St George Bank (part of Westpac) will bring in tighter loan assessment criteria for customers seeking to change to an interest only loan or extend their interest only loan term.
Effective from 1 July, the changes mean that a serviceability assessment and income verification documents will be required to switch/split repayments from principal & interest to interest only. This will be completed and assessed by the bank and is not available for completion by mortgage brokers, St George wrote in a broker note.
Brokers receiving a request to switch/split payments to IO or extend the IO term will need to ensure the loan drawdown date occurred over 12 months prior, determine if IO repayments are available on the loan, and factor in any previous IO terms the customer may have held to meet credit policy IO maximum rules. If these criteria are satisfied, the customer will have to contact the bank directly to proceed.
However, if these criteria are not satisfied, the loan will need to be re-originated.
St George has also brought in a number of changes to its self-managed super fund (SMSF) home loans which came into effect on 26 June.
The maximum IO repayment term has been reduced from 10 years to five years while a minimum SMSF fund balance of $200,000 will need to be demonstrated on application. The bank has also brought in two newly updated forms for SMSF loan applications.
Finally, the bank has said that switching/splitting to a portfolio loan (LOC) will no longer be permitted from 1 July. This will now require a re-origination into the line of credit facility instead
