Pepper Money lending policy assesses the credit event, income evidence and property together, with different residential products for different repayment histories. For brokers, the selected product also determines which commission terms apply. Keep the placement decision and the commission record separate so a workable credit scenario does not become an assumed payment entitlement.
Broker Pay for the Selected Loan
Record the exact Pepper Money product and the commission agreement that applies through your aggregator before forecasting upfront or trail. A Prime schedule and a non-conforming schedule need separate treatment, even when the same borrower could qualify for more than one route.
Use the hypothetical $600,000 refinance developed below. The starting loan amount is $600,000, but the upfront calculation needs the agreement’s eligible balance. Record how it treats undrawn funds, offset and redraw, then apply the product’s rate and your aggregator split. Keep GST separate from brokerage income.
For trail, record the eligible outstanding balance, annual rate, payment interval and any arrears exclusions. A loan staying open does not establish that every balance or every repayment status earns trail. Match the first payment and later adjustments against the commission statement.
The MFAA explanation of broker remuneration distinguishes settlement commission from ongoing trail and explains early repayment recovery. For this file, retain the rate schedule with the settlement record so a later product change cannot obscure the original basis.
Track My Trail’s Clawback Risk shows each loan inside its clawback period, its days remaining and the upfront exposed under the applicable rules. That makes the $600,000 file’s exposure visible beside the rest of your book.
Clawbacks, Refinance and Splits
For a Pepper Money residential loan, identify whether the proposed change repays the original debt or preserves it before applying the recovery terms. Pepper Money’s commercial early-payout announcement applies to commercial lending. It does not establish a residential exemption.
An external refinance pays out the Pepper loan. Compare the payout event and elapsed settlement period with the residential recovery schedule retained for that account. Record both the upfront recovery and the end of future trail as separate effects.
An internal refinance can involve a replacement account, while a variation can preserve the existing debt. Record the old and new account references, the amount repaid and any additional advance. The label used in a client conversation does not establish the commission outcome.
For a top-up, separate the existing balance from new money. Apply the additional-advance terms to the new funds instead of multiplying the original upfront rate by the whole revised loan. For a split, reconcile the old account to each new portion so the same balance is not counted twice.
Keep the transaction classification and the commission response in writing. A rate change on an unchanged account and a full payout are different events, even when both improve the client’s repayments.
Credit History and Repayment Conduct
Pepper Money distinguishes paid defaults, unpaid defaults, hardship assistance and discharged bankruptcy when assessing a residential application. Its credit-history policy also considers the reason for the event and repayment conduct since it happened.
| Event | What Pepper Money Publishes | Evidence for the File |
|---|---|---|
| Paid default | Paid defaults can be considered. Product selection still depends on the credit profile. | Listing amount, listing age and evidence of payment |
| Unpaid default | Unpaