This page provides summary of the requirements developed by the Living Expenses Working Group.
A number of iterations of draft LIXI 2 standards that accommodate these requirements were released for comment through October and November 2016 with a final version of the LIXI Credit Application for Australia Standard being published on 13th December 2016 (LIXI Credit Application for Australia (CAL 2.6.0) Standard).
LIXI 1 changes are being finalised and will be published in the coming days, with further information available here: Proposed LIXI 1 Solutions to the Living Expense Working Group Requirements.
Living Expense Categories
The Living Expenses Working Group has established a set of requirements for capturing the living expenses of the applicant's household. The requirement is to have a commonly agreed set of expense categories, so that these questions provide a sufficient level of detail for each of the lenders that agrees to the standard. Should a lender not require that level of detail, it is possible to aggregate the categories, thus avoiding rework in going back to the applicant to gather more data.
This list is not intended to exclude deeper questioning by the broker, but establishes a consistent framework within which to gather the data.
Within the schema documentation, additional detail will be provided, agreed to by the working group, that may be used to provide guidance, prompting as to the various items that would fall into a given category.
|Expense Category||Detailed Description|
|Childcare||Childcare including nannies.|
|Clothing and personal care||Clothing, footwear, cosmetics, personal care.|
|Education||Public and private education fees and associated costs (preschool, primary, secondary and tertiary) including books and uniforms etc.|
|Groceries||Typical supermarket shop for groceries including food and toiletries.|
|Insurance||All insurance including health, home and contents, motor vehicle, life, income protection.|
|Investment property utilities, rates and related costs||Housing and property expenses on investment property including rates, taxes, levies, body corporate and strata fees, repairs and maintenance, other household items and utilities (excluding insurance, telephone, internet and pay TV as they are categorised separately).|
|Medical and health||Medical and health costs including doctor, dental, optical and pharmaceutical etc. (excluding health insurance which is categorised under insurance).|
|Other||Unique items not covered in above categories (must be explained further).|
|Owner occupied property utilities, rates and related costs||Housing and property expenses on owner occupied property including rates, taxes, levies, body corporate and strata fees, repairs and maintenance, other household items and utilities (excluding insurance, telephone, internet and pay TV as they are categorised separately).|
|Recreation and entertainment||Recreation and entertainment including alcohol, tobacco, gambling, restaurants, membership fees, pet care, holidays.|
|Telephone, internet, pay TV and media streaming subscriptions||Telephone accounts (home and mobile), internet, pay TV and media streaming subscriptions (such as Netflix and Spotify).|
|Transport||Public transport, motor vehicle running costs including fuel, servicing, parking and tolls (excluding motor vehicle insurance which is categorised under insurance).|
Note that the existing LIXI 2 Standard supports capturing the following attributes of a living expense, and the proposed solution should maintain this functionality:
- the percentage of an expense that a particular applicant is responsible for.
- the start and end date of an expense, for example Private School fees may commence in 2 years when a child moves from child care into a private school. In this situation, the start date attribute is required.
Interest Only Reasons
The Living Expenses Working Group has established the following set of options which are outlined on this page.
The Living Expenses Working Group has established that two declarations may need to be transmitted with a credit application:
- Declaration from the broker that the interest only period aligns with the applicant's requirements.
- Declaration from the broker that the applicant has had the additional risks and costs of an interest only term explained to them. The applicant has had the following explained: interest only loan repayments will not pay off any principal during the interest only term; the repayments required to pay out the loan will increase after the interest only period ends to cover both interest and principal reductions; and the applicant may pay more over the life of their loan than if there was no interest only term.
The exact wording used in the broker's inquiry tools remains up to each licensee, provided the intent of each declaration remains consistent. The broker's inquiry tools will capture much more information about the borrowers requirements and objectives, but for the purpose of the message transmission, a single declaration for the explanation of additional risks and costs is sufficient, even if the broker's inquiry tools breaks up the declarations into multiple parts.
Updated: 13th December 2016