Residential Mortgage¶


Product ID	`PRD-018`
Launch tier	2
Jurisdiction	NZ + AU
Status	Planned
Regulations	CCCFA 2003 · RBNZ BS19 LVR · NCC Act 2009 (NCCP) · APS 220 Credit Quality · ASIC RG 209 · NZ Banking Code · ABA Banking Code

Overview¶

The Residential Mortgage is a secured lending product available to individuals (and joint applicants — GAP-025 notes that joint accounts are on the roadmap) in New Zealand and Australia. The product offers standard variable rate, fixed rate (1–5 year terms), and split mortgage structures, all secured by a first registered mortgage over residential property.

In New Zealand the product is regulated under the Credit Contracts and Consumer Finance Act (CCCFA) and subject to RBNZ loan-to-value ratio (LVR) restrictions under BS19. In Australia the product is regulated under the National Consumer Credit Protection Act (NCCP) and subject to APRA APS 220 credit quality requirements. Conduct obligations apply in both jurisdictions under the CoFI Act (NZ) and ASIC RG 274 (AU).

This is a Tier 2 launch product. Credit infrastructure (SD05) must be fully deployed before this product can be offered.

Key terms¶

Term	Detail
Product type	Mortgage (secured)
Security	First registered mortgage over residential property in NZ or AU
Available rates	Variable; fixed 1, 2, 3, 4, or 5 year; split (variable + fixed portions)
Repayment types	Principal and interest (P&I); interest only up to 5 years
Minimum loan amount	$50,000 NZD / $50,000 AUD
Maximum LVR	80% standard; up to 90% with LMI (AU only); NZ subject to RBNZ LVR restrictions (BS19)
Loan term	10–30 years
Repayment frequency	Weekly, fortnightly, or monthly

System capabilities¶

The following modules operate in real time to deliver this product:

MOD-027 (affordability calculator) assesses serviceability at application using declared income, existing commitments, and a 3% stress buffer above the application rate.
MOD-028 (credit score) provides risk-based pricing inputs, including LVR band and credit score tier mapping to margin.
MOD-029 (pre-approval engine) issues conditional pre-approvals against a specified purchase price and LVR, valid for 90 days.
MOD-115 (property security and LVR management) registers the property security instrument at settlement, records valuations, and calculates current LVR in real time. Monitors for LVR policy breaches and emits events for credit team review.
MOD-116 (mortgage servicing engine) manages fixed rate periods end-to-end: issues expiry notifications at 90, 60, and 30 days; processes rate elections; calculates and discloses break costs; handles discharge requests; detects arrears and escalates to hardship.
MOD-112 (amortisation schedule engine) calculates the repayment schedule at origination and recomputes on each rate change or extra repayment.
MOD-005 (daily accrual calculator) accrues interest daily on the outstanding balance for both variable and fixed rate balances.
MOD-066 (collateral and security management) records the security instrument and monitors collateral adequacy at the portfolio level.
MOD-065 (credit servicing and collections) manages arrears, hardship, and collections workflows once an account is escalated.
MOD-110 (fee engine) applies establishment fee, valuation fee, and discharge fee per the configured fee schedule.

Eligibility¶

MOD-105 (application eligibility) assesses all of the following criteria before an application proceeds to full credit assessment:

Minimum age 18
NZ or AU residency, or an eligible visa category per credit policy
Satisfactory credit history assessment (MOD-028)
Serviceability at the application rate plus a 3% stress buffer (required by RBNZ and APRA)
Property located in NZ or AU
LVR within policy limits at origination (80% standard; 90% maximum with LMI in AU; NZ LVR bands per BS19 in force at application date)
Property must be acceptable security: no leasehold title, no high-density apartment exclusions, no properties subject to embargo per current credit policy

Account opening¶

The application flow from enquiry to drawdown proceeds through the following stages:

Pre-approval — Customer submits income and purchase details. MOD-029 issues a conditional pre-approval if serviceability and LVR criteria are met. Valid 90 days.
Full application — Customer submits full application with property details, supporting documents, and consents.
Credit assessment — MOD-027 (affordability) and MOD-028 (credit score) run in parallel. Credit team reviews output.
Property valuation — Independent valuation ordered (registered valuer or AVM). MOD-115 records the valuation and calculates origination LVR.
Security registration — MOD-115 registers the security instrument against the title reference. LVR gate must clear before settlement proceeds.
Loan offer — Formal credit contract issued. CCCFA (NZ) or NCCP (AU) disclosure requirements apply.
Disclosure — MOD-050 enforces required disclosure delivery and acknowledgement before execution.
Settlement — Legal settlement occurs. MOD-001 posts the drawdown. MOD-116 activates the mortgage servicing lifecycle.
Drawdown — Funds disbursed to conveyancer or vendor account. Repayment schedule activated.

