Spring is in the air with a surge of new property listings hitting the market, and refinance opportunities remain strong. But not in years has it been so difficult for mortgage brokers to identify a suitable product, with satisfactory “servicing,” to meet new clients' lending requirements.
We’ve made many recent policy changes to make “minimum” servicing requirements easier across the CHL Select product range.
I’ve heard you released a new servicing calculator. How do I confirm my version is current and will be used to assess my application?
Yes, we have updated our servicing calculator with some excellent changes!
Always download the most recent calculator from Mercury Nexus, Research App.
In instances where there’s a cross-over with an inflight application and a calculator update, we’ll rely on the new version for decisioning. Please provide a copy of the calculator with your application, as it highlights different sections to ApplyOnline.
I checked servicing last week for a scenario and again this week - it’s servicing more! Why?
We’ve tweaked some of the internal calculations relating to shaded income (including overtime, bonuses, commission, and rental income). If these income types are evident, you may see the results change.
I have a 95% (inclusive of LMI) owner-occupied purchase. Did the servicing requirements change recently?
Yes, they did! We’ve tweaked this too. We removed the additional servicing requirement for > 90% LVR – servicing is now the same as other LVRs with a ratio of >1. Please disregard the alert on our manual calculator as this has not been removed yet, and will not affect assessment. Note - Bridging will remain with a different servicing ratio.
Does Connective Select add back negative gearing?
Yes, we do! If rental income is being received, please tick ‘investment eligible for tax deductions’ on our calculator, and negative gearing will automatically apply. We’ve also changed our calculator to include further negative gearing add backs – a positive impact to servicing!
Does Connective Select shade rental income and how do you treat investment property expenses?
We’ve changed this recently too. We now only shade rental income by 10% to reflect lower vacancy rates, which will have a positive impact on servicing. For investment property running costs, we’ll use the higher of the applicant’s actual declared costs or 10% of the monthly rental income.
I have a self-employed customer that is operating through a Pty Ltd. What do I need to provide?
We assess self-employed applicants using the most recent lodged income tax return. Please only provide 1 year’s tax return and financial documents. ApplyOnline requires 2 years so input the same year twice, and provide the personal and company ITRs, financials, and matching NOA again.
Don’t forget if the Pty Ltd liabilities are shown for the full year on the financials and if you’re not adding back depreciation or instant asset write-off, you can exclude company liabilities from servicing.
For further Net Surplus Calculator questions or application workshopping assistance, please contact your Connective Home Loans BDM.
