CBA has doubled the waiting period for customers seeking to switch to an interest-only repayment loan from 90 days to 180 days. This is a further move to try to reduce the proportion of IO loans held, following regulatory pressure to meet the 30% limit. CBA has already lifted interest rates, tightened lending criteria and throttled back applications via mortgage brokers.
From The Adviser. As of 31 July, customers with Commonwealth Bank (CBA) will be required to wait 180 days to change to an interest-only (IO) loan, while requests to switch within 180 days of loan funding will be sent on for credit assessment.
In addition, clients with loan-to-value ratios (LVR) of more than 80 per cent will not be able to refinance from a principal and interest (P&I) loan to IO within 180 days of funding.
Effective on the same date, the maximum IO terms have been reduced (over the life of the loan) to five years for owner-occupied home loans and 10 years for investment home loans.
Document identification
CBA is also changing the application identification process for new clients, effective 31 July. Brokers will need to acknowledge that they have viewed original identification documents for all borrowers and guarantors, and brokers must provide clear copies of the original (and sighted) identification documents when the application is submitted.
Furthermore, in the case of multiple applicants, brokers must submit each applicant’s identification documents on separate pages for each loan application.
CBA warned: “Missing documentation or discrepancies may result in delays to the customers’ application.”
One thought on “CBA doubles waiting period for IO switch”