Lending and Credit Flashcards

What does LVR stand for in NAB's home lending context?

Answer: Loan to Value Ratio

LVR stands for Loan to Value Ratio, calculated by dividing the loan amount by the property's assessed value.

At what LVR does NAB typically require Lenders Mortgage Insurance (LMI)?

Answer: Above 80%

NAB generally requires LMI when the LVR exceeds 80%, protecting the lender against potential default losses.

Which NAB home loan feature allows borrowers to access extra repayments they have already made?

Answer: Redraw facility

A redraw facility lets borrowers withdraw additional repayments they have made ahead of schedule on their home loan.

In NAB's credit assessment, 'serviceability' primarily refers to:

Answer: The borrower's ability to meet loan repayments from their income

Serviceability measures whether a borrower can comfortably meet repayments based on their income, expenses, and existing debts.

What is the key difference between a fixed-rate and a variable-rate NAB home loan?

Answer: Fixed-rate loans lock in an interest rate for a set period; variable rates fluctuate with market conditions

A fixed-rate loan maintains the same interest rate for the agreed term, while a variable rate can rise or fall based on market and lender decisions.

Which documents does NAB primarily use to verify the income of a PAYG employee applying for a home loan?

Answer: Recent payslips and an annual PAYG payment summary

NAB requires recent payslips and PAYG payment summaries to confirm the borrower's salary, employment status, and consistency of income.

What does NAB's credit scoring system primarily assess?

Answer: The likelihood that a borrower will repay their debts as agreed

Credit scoring evaluates a borrower's creditworthiness based on repayment history, outstanding debts, and financial behavior patterns.