Relocation With End Loan Product Specification

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1 Relocation With End Loan Product Specification For further information Mortgage Central This product specification is the property of St.George Bank. It is for the use of St.George Bank employees, contractors and accredited brokers only. It is not to be distributed to customers.

2 Product description The Relocation Loan is designed to assist customers with the purchase of a new property for the purpose of owner occupation or Investment when the sale of their existing property is still to occur. The Relocation Loan has 2 options. Option 1 - With End Loan - caters for customers who will have a residual loan secured by a mortgage on their new property once the sale of their existing property occurs. Option 2 - With No End Loan - caters for borrowers who want to relocate their property but have not yet sold their existing property. This loan allows for the capitalisation of interest until the sale of the existing property occurs. This option caters for customers who will not have a residual loan once the sale of their existing property occurs. Refer to Relocation With No End Loan Product Specification The End Loan is based on the purchase price of the new property plus purchase/selling costs, less equity in the existing property and allowing for a 15% fall in the sale/ valuation of the existing property. This allows for a possible fall in property value/sale price of the existing property. Key benefits / target market Targeted towards subsequent home buyers who wish to purchase a new property for the purpose of owner occupation or Investment before they have sold their existing property. Key Benefits The interest rate may be lower than standard bridging finance rates available elsewhere. Borrowers may be given greater bargaining powers when purchasing their new home. For Contract Building loans, borrowers are able to live in their existing home while the new home is being constructed. Repayments and serviceability are calculated on the end debt amount. Availability The Relocation With End Loan is available on any existing product type currently available (subject to individual product specifications) for the end debt portion. The capitalised portion is to be on the standard variable rate only. The Relocation Loan is AVAILABLE for: Owner Occupiers Investors Contract Building Loans New Loans 1st Mortgage ONLY Land to Build (Building is to be completed within 6 months) Flexible Choice A Relocation Loan is NOT AVAILABLE for: 2nd Mortgages Increase (Further) Loans Vacant Land Extended settlement loans Owner Builder Loans Family Pledge loans Multiple Drawdowns An advance may be used for the payment of a deposit, (sales) contract and mortgage stamp duty or other associated purchase costs provided the following criteria is met: Only one advance is to be made for these amounts Security is to be in place against the existing security property Building Loans Building loans are allowed provided they are being undertaken via a Contract builder (owner builders excluded). There is a maximum of 6 months to build the home from the date of the first advance, then a maximum of 6 months from final draw down to sell the existing home, a total relocation period of 12 months. Eg if the building is completed within 4 months, then the maximum relocation term will be 10 months. Switching Not available during Relocation period. Splitting Available with Flexible Choice only. Page 2 of 6

3 Increase (Further) Loan Not available during Relocation period. Capital Gains Tax Implications for Investors Any estimated CGT liability arising from the sale of property is to be included in the selling costs for investment Relocation Loan Calculations. For any investment property purchased after 19th September, 1985, there may be Capital Gains Tax (CGT) implications associated with the sale of the investment property. All borrowers are to provide a statement from their accountant as to the estimated amount of CGT they will be liable for in relation to the sale of the investment property involved in the Relocation Loan, based on the property valuation obtained by the Bank. Loan amount Minimum: - $10,000 Maximum: - $1,000,000* * Any requests for loans in excess of $1,000,000 are to be referred to Mortgage Central before proceeding. Interest rate During the relocation period (ie until the existing property is sold) the standard variable interest rate is applicable on the capitalised portion. Refer to the current Lending Interest Rates at a glance for that rate. Loan term END LOAN SEQUENCE Principal & Interest: Refer to individual product specifications. Interest Based Term: Refer to individual product specifications. At the end of the Interest Based term the repayments automatically change to Principal and Interest for the remainder of the contract term, which must be for a minimum of 12 months. Building Loans: Refer to individual product specifications. CAPITALISED LOAN SEQUENCE 6 months for Non-Building Loans 12 months for Building Loans Relocation Period Non-Building Loans The sale and settlement of the borrower s existing property is to be completed on or before 6 months after the date of the first advance of the loan. Relocation Period - Building Loans If the loan is a contract builder-building loan, the borrower is to ensure that the building is completed within 6 months of the date of first advance. The sale and settlement of the borrower s existing property is to be completed on or before 6 months after the date of the final progress payment. The maximum Relocation Period is therefore 12 months in total. Owner builder loans are excluded. Repayment types END LOAN SEQUENCE Principal & Interest Interest Based Progressive drawdown period repayments (building loans only - during construction) Principal & Interest Repayments are calculated at the interest rate charged to the loan using the end loan amount. This figure is rounded to the next whole dollar and the monthly administration fee is then added. The minimum repayment frequency required is monthly. Customers may nominate to pay weekly or fortnightly. Fortnightly repayments are one half of the minimum monthly repayment. Weekly repayments are one quarter of the minimum monthly repayment. Weekly and fortnightly frequency repayments are to be in whole dollars. If necessary these repayments are rounded up to the nearest dollar. Interest Based Repayments are calculated at the interest rate charged to the loan using the end loan amount. Monthly repayment frequencies ONLY are allowed, ie the customer cannot nominate to pay weekly or fortnightly. Progressive drawdown period repayments During the construction period (until loan is fully drawn) repayments are interest only repayments. Refer to current Page 3 of 6

