ASIC recent review of interest only loans makes for interesting reading.
There are plenty of action items for brokers to consider when a client requests an interest only term. The devil is in the detail. The importance of detailed information of your discussions with your broker so that your mortgage adviser clearly understands your short and long term requirements and objectives.
Action 1: Provide specific guidance on loan products and features.
Action 2: Ensure all questions are answered
Action 3: Keep all information in one place
Action 4: Focus on the consumer’s underlying objectives
Action 5: Have documented processes where objectives conflict.
Action 6: Include a concise narrative summary
Action 7: Provide a summary statement to the consumer
Action 8: Ensure the interest-only period reflects the consumer’s intention
Action 9: Ensure the consumer understands products and features
Action 10: Ensure the consumer knows what they must do
Take some time to have a read of the ASIC's findings, attached is the document for your reading pleasure.
