Debt types

Debt types

Existing debt commitments are any periodic repayment a borrower is required to make toward repayment of an existing debt facility. Debt types are used to:

  1. collect information from the borrower at time of creating the quote/application
  2. collect information from the borrower by the credit assessors at time of evaluation
  3. used to calculate surplus (NDI)
  4. used to calculate debt to income ratio (DTI)

1. To create a Debt Type navigate to Configuration -> Setup

2. Select Debt Type under the finance agreements section.

3. Click on  icon to create a new Debt Type.

4. Provide the details for the debt type. 



 For each debt type the following will need to be supplied.


Description
Display As
Available During Origination
Debt Type Applies To
Include in surplus
Include in DTI
Classification
Minimum weekly amount
To identify what the debt type is
This is what will appear on the pages/screens when the debt type is prompted for or presented
There may be instances where you would like the debt type to not appear on the application page for the borrower to supply details but would like the debt type available to the credit assessor to collect information at time of evaluation.
Debt types can be created that are specific to individual borrowers and also specific to business borrowers. If an application exists for a business only debt types that apply to the business will be presented on the pages. Likewise for individuals.

If the debt type is to be included in the surplus (NDI) calculation. see here for how the surplus calculations is made. If it is to be included in the surplus it can be included in 3 ways.

Use % of repayment amount
Use % of limit amount
Use % of balance amount

You need to also indicate which of these you wish to use and the percentage. It is all explained in the surplus calculation link above.

If the debt is to be included in the debt to income (DTI) calculation. See here for details on how the calculation is made. If it is to be included in the DTI calculation it can be included in 3 ways.

Use % of repayment amount
Use % of limit amount
​Use % of balance amount

You need to also indicate which of these you wish to use and the percentage. It is all explained in the DTI calculation link above.

Used to categorise the debt type for analysis
If the debt type is used in the surplus calculation, the minimum weekly amount can be applied. If the “Minimum Weekly Amount” on the debt type, contains a value, and the borrower / applicant has supplied a value for the debt type, then the greater of the “Minimum Weekly Amount” (adjusted to the correct frequency) on the debt type and the debt type value supplied by the borrower will be used. Example if the minimum amount (adjusted to the correct frequency) for mortgage is $300 and the mortgage amount on the application is $100, then $300 will be used instead of the mortgage value supplied on the application


5. After providing the details click   to create the new debt type. 


 



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