the editorial strategy, Annie writes news and features about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape.

She is also the host of the Elite Broker, New Broker, Mortgage & Finance Leader, Women in Finance and In Focus podcasts and The Adviser Live webcasts. 

Annie regularly emcees industry events and awards, such as the Better Business Summit, the Women in Finance Summit as well as other industry events.

Prior to joining The Adviser in 2016, Annie wrote for The Guardian Australia and had a speciality in sustainability.

She has also had her work published in several leading consumer titles, including Elle (Australia) magazine, BBC Music, BBC History and Homes & Antiques magazines.  

JOIN THE DISCUSSION

You need to be a member to post comments. Become a member for free today!
magazine
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more
You have 0 free articles left this month.
Register for a free account to access unlimited free content, or become a PREMIUM MEMBER to enjoy a wide range of benefits