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A non-major bank has announced that it will cease accepting lo-doc commercial applications at the end of this month.
Adelaide Bank has said that, as part of a "full review" into its Smartsuite Commercial offering, it has decided to "reshape" its current commercial offering.
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As part of this, from 1 July 2017, the lender will delete the lo-doc commercial option from its product offering.
No further lo-doc applications will be accepted after close of business on Friday, 30 June 2017. However, the bank has said that applications in the bank’s system that are either approved, awaiting settlement or awaiting formal approval, will be honoured (as will loans which have been submitted as per current policy).
Another change as part of the reshaping includes a change to loan purpose restrictions.
This is specific to a release of equity for any unverified business or investment purpose, which will be restricted to the lower of either $200,000 or 10 per cent of the security value (working capital is not acceptable).
Lastly, Adelaide Bank said it would be altering its simple doc declaration to "ensure the client declares that income generated from the property is sufficient to meet repayment commitments" and that they can "comfortably afford all repayments resulting from this loan(s) without incurring financial hardship".
The client will also be required to declare that they have other income sources available to service this loan, if necessary.
An updated Smartsuite Commercial application form will be available on Adelaide Bank's broker website as of 1 July 2017.
The bank stated: "The bank has undertaken a full review of its Smartsuite Commercial offering and will begin the exciting task of rebuilding our value proposition. This will, in time, provide our broker partners with more options and product enhancements."