Fee structure¶

All fees are configured in MOD-110 and are tenant-configurable per jurisdiction. The standard fee schedule includes:

Fee	Timing	Notes
Establishment fee	At drawdown	Covers application processing and origination
Valuation fee	At application (if applicable)	Charged when a registered valuer is ordered; waived for AVM-only assessment
Legal / security fee	At settlement	Covers title search and security registration
Monthly service fee	Monthly (if applicable)	May be waived subject to product tier
Discharge / settlement fee	On full repayment or sale	Covers security release and discharge administration

For fixed rate loans, an early repayment fee (break cost) applies if the loan is repaid in full or refinanced before the fixed term expires. Break cost is calculated by MOD-116 using the formula:

break_cost = max(0, (contract_rate − reinvestment_rate) × outstanding_balance × remaining_fixed_days / 365)

Where reinvestment_rate is the wholesale swap rate for the remaining fixed term, sourced from MOD-085. Break cost is disclosed to the customer and must be accepted before early repayment is processed.

Interest calculation¶

Interest accrues daily on the outstanding balance via MOD-005.

Variable rate: Base rate plus margin. The base rate is updated by MOD-006 when the bank changes its variable rate. Rate changes take effect from the effective date recorded in MOD-006.

Fixed rate: Contract rate is locked for the elected term by MOD-116. Changes to the variable rate do not affect the fixed rate balance during the fixed period. On expiry, the account reverts to the prevailing variable rate unless a new election is made.

Interest-only: MOD-005 accrues interest only on the outstanding balance. MOD-112 generates a schedule reflecting zero principal reduction. At the end of the interest-only period, the account automatically converts to P&I repayments over the remaining term.

Principal and interest: MOD-005 accrues interest daily. MOD-112 calculates the scheduled repayment as an annuity payment that reduces the outstanding balance to zero over the remaining term. Each repayment comprises an interest component (from daily accrual) and a principal component.

Statements¶

Monthly statements are generated by MOD-113 and include: opening balance, all transactions (repayments, interest postings, fee charges), closing balance, and current interest rate.

An annual summary statement is produced at year end, including total interest paid for the period (required for tax purposes in both NZ and AU).

Statements are retained for 7 years per records management policy. All statements are accessible in-app via MOD-073.

Closing and discharge¶

The discharge process is as follows:

Customer or conveyancer initiates discharge request via the back-office portal or app.
MOD-116 calculates any applicable break cost if the loan is on a fixed rate. Break cost is disclosed and accepted before processing continues.
MOD-065 confirms no unresolved arrears or hardship holds on the account.
MOD-001 posts the final repayment transaction and closes the loan account.
MOD-115 marks the security instrument as discharged, records the discharge date, and issues a discharge authority to the relevant land registry.
A discharge notice is issued to the customer within 5 business days of the final payment being received and cleared.

Regulatory compliance¶

New Zealand:

CCCFA affordability assessment is mandatory at application (MOD-027). Responsible lending disclosure is enforced by MOD-050.
RBNZ LVR restrictions (BS19) are enforced at origination by MOD-115. LVR band distribution is reported in prudential returns via MOD-115 output.
CoFI Act conduct obligations apply throughout the product lifecycle. Rate election notifications and break cost disclosures are enforced by MOD-116 in compliance with CON-004 and CON-005.

Australia:

NCCP responsible lending obligations are satisfied by the MOD-027 serviceability assessment and MOD-050 disclosure workflow.
APRA APS 220 credit quality requirements are met through collateral adequacy monitoring (MOD-066, MOD-115) and credit provisioning (MOD-030).
ASIC RG 209 interest rate risk disclosure requirements are satisfied by MOD-116 break cost disclosure and fixed rate expiry notifications.
ASIC RG 274 design and distribution obligations require that this product is distributed only to customers within the target market determined at product approval.

Both jurisdictions:

IFRS 9 expected credit loss staging is applied to all mortgage balances via MOD-030.
Credit bureau reporting of account status and repayment history is handled by MOD-059.
AML CDD is performed at onboarding via MOD-009, satisfying AML-002.

Governing policies¶

CRE-001 — Credit Risk Management Policy
CRE-002 — Responsible Lending Policy
CRE-003 — Credit Decisioning & Scorecard Policy
CRE-004 — Loan Origination Standards
CRE-006 — Impairment & Provisioning Policy
CON-004 — Product Disclosure & Sales Practice Policy
CON-005 — Fee & Pricing Transparency Policy
CON-008 — Financial Hardship Policy
CLQ-002 — Liquidity Risk Management Policy
PAY-001 — Payment Operations Policy
AML-002 — Customer Due Diligence (CDD) Policy

Implementation modules¶

Module	Name	Status
MOD-001	Double-entry posting engine	Deployed
MOD-002	Immutable transaction log	Deployed
MOD-003	Real-time balance engine	Deployed
MOD-005	Daily accrual calculator	Deployed
MOD-007	Account state machine	Deployed
MOD-009	eIDV & document verification	Deployed
MOD-027	Affordability calculator	Deployed
MOD-028	Credit score & risk rating	Deployed
MOD-029	Pre-approval engine	Deployed
MOD-030	Stage allocation model	Deployed
MOD-031	ECL calculation & GL posting	Deployed
MOD-050	Disclosure enforcement module	Deployed
MOD-059	Credit bureau submission engine	Deployed
MOD-065	Credit servicing & collections	Deployed
MOD-066	Collateral & security management	Deployed
MOD-110	Fee engine	Deployed
MOD-112	Amortisation schedule engine	Deployed
MOD-113	Statement generation	Not started
MOD-115	Property security and LVR management	Deployed
MOD-116	Mortgage servicing engine	Deployed

Compiled 2026-05-22 from source/entities/products/PRD-018.yaml