Document ID: chunk:federal_register_of_legislation:F2023L00410:body:0:p10
Version: federal_register_of_legislation:F2023L00410
Segment Type: other
Provision Reference: 
Character Range: 27674–31445

loans.

Exceptions to serviceability policy                  Loans approved either with negative serviceability, below the ADI's serviceability threshold or that have been granted other credit policy waivers related to serviceability. Include loans:
                                                          * with net income surplus less than $0 or below the ADI's minimum serviceability threshold, temporary or otherwise (e.g. bridging finance);
                                                          * with net income surplus of more than $0 or the ADI's minimum serviceability threshold, but where input parameters have been adjusted below policy minimum levels (e.g. changes to interest rate floors or expense assumptions); and
                                                          * where additional income outside of policy is included to achieve net income surplus above $0 or the ADI's minimum serviceability threshold.

                                                     Exclude loans:
                                                          * that initially fail automated internal decision tools but meet serviceability policy requirements after income is manually added; and
                                                          * with non-serviceability policy exceptions (for example, valuation and LVR exceptions).

Externally refinanced                                Loans where a new loan is obtained to replace an existing loan that was provided by a different lender (that is not within the regulated ADI itself). It excludes:
                                                            * refinanced loans for a different residential property. These should only be reported as new funded loans.

Funded                                               A loan is considered funded once any portion of the funds is made available for the borrower to draw down according to the terms of the contract, whether or not it is drawn down within that period.
Interest-only                                        Loans on which only interest is paid during a set period and no principal is automatically amortised. The loans will typically revert to principal-and-interest repayments at the end of the interest-only period. Only report loans as interest-only loans during their interest-only period.

Lenders mortgage insurance (LMI)                     As defined in paragraph 14(o) of APS 112.

Low-documentation                                    A loan for which the lender has not, prior to loan origination, fully documented and verified the income of the borrower.

Mortgagee in possession                              Loans for which the ADI has taken possession of the property securing the loan due to borrower default. Do not include loans where the property has been sold.

Offset accounts                                      Deposit accounts that are offset against the balance of an outstanding loan when calculating the interest owing. Exclude accounts with no credit outstanding associated with them, and all-in-one facilities where it is not possible to separate the loan balance from the borrower's deposits.

Non-Performing                                       Loans that are non-performing as defined in Prudential Standard APS 220 Credit Risk Management (APS 220).

Past-due                                             Loans that are past-due as defined in APS 220.

Reverse mortgages                                    Loans secured by residential property in which repayments are generally deferred and capitalised, with full repayment due when the owner dies, sells the property or moves out of the house.

Revolving credit                                     Lending facilities that the borrower may repeatedly draw down,