Commonwealth Bank of Australia (CBA) has just unveiled the Interest Only Simulator, a new digital tool which will be incorporated into its third-party lending process.
The Interest Only Simulator will be accessible via CommBroker, and will show customers the differences between interest-only and principal-and-interest repayments, as well as the financial impacts over the lifespan of both types of loans.
The tool will be mandatory from October 6 onwards for all customers applying for new interest-only loans.
“The new tool will make it easier for our brokers to have conversations with customers about their needs and their loan options,” a CBA spokesperson told Australian Broker. “It will also help ensure customers understand what type of loan is best for them and their situation.”
A compulsory Customer Acknowledgement Form will also be included with the tool. This form will be submitted with all interest-only home loan applications to ensure that the arrangements meet the clients’ needs.
Brokers are required to provide customers with a copy of their Customer Acknowledgement Form as a record of the discussion, and the copy can be sent electronically as a pdf attachment through email.
“We encourage our customers to choose principal-and-interest repayments to help them build equity in their home, where this meets their needs and objectives. Customers who currently make interest-only payments are encouraged, where they are able, to switch to principal-and-interest repayments,” the CBA spokesperson said.
Collections: Mortgage News