NAB rolls out stricter rules on ID checks and credit history for home loan applications

NAB rolls out stricter rules on ID checks and credit history for home loan applications
NAB rolls out stricter rules on ID checks and credit history for home loan applications

National Australia Bank is tightening its rules for home loan applicants, with photo IDs and supporting documents in response to more regulatory scrutiny of lending practices by banks.

Mortgage brokers will be required to provide updated photographs for all existing NAB customers who take out a new mortgage with the bank. 

The lender will also need to provide a physical or scanned copy of a certified photograph, such as a driver’s licence, or a passport.

The bank will also require consent forms from the borrower, any guarantors, employers and the broker, according to The Australian Financial Review.

The new identity check rules are as a result of polices being rolled out by the Australian Registers National Electronic Conveyancing Council as it tries to tackle online fraud.

The rules are even tougher for interest-only borrowers as they will be asked questions about whether that type of loan is suitable for their needs, or whether a principal and interest might be better.

For principal and interest only borrowers, questions range from whether they are taking out the loan as owner-occupiers, or investors, and how they might cope with temporary income reduction, or a large expense item.

Interest-only borrowers will also need to disclose whether they will require additional bridging finance.

"It will ensure customers take out interest-only lending in the right circumstances, which is suitable for their needs," according to a bank memo cited by the AFR.

The bank had increased rates for mortgage holders making interest-only repayments in June, following other major banks.

NAB is also tightening credit policies, such as verification of bonus income and more closely scrutinising any regular deductions from PAYG income, such as superannuation salary sacrifice, in response to tougher regulatory requirements.

Commissions can be considered when it regularly tops up a base salary; or where it is consistent and regular amounts for a minimum of six months.

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Nab Loan Application

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