CBA Crackdown on IO

Discussion in 'Loans & Mortgage Brokers' started by Scott, 1st Oct, 2018.

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  1. Scott

    Scott Active Member

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    Northern NSW
    Hi All,

    So I hear CBA Interest only periods used to be:
    • 5+5 years interest only period for PPOR
    • 5+5+5 years for IP
    And now they have been reduced to:
    • 5 only for PPOR
    • 5+5 for IP
    Correct??

    I have had a CBA investment loan for 2 years and my broker has recommend that I extend my IO period now as CBA will be making further changes meaning it will require a full application, or at least an income check to extend IO periods. I believe all it took in the past was a phone call.

    When I rang the bank to do so they told me I was mad as I would miss out on 3 years of IO period and that they do not think any changes are coming.

    A little confused. Has anyone else got any info here?
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    The above reductions are correct, i n fact many moons ago, 15 year in ONE go was doable.


    Dont listen to the bank call centre :)

    They will tell you that you have guaranteed renewal of the IO period at the end of the current period................

    Unless you pass servicing at the time under THAT criteria, there is no extension.

    There is a whole subset of advice going on there with the call centre that will leave many a people in a spot.

    ta
    rolf
     
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I gather you had a chat with the bank before the 17th :)

    the below came out a few weeks back, and was anticipated for months


    ta
    rolf


    Hi Rolf,

    I'm writing to tell you about changes we are making as part of our commitment to protecting the financial wellbeing of our customers.


    [​IMG] From Monday 17 September, we're changing the processes for:

    Customers requesting a switch from Principal and Interest (P&I) repayments to Interest Only (IO) payments, and;

    Some customers who wish to extend their current Interest Only (IO) period on their home loan.
    ___________________________________________________________

    [​IMG] We have created a team of Interest Only Specialists who will complete a serviceability assessment and verification for all eligible broker and proprietary customers wishing to switch from P&I to IO payments on their home loan.

    Our newly created team will ensure a consistent customer experience is provided for all customers
    ___________________________________________________________

    [​IMG]
    We are making these changes as part of our ongoing commitment to protecting the financial wellbeing of our customers, and to meet our continued regulatory and responsible lending commitments.
     
  4. jazzsidana

    jazzsidana Well-Known Member

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    Melbourne
    CBA now has special 1300 number to deal with interest only extensions..

    And yes, they require lot more info now (payslips, rental statements bla bla).. Was discussing/helping one my CBA customers last week only with regards to this...

    In past, it was sign a paper and you done with it..

    Also, I am pretty sure if you already in IO period, they won't extend it further until first one is super close to expiry date..

    Hope that helps!.

    Cheers,
     
  5. Scott

    Scott Active Member

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    Northern NSW
    Thanks Rolf and Jazz,

    Actually my chat was last week. They said they can do it (even 3 years out) but recommended I don't.

    According to the above I may actually be too late already so maybe I should do it now if I still can.

    Thanks again for the clarification
     
  6. Scott

    Scott Active Member

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    By the way, are all the other banks the same now?
     
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    very much the same

    CBA has been an outlier for a long while

    ta

    rolf
     
  8. Redom

    Redom Mortgage Broker Business Plus Member

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    APRA specifically put this in their latest prudential practice guideline about 12-18 months ago now (may 17). CBA just made the change 12 months late (probably a system thing). Its not necessarily a crackdown from them, more so from the regulator and one thats being applied late.
     
    Last edited: 2nd Oct, 2018
  9. Scott

    Scott Active Member

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    Thank you, that helps!
     

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