22Requirements relating to mortgages

22  Requirements relating to mortgages

 (1) The mortgage requirements in relation to a proposed arrangement are as follows:

 (a) the purchase of the relevant property is financed by a single mortgage with a participating lender (the first mortgage); and

 (b) the following requirements will be satisfied in relation to the first mortgage at the time of settlement of the purchase of the relevant property:

 (i) the applicant or applicants are the only counterparties to the mortgage agreement; and

 (ii) the mortgage is a variable or fixed rate loan, or a combination of both (and not a line of credit); and

 (iii) subject to subsections (2) and (3), the mortgage agreement requires scheduled payments of both principal and interest for the full period of the agreement which is a period of not more than 30 years; and

 (c) the applicant or applicants have granted a second mortgage over the relevant property in favour of the Commonwealth.

 (2) The mortgage agreement may be varied in relation to an applicant who is experiencing hardship.

Example: A participating lender may provide for interest‑only payments to be made while a borrower is experiencing hardship.

 (3) Where the arrangement relates to the construction of a new home:

 (a) the mortgage agreement may provide for interest-only payments to be made while the home is being constructed; and

 (b) the period of the mortgage may exceed 30 years, but only if the period of the mortgage agreement after completion of construction of the home is not more than 30 years.