Target Market Determination Document (TMD)

Target Market Determination Document (TMD).

TMD for Non Conforming Loans home loan products issued by Pepper Finance Corporation Limited ACN 094 317 647 AFSL and Australian credit licence 286655

1.      About this document

This Target Market Determination (TMD) provides information about the target market for Non Conforming Loans home loan product1. It outlines the likely objectives, financial situation and needs of the target market as well as the key attributes of the product.

This document is not to be treated as a full summary of the product’s terms and conditions and is not intended to provide financial advice. Consumers must refer to the product terms and conditions detailed below when making a decision about this product:

  • General Terms & Conditions
  • Pepper Money Loan Agreement
  • Mortgage Common Provisions

Target market determination date 5 October 2021

2.      Description of target market, including likely objectives, financial situation and needs

The features of this product, including its key attributes have been assessed as meeting the likely objectives, financial situation and needs of consumers who:

  • satisfy our eligibility criteria, including (but not limited to):
    • being 18 years or older at the time of application;
    • being resident of Australia; and
    • receiving sufficient and consistent income;
  • require a loan secured by owner occupied or investment residential property for the purpose of:
    • purchasing residential property;
    • refinancing a loan secured against residential property; and/or
    • accessing equity in a residential property;
  • require the flexibility of a variable interest rate;
  • may require the option for a sub-offset account for deposits to offset interest;
  • may require the option to access redraw from the sub-offset account;
  • may require the ability to make unlimited extra

Whilstvariableinterestratesfluctuate,theproducthasbeenassessedasmeetingthelikelyobjectives,financial situation and needs of consumers in the target market because it allows them to makeadditional repayments and/or deposit funds into a sub-offset account to reduce interest payable whilstretainingtheability todrawonthosefundswhenrequired.

Purchase or refinance of an owner-occupied residential property^

This product allows consumers to finance the purchase or refinance of an owner-occupied residential property and make principal and interest repayments in order to reduce the overall debt and build equity in the property.

Purchase or refinance of an investment residential property^

This product allows consumers to finance the purchase or refinance of an investment residential property with the ability to select principal and interest repayments in order to reduce the overall debt and build equity or interest only repayments for tax purposes.

Access equity^

This product allows consumers to access part of the equity in their owner occupied or investment residential property in order to use the funds for an approved purpose in accordance with our lending criteria.

^The maximum term, loan size, fees and charges and Loan to Valuation Ratio will vary depending on the consumer’s circumstances, including the method of income validation and credit history. E.g., discharged bankrupt or defaults. Refer to the key product attributes below to ensure that the available product options meet the consumer’s likely objectives, financial situation and needs.

Key product attributes

  • Principal and interest loan repayments
  • Interest only loan repayments up to 5 years
  • Loan term up to 40 years
  • Equity access, purchases and refinances acceptable
  • Availability of a Redraw Facility
  • Availability of an Interest Offset sub-account;
  • Ability to make additional repayments at no additional cost
  • Ability to finance loan related fees onto the loan amount (to a limit defined by the lender) for example, risk fees can be capitalised on the loan amount up to the maximum allowable Loan to Valuation Ratio limit, provided loan serviceability is
  • Availability of a Visa debit card* for everyday access to additional funds including ATMs
  • Access to online banking including BPay
  • Pricing for risk:
    • If a loan is approved, the interest rate offered and fees and charges will depend on our assessment of a number of factors at the time of application including the consumer’s credit history and the nature of the security property
    • The interest rate offered may be higher than our published starting rate(s), depending on the consumer’s circumstances (e.g. Loan to Valuation Ratio, credit history, loan size, security property type etc) and this risk loading will apply for the loan

*Visa debit card issued by Indue Limited

Fees and Charges^

  • Establishment Fee (including one valuation)
  • Monthly account keeping fee
  • Mortgage risk fee/ Lender protection fee

Other fees and charges may apply, as set out in the loan agreement

Excluded class of consumers

This product may not be suitable for individuals who:

  • do not satisfy our eligibility criteria;
  • need to borrow greater than 95% Loan to Valuation Ratio;
  • require a loan term greater than 40 years;
  • require a fixed interest rate loan;
  • are borrowing to construct a dwelling; and/or
  • require a line of credit

3.      How this product is to be distributed

Distribution channels and conditions

This product is designed to be distributed through the following channels:

  • Non Conforming Loans and Pepper Money accredited mortgage brokers subject to Best Interests Duty (Third Party Channel); and

The distribution channels are appropriate because:

  • the product has a wide target market;
  • our Third Party Channel consists of accredited brokers that are subject to a higher duty under Best Interests Duties to ensure that the product is in the best interests of the particular consumer;
  • our application and approval process has controls in place to ensure all approved consumers meet our eligibility and lending requirements; and
  • we conduct adequate training, upfront and ongoing due diligence and monitoring of distributors including the ongoing provision of information to these

4.      Reviewing this target market determination

We will review this TMD in accordance with the following:

Review periods First review date: within twelve months of the effective date. Periodic reviews: every twelve months after the initial review and each subsequent review.
Review triggers The review triggers that would reasonably suggest that the TMD is no longer appropriate include (but are not limited to):

·        There is a material change to the product or the terms and conditions of the product

·        A significant dealing of the product to consumers outside the target market occurs

·        External events such as adverse media coverage or regulatory attention suggest that the target market for the product might not be appropriate; and

·        There is a significant change in product related metrics, including, but not limited to:

o    increased complaints in relation to the purchase or use of the product;

o    increased declined loan applications;

o    high rates of default;

o    high rates of hardship;

o    high numbers of consumers refinancing their loans.

Where a review trigger has occurred, this TMD will be reviewed within 10 business days. Meanwhile, we will cease to offer this product to our consumers until our review concludes and any necessary changes to the product or TMD, including distribution methods, are made.

1 Credit services for Non Conforming Loans products are provided by Ausco Trading Pty Ltd ABN 95 003 585 662 Australian Credit Licence 386838 (“NCL”) and its appointed representatives. Credit for Non Conforming Loans products is provided by Pepper Finance Corporation Limited ACN 094 317 647 (“Pepper”). Pepper Money Limited ACN 094 317 665, Australian Credit Licence 286655 acts on behalf of Pepper

Call a Specialist Lender

1300 791 329

We specialise in Non Conforming Loans. Please complete our contact Form or Phone Direct and you can discuss your situation with an expert.

If you wish to proceed, then we will help you to complete all the necessary paperwork and liaise with the lender on your behalf. This will include the completion and submission of your home loan application and the on-going communication between all parties until your home purchase is settled.