NAB Lending and Credit 2

Question 1

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

Accepted Answer

Loan to Value Ratio

Answer

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

Question 2

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

Accepted Answer

Above 80%

Answer

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

Question 3

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

Accepted Answer

Redraw facility

Answer

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

Question 4

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

Accepted Answer

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

Answer

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

Question 5

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

Accepted Answer

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

Answer

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.

(NAB) National Australia Bank Practice Test