5.11 Loan Features

Genworth recognises the changing face of loan products within the mortgage industry. The industry has seen many new innovative products hit the market with differing features than the traditional home loan. Genworth insures loans with the following features:

• Interest-Only loans
• Line of Credit
• Combination Loans
• Redraw Facility
• Split Borrowings
• Loan terms up to 40 years
• Parenting Repayment Break.

5.11.1 Interest-Only Loans

• An Interest-Only facility is where the borrower is only required to meet interest payments for a specific period of time. Traditional Interest-Only loans are generally Interest-Only for up to the first 5 or 10 years and then convert to Principal and Interest payments.
• The maximum loan amount and LVR per security is limited as follows:

Repayment Structure	Maximum LVR	Maximum Term
Interest-Only loans NOT converting to principal and Interest within 10 years	90%	10 years
Interest-Only loans converting to principal and interest within 10 years	95%	As per Product Parameters, section 4 Products Parameters - Maximum Interest-Only term is not to exceed 10 years

5.11.2 Line of Credit Facility

A revolving line of credit facility provides continuous credit for come and go needs. In most cases, only Interest payments are met for the duration of the loan term.

Loan Structure	Maximum LVR	LMI Products
Line of Credit	90% 80%	Standard LMI Low Doc

Refer to section 5.11.3 Combination Loans for further information regarding Lines of Credit with higher LVR’s.

5.11.3 Combination Loans

• A Combination Loan allows a borrower to structure their loan in such a way that they can combine a Line of Credit facility with a principal and interest loan
• Where a Line of Credit facility is combined with a principal and interest component, the following additional parameters apply.

Line of Credit (Interest-Only) Portion	Maximum LVR	Product
Up to 20% of the total loan amount 95%	95%	Standard LMI HomeBuyer Plus

Feature	Product Parameters (Summary)
Loan Purpose	As per relevant Product Parameters, section 4 Products Parameters.
Credit History	As per relevant Product Parameters, section 4 Products Parameters.
Loan Term	As per relevant Product Parameters, section 4 Products Parameters.
Repayment Type	For loans up to 90% LVR, the total loan may be Interest-Only or Principal and Interest For loans above 90% LVR, the non Line of Credit component must be fully amortising from commencement (ie cannot be Interest-Only converting to Principal and Interest).
Other	For loans above 90% LVR, a Line of Credit component can only be insured where Genworth insures all loans secured by the same property.
Lender Responsibility	Lender is to provide: Loan Amount split - example $20,000 Line of Credit (IO) and $80,000 P & I Interest /Repayment Type - example Fixed/ Variable for each loan component Maximum of 4 loan components.

5.11.4 Redraw Facility

• Many Lenders permit borrowers to deposit extra amounts into a loan account as surplus repayments, thereby reducing monthly interest charges. Borrowers are then permitted to redraw those surplus funds as the need arises from time
  to time
• Providing a loan redraw does not result in the insured loan exceeding the Scheduled Amortised Balance, Genworth has no objection to this practice
• Where the Lender allows the borrower to exceed the Scheduled Amortised Balance by way of the redraw facility, that excess is not covered under the LMI policy.

5.11.5 Split Borrowings (with Common Security)

Lenders offer split borrowings for a range of reasons which may include different loan purposes, different interest rates, repayment methods or different loan term.

• There have been instances where some Lenders have packaged multiple loans so that each party to a joint property purchase, has a separate loan account in his/her own individual name, with cross guarantees from other joint purchasers
• Where split loans have the same borrowers, Genworth will assess the combined exposure under Standard LMI policy, with the total LMI premium apportioned between the loans
• Where the split loans have separate borrowers, ie separate loans for each joint mortgagor, LMI cover is not available.

5.11.6 Loan Terms up to 40 Years

• For Standard LMI and HomeBuyer Plus products only, loan terms of up to 40 years are available
• All other products are limited to 30 years. Where the loan term extends beyond the borrower's retirement age, Genworth expects that the Lender investigates and evidences other repayment options such as lump sum superannuation entitlements. This is to ensure that there is an adequate method to repay debt where the traditional income stream ceases at retirement.

5.11.7 Parenting Repayment Break (PRB)

• Parenting Repayment Break is available to eligible borrowers on both our Standard LMI and Homebuyer Plus products
• Borrowers who are on or planning to take maternity/paternity leave will have the ability to take a brief break in repayments
• Subject to the criteria outlined below, Lenders may approve the Parenting Repayment Break without seeking consent from Genworth.

Feature	Product Parameters (Summary)
Max LVR	90% - at time of request.
Loan Purpose	Owner-occupied loans only.
Credit History	Minimum of 12 months of satisfactory loan repayment prior to allowing a Parenting Repayment Break Repayment history must be clear of missed/late payments for at least 6 months.
Repayment Type	IO not permitted.
Other	Parenting Repayment Break may be taken as either: 3 months 'no repayments' or 6 months 'half repayments'. Maximum of 2 Parenting Repayment Breaks during life of loan 12 full monthly payments must be made between each subsequent Parenting Repayment Break Repayments to be re-amortised over remaining term following a Parenting Repayment Break.
Documentation	Lender is to retain evidence of: Evidence of maternity/paternity leave approval Lenders approval of Parenting Repayment Break Re-amortisation, serviceability calculations and Income evidence (if applicable).