Commonwealth Consolidated Regulations Commonwealth Consolidated Regulations(1) This regulation:
(a) is made for the purposes of the following provisions of the Act:
(i) paragraph 164(d);
(ii) paragraph 118(2)(c) (when the credit contract must be assessed as unsuitable--entering the contract or increasing the credit limit), as modified by subregulation (2);
(iii) paragraph 123(2)(c) (prohibition on suggesting or assisting consumers to enter, or increase the credit limit under, unsuitable credit contracts), as modified by subregulation (3);
(iv) paragraph 131(2)(c) (when credit contract must be assessed as unsuitable), as modified by subregulation (4);
(v) paragraph 133(2)(c) (prohibition on entering, or increasing the credit limit of, unsuitable credit contracts), as modified by subregulation (5); and
(b) sets out circumstances in which a credit contract is unsuitable.
Modifications of Act
(2) For the purposes of paragraph 164(d) of the Act, the provisions to which Part 3 - 7 of the Act applies apply as if paragraph 118(2)(c) of the Act were varied to read:
"(c) if the regulations prescribe circumstances in which a credit contract is:
(i) unsuitable; or
(ii) unsuitable unless the contrary is proved;
those circumstances will apply to the contract;".
(3) For the purposes of paragraph 164(d) of the Act, the provisions to which Part 3 - 7 of the Act applies apply as if paragraph 123(2)(c) of the Act were varied to read:
"(c) if the regulations prescribe circumstances in which a credit contract is:
(i) unsuitable; or
(ii) unsuitable unless the contrary is proved;
those circumstances will apply to the contract;".
(4) For the purposes of paragraph 164(d) of the Act, the provisions to which Part 3 - 7 of the Act applies apply as if paragraph 131(2)(c) of the Act were varied to read:
"(c) if the regulations prescribe circumstances in which a credit contract is:
(i) unsuitable; or
(ii) unsuitable unless the contrary is proved;
those circumstances will apply to the contract;".
(5) For the purposes of paragraph 164(d) of the Act, the provisions to which Part 3 - 7 of the Act applies apply as if paragraph 133(2)(c) of the Act were varied to read:
"(c) if the regulations prescribe circumstances in which a credit contract is:
(i) unsuitable; or
(ii) unsuitable unless the contrary is proved;
those circumstances will apply to the contract;".
Circumstances
(6) A circumstance in which a credit contract is unsuitable unless the contrary is proved is that:
(a) the credit contract is part of an arrangement that is a reverse mortgage; and
(b) at the time the credit contract is entered into, the youngest borrower under the reverse mortgage is 55 or younger; and
(c) the loan to value ratio of the mortgage is higher than 15%.
(7) A circumstance in which a credit contract is unsuitable unless the contrary is proved is that:
(a) the credit contract is part of an arrangement that is a reverse mortgage; and
(b) at the time the credit contract is entered into, the youngest borrower under the reverse mortgage is older than 55; and
(c) the loan to value ratio of the mortgage is the sum of;
(i) 15%; and
(ii) 1% for each year that the borrower is older than 55.
Note: Examples of unsuitable loan to value ratios are:
(a) if the youngest borrower is 60, a loan to value ratio that exceeds 20% is unsuitable unless the contrary is proved; and
(b) if the youngest borrower is 70, a loan to value ratio that exceeds 30% is unsuitable unless the contrary is proved.
(8) In this regulation:
"loan to value ratio" , in relation to a reverse mortgage over a reverse mortgaged property, is:
where:
A is the amount of credit owed under the credit contract for the reverse mortgage.
B is the value of the reverse mortgaged property.