As the "Separation Tsunami" continues to hit Australian households, mortgage brokers are increasingly acting as the "first responders" for separating spouses. Mastering specific non-bank policies—such as the Common Debt Reducer (CDR) and the use of "actual repayments" rather than sensitized buffers—is essential for facilitating property buyouts when serviceability is tight.
The "Mortgage Prisoner" Simulator
Visualize the difference between standard major bank policy and specialist CDR policy. Adjust the sliders to see how borrowing capacity shifts.
The 4 Policy Levers
When structuring a buyout, these four credit policy distinctions determine financeability.
| Credit Lever | Major Bank Approach | Specialist (CDR) Approach |
|---|---|---|
| Serviceability Buffer | Standard 3% buffer applied to all debts | "Actual Repayments" on existing loans |
| Child Support | Shaded by 20-50% or age-restricted | 100% of CSA-registered income |
| Joint Debt (CDR) | 100% of liability against applicant | Apportioned based on ownership % |
| Credit History | Zero tolerance for recent arrears | "Life Event" exceptions allowed |
Structuring the Deal: Broker Protocol
Emotional Intelligence & Privacy
Brokers must act with extreme caution. Ensure a credit inquiry for one spouse does not inadvertently alert the other (e.g., via joint account notifications) during the sensitive pre-separation phase.
Pro Tip
Establish a separate email channel and confirm safe times to call before initiating any credit checks.
The Valuation Fulcrum
An upfront valuation is the "fulcrum" of the settlement. Facilitate this before legal orders are finalized to ensure the buyout figures in the Binding Financial Agreement (BFA) or Consent Orders are actually financeable.
Apply the CDR Policy
Lenders like Liberty and Pepper assess only the applicant's share of joint debt if the other party is proven to be self-sufficient. Gather evidence of the ex-partner's income or new residence early to prove self-sufficiency.
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