As a broker, you must complete a thorough assessment to ascertain if a customer can adequately service the debt. It does not require you to strictly adhere to APRA’s guidelines. However, you do need to ensure that you are performing the preliminary serviceability assessment using your own calculator because you need to be able to justify the outcome and explain the arithmetic that was used to ascertain if a customer could adequately service the debt.

This means that a lender’s servicing calculator should not be used to complete your preliminary assessment as it will not provide justification for you under NCCP due diligence requirements.

If you conduct your own preliminary assessment completely independent of the lender, then obviously it is going to have a very different outcome to the serviceability assessment completed by the lender. Therefore, unless you are able to explain the mathematics of your client’s ability to fit repayments into their life, you are not complying with the legislation.

Connective has implemented the Connective compliance calculator that is included in every borrowing capacity calculation.

The Connective Compliance Calculator will be displayed in the list of lenders within the Borrowing Capacity calculation

This calculator will be pegged to the top of the list to ensure it is front and centre.

Note: For a step by step instruction on how to use the Borrowing capacity calculator please refer to:

Completing a Borrowing Capacity Calculation

If the borrowing capacity is sufficient for your client’s requirements and objectives then you can proceed as normal. If the borrowing calculator falls short of the client’s requirements then you must add a file note to mercury as to why the client is able to service a higher borrowing amount.