4 Residential Loan Agreement General Terms and Conditions. CAPITALISED LOAN SEQUENCE No repayments required. The interest charges are capitalised over the term of the loan and the full repayment of principal plus capitalised interest and all fees and charges is required on the sale of the existing property. Repayment due date The first repayment is due one month after the settlement date (date of first advance), unless that date is the 29th, 30th or 31st of the month, then the first repayment is due on the 28th of the next month. All subsequent repayments are due on the same day as the first repayment in each following month. For customers nominating weekly or fortnightly repayments, these payments will commence as follows. Weekly - on the first nominated day following monthly payment due date. Fortnightly - on the second nominated day following the monthly payment due date. FOR EXAMPLE. The monthly repayment is due on the 24th and the customer has nominated Tuesday as the repayment day. If weekly repayments were nominated, the first weekly repayment would come out of the transaction account on the first Tuesday after the 24th of the month following the input frequency. If fortnightly repayments were nominated, the first fortnightly repayment would come out of the transaction account on the second Tuesday after the 24th of the month. Customers may nominate any weekday (Monday to Friday) for weekly or fortnightly repayment frequencies. Monthly repayments ONLY are allowed when paying interest based repayments. Repayment method The monthly repayment is the minimum amount a borrower is required to pay each month under the loan contract. All borrowers should be encouraged to open a St.George transaction account from which loan repayments can be deducted. Automatic Transfer Automatic transfer from a St.George transaction account is the repayment method preferred by the Bank. Nominated transaction accounts will be free of some transaction fees and reduced account keeping fees if a loan repayment is made by this method at least once per month. May not apply to all transaction accounts. Refer to Bank Accounts Fees and charges and how to minimise them for excepted transactions. Direct Credit (Inward Direct Entry) A payment via Direct Credit to the loan initiated from another financial institution can be accepted. Direct Debit (Outward Direct Entry) Payments can be made via an automatic transfer (set up by St George) from a transaction account at another financial institution Branch Payment / Internet / Phone Banking Manual payments to the loan via these methods are also available. (Processing fee may apply) Principal reductions Customers with principal & interest repayments may nominate to pay extra repayments via automatic transfer from their St.George transaction account. Additional repayments may be made over the counter at any St.George branch or via Internet or Phone Banking. (Processing fee may apply) Redraws Not available during relocation period. Reviews Review of the account will take place at 6 months - the end of the Relocation period. For Building loans, the account will be reviewed at 6 months - the end of the Building period and 12 months - the end of the Relocation period. Page 4 of 6

