ME Bank started enhancing their Verification and Validation (V&V) procedures since Monday, 9 December 2024. These changes aim to improve their ability to support customers with their home lending needs.
Here’s a summary of the updates:
Cash Out Validation for Loans with an LVR of 80% or less
ME Bank simplified the criteria from five categories down to just three and increased the cash-out limit without the need for supporting evidence.
| For this cash-out purpose… | Cash-out amount they will lend up to without supporting document/s… |
| Other or personal use (e.g. travel/holiday, wedding, furniture/appliances, retention of redraw) | <$200,000 |
| Renovation Cosmetic/non-structural (can include ancillary improvements e.g., landscaping, pergola, shed, or build of granny flat/fully self-contained unit with living area of <=60sq.m) | ≤$750,000 |
| Residential property (or deposit)/motor vehicle/personal investment* | no limit |
*Personal investment purpose (e.g. shares or managed funds) should be limited to 50% of the total loan amount.
Non-Base Income
Me Bank has reduced the validation requirements for commission, overtime, shift allowances, penalties, and bonus incomes making validation more efficient for you and easier for your customers.
Commission Income
For calculations involving commission income, Me Bank will now use 80% earned over the last six-month period annualised, validated by:
- One payslip with at least six months of year-to-date
commission; or - For less than six months of year-to-date commission:
- Six months’ payslips showing commission income; or
- A letter from the employer showing six months of commission and one payslip showing commission.
Overtime, Shift Allowance and Penalties
Me Bank will need three months year to date annualised, shaded to 80%, validated by:
- One payslip from the last 28 days (42 days if paid monthly) showing at least three months of YTD income.
- The most recent payslip (if less than three-months year-to-date) along with the final payslip or payment summary from the last fiscal year.
Bonus Income
For monthly, quarterly, or biennial bonuses, Me Bank will use 80% of all bonus payments over the year. For annual bonuses, average the last two years. If the customer has received at least two bonus payments from their current employer in the last two years, provide payslips as evidence.
For full details, please refer to the updated version of the ME Home Lending Policy and V&V Procedures on the Broker Portal.
Inflight applications
The above changes apply to all new ME home loan applications submitted from Monday, 9 December 2024. Existing policy, procedure and serviceability rules will apply to applications submitted before this date unless there is material change in the application that requires re-decisioning.
The updated ME home loan supporting document updated Checklist will be available in ApplyOnline early next year.
Credit Assessment Tool (CAT)
As a result of these changes, Me Bank will be making wording changes only to the instructions in their Credit Assessment Tool (CAT). The new CAT is available to download from the broker portal.
Approval-in-Principal (AIP)
As a reminder Me Bank has temporarily paused the acceptance of Approval-in-Principal (AIP) applications for new to bank customers. They will continue to accept AIP applications for existing ME home loan customers.
This temporary pause will enable ME to continue supporting your customers who have contracts in place for purchases and refinance applications with quick turnaround times and responsive coverage.
If you have any questions about this change, please do not hesitate to get in touch.
