3 Big Rules

  1. If in doubt, always put more information rather than less

  2. Answer every bullet point on here that applies and more, not just some.

  3. No acronyms. LMI in the document is always ‘Lender’s Mortgage Insurance’ not LMI.

  1. Ensure All Financial Details Are Correct

    • Client’s Marital status is updated (it defaults to ‘single’)

    • If the property was a preapproval, update with property address and purchase price

    • Ensure correct rent'/boarder incomes are loaded

    • Ensure correct bank/rates/structure is loaded under ‘Funding Details’. Ensure this includes any capitalised fees, like LMI Fee.

  2. Summary (required)

    • Why did the client(s) approach you? What type of lending were they looking for?

    • Had they previously tried with banks themselves? What challenges were they facing when they first came to you?

    • What was the main challenge of the application? Perhaps a fixed contract? Parental leave issues? Credit Issues? Servicing? Deposit level?

    • Note specifically when you will be next in touch to review their lending and set reminders.

  3. Interest Rates
    General

    • What were all of the options discussed in terms of loan structure? - not just the final loan structure.

    • It is very important that risks AND benefits are discussed for all choices, not just benefits.

    • For ALL RISKS, include a mitigation. Mitigations can be things like -

      ‘We opted to fix the total loan for 1 year, which puts us at risk of short term interest rates rises. This is mitigated by the fact that you only have a $200,000 loan remaining, which is relatively small compared to your $250,000 annual household income, therefore interest rate shocks won’t leave us too vulnerable.’

      ‘We opted to split the loan into 1/2/3 year portions. The risk of this is that interest rates could drop and we would still be locked into the longer 2 and 3 year terms, unable to take advantage of any rate drop. This is mitigated by having the 1 year portion to take advantage of this, and the longer fixed term periods will give us greater long term safety. We also won’t be exposed to the volatility of the lending market at once, instead only exposing us to a third of our loan at once, giving us greater resilience.’

      Revolving/Offset

    • If revolving or offset was discussed, are you confident the clients have a full understanding. Confirm that you will follow up with them on settlement day and set a reminder to ensure their Revolving/Offset is set up correctly.

    • If revolving or offset, why is this beneficial to the client?

      Split

    • If the loan was split, why did you split? If it wasn’t split, why not?

    • What are the risks and benefits of splitting? What are the risks and benefits of not splitting

      Product Features

    • If fixed - how much can the clients pay off without penalty per year? Any rules around increasing regular repayments?

    • If revolving, give a short explanation of how this works - feel free to use the shortcut

    • Are there any regular fees on any of the clients products/accounts? - EG: ANZ Revolving Credit Facility Fee

    • If Kainga Ora First Home Loan or ANZ LEP Fee, explain around this being included int he loan and paid off over x years.

    • If standard over 80% loan, explain how the client can get under 80% (pay off more loan/house goes up in value) and that you will regularly check in with them. Note how long they have to have the loan for before LVR can be reviewed.

      Turn Around Times

      Generally this is not an issue and is included for our Australian cousins, but do note if it has been a major factor in the application.

      Lender Preferences

    • What made you go to the final lender of choice? Pricing? Policy? Existing banking relationship? Turnaround time?

    • What other lenders were considered? Always include more than one or a strong reason why others were not included.

    • If Kainga Ora First Home Loan - note all banks that take part in this and why your choice was more appropriate, eg: Higher lending amount possible, lower rates, better policies on existing debts


      Credit Policy

      Generally this has already been explained above, but if not, explain if some quirk of policy led you there.

      EG: We approached TSB as this was a new build, and under TSB policy, they are the only bank that does not currently require a registered valuation on newly built properties. This saves you approximately $800-1,000 in valuation fees.


      Other

    • Include information around clawback as per the clawback shortcut

    • Include any info around fees, EG: Loan Admin Fees levied by ASB or LMI Fees. Note if they are up front or if they have been caplitalised.

      Documents

  • Add in TOE & Fact Find

Statement Of Advice - Best Practice