Interest Only Reasons

This page provides summary of the Interest Only Reason requirements developed by the Living Expenses Working Group.

Throughout 2016 the Living Expenses Working Group established the a set of options (consisting of a binary Yes/No option) for each loan where that loan contains an interest only period (multiple selections are allowed). Each option offers a free text field to accompany the check-box for the applicant/s to expand upon the selection. Each organisation is responsible for applying their own business rules as to whether to use this free text field, and whether to enforce completion of the free text field. The mandatory or optional nature of each field is therefore considered out of scope of the LIXI standard. These were first incorporated into the CAL 2.6.0 Standard Release on 13th December 2016.

  • Temporary reduction in income
  • Large non-recurring expenses
  • Variable income
  • Maximise cash flow
  • Create funds for investment purposes
  • Principal reductions in an offset facility
  • Taxation, financial or accounting reasons
  • Plan to convert to investment property
  • Other reason

In 2017, the increased regulatory oversight of interest-only loans caused a number of lenders and aggregators to request the capture of two new interest only reasons for Construction Loans and Bridging Finance respectively. These were originally thought to be unnecessary, as the interest only feature of construction loans or bridging loans was standard for the product, but there are now situations where this is not the case.

  • Minimise Cash Flow Impact During Construction;
  • Minimise Cash Flow Impact During the Bridging Period.

These two additional reasons were added to the LIXI 2 suite of standards on 22nd September 2017 in the CAL 2.6.5 Standard Release.

Updated: 22nd September 2017