Cost of living business rule

Cost of living business rule

Business rules exist at originator group product level, allowing finance companies to set rules and settings that are specific to each combination of originator group and product.
The cost of living business rule contains the the rules for determining the expenses and surplus of the borrower on an application.

To understand how all the below is used please refer to the surplus article in conjunction with this article.

1. Navigate to Configuration -> Organisational Structure -> Select Originator Group product 



2. Select Originator Group Product under Originator Groups



3. Apply the filter to find the Originator Group Product that you need to assign the newly created Secondary Credit Rating Table. Select the Finance Company, Originator Group and Product from the drop down lists and click on Apply Filter 



4. Once you have filtered the Originator Group Product, Select it and got to Actions -> Business Rules -> Cost Of Living


 
Effective Date: The date the business rule will be applied from.

Use for Expenses in NDI: Select the option to use to calculate expense. The options are:
  1. COLA
  2. HPI (Henderson poverty index
  3. HEM (Household expenditure measure)
  4. Total living expenses
  5. Comparison Value


If "HPI (henderson poverty index)" is selected in "Use for expenses in NDI", the page will appear as follows



Include partner income:  Include the partner income with the borrower income when calculating the surplus.

Monthly required surplus as percentage:  Used to determine the outcome of the decision tree variable "Financial - has the applicant got an actual surplus greater than the surplus required"

Minimum monthly required surplus as percentage: the surplus needs to be above a certain percentage of the amount financed.

Minimum monthly required surplus as amount: the surplus needs to be above a certain amount


If "HEM (household expenditure measure)" is selected in "Use for expenses in NDI", the page will appear as follows




If "total living expenses" is selected in "Use for expenses in NDI", the page will appear as follows


Discount expenses: If the borrower has a partner i.e. their marital status on the application is married or defacto a discount can be applied to the Expenses

By: The discount can be by a percentage or pro rata of the income value

To a minimum of: The discount will not be able to be higher than this value


If "COLA" is selected in "Use for expenses in NDI), the page will appear as follows:



COLA first adult: The monthly allowance that you will use in the COLA capacity calculation for the borrower.

COLA other adults: The monthly allowance that you will use in the COLA capacity calculation if the borrower is married.

COLA first child: The monthly allowance that you will use in the COLA capacity calculation if the borrower has one child.

COLA other children: The monthly allowance that you will use in the COLA capacity calculation if the borrower has more than one child.

Include Partner Income:  The partner income will be added to the borrower income


If "Comparison Value" is selected in "Use for expenses in NDI", the page will appear as follows:



Calculate NDI expenses as:
  1. greater of total living expenses versus HPI
  2. greater of total living expenses versus HEM
  3. greater of total living expenses versus COLA

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