5 Serviceability Serviceability is assessed on the End Loan amount. Current credit policy applies. Loan to Valuation Ratio The maximum LVR is not to exceed 90% (owner occupier Loans) and 80% (investor loans) at the time of projected Peak Debt (calculated in the Relocation Worksheet). The Peak Debt is to be calculated on the outstanding loan balance on the existing property PLUS funds required to purchase the new property (less any funds the borrower puts towards the purchase) PLUS the capitalisation of interest for six (6) months on the capitalised (bridging) loan portion. This represents the total outstanding debt against total security held. In the case of Building loans this capitalisation of interest will be for 12 months. Valuation Existing Property Valuation is to be carried out on the existing property. Property to be Purchased Except where not permitted, the purchase price, excluding the cost of chattels (furnishings), in a contract of sale may be used to determine the Security Value (SV) of new residential security property (including approved land and house packages). Where purchase price method is not permitted, a short form (standard) valuation report is to be requested. Security Current credit policy applies. A Relocation Loan will have at least two securities. St.George is to hold registered first mortgage security over all security properties. Any existing mortgages on security properties are to be discharged and the loans re-financed. All properties will be held as security upon settlement of the new purchase. The existing securities will be released when the properties are sold and the end loan amount will be secured by mortgage on the remaining property. Where there are more than two security properties, the existing properties do not need to be released at the same time. Contract of Sale For all loans except Building loans, provide evidence that the existing property is listed for sale with a real estate agent (or satisfactory evidence that the property is on the market by private sale), prior to providing any form of approval under this product. Lenders Mortgage Insurance LMI is available for this product for owner occupiers up to a maximum of 90% LVR. It is not available for investors. The loan is to qualify in accordance with the above LVR requirements. Fees Reference Refer to the interest rates and fees section of the website for current fees and charges. Establishment Fee Establishment fee applies irrespective of any special deals for standard variable rate loans except when the end debt portion of the relocation loan is taken as part of the Advantage Package. In that case, the establishment fee is waived. The fee includes the Bank legal fees for one new security property and any number of existing securities and one standard valuation for the primary security property only. Additional security fees are to be collected for each additional security property, after the first security property. Settlement Processing Fee This fee is automatically deducted from the loan at settlement. Administration Fee Refer to individual product specifications. Building Loans Progress Payment administration fee - this fee is automatically deducted from the loan at settlement. Page 5 of 6

6 Interest offset facility If the end debt portion of the loan is taken as a Standard Variable or Discount Variable Rate then customers are eligible to a Full Interest Offset facility. The offset type is dependent on repayment type. Mortgage Equaliser Offset is available where the customer has Principal and Interest repayments. Repayment Offset is available for interest based repayments. Partial offset is no longer available for sale on Relocation Loan with End Debt. Interest offset is not available on the capitalised portion of the Relocation Loan. If the Full interest offset is taken, a Full Offset Service fee is payable whilst the facility is current. This fee is debited to the loan account each month. There is no fee payable if the loan is taken as part of the Advantage Home Loan Package. Up to 99 transaction accounts may be setup to offset the loan interest provided the Offset Account holders match those on the Loan Account. Offset Accounts cannot be linked to multiple loans. Parties who are not on the Loan Account cannot be account holders of the Offset Account under any circumstances. End of relocation period At the end of the relocation period, a partial discharge transaction is processed to the loan to discharge the Capitalised Loan sequence. The relocation period will end at the time the partial discharge payment is made to the loan. The loan will continue on the selected product. Statement Statements are generated every six months. The statement cycle will be six months from the month of advance of the loan and every six months thereafter. Investment loans have a statement cycle that coincides with the end of the Financial Year. These are the only statement frequencies available. Borrowers cannot nominate any other frequency. Customers with CCC-regulated loans can nominate one of the borrowers to receive statements and notices on behalf of the other borrowers providing they all agree. Interim Statements / Replacement Statements These are available for mailing out on request. A fee is applicable. Substitution of security Not available during relocation period. Discharge / partial discharge Discharge of Mortgage fee applies This fee is payable to the Bank. It is in addition to the fee for the Registration of the Discharge of Mortgage, payable to the Land Titles office. End Procedure Relocation with End Loan Product Specification August 2012 For further information Mortgage Central This document is owned and updated by St.George Bank Intermediary Distribution and is subject to change. Terms and Conditions and fees and charges apply and are available on request. All applications are subject to St.George Bank s prevailing credit criteria. St.George Bank A Division of Westpac Banking Corporation ABN AFSL and Australian credit licence STGW / Page 6 of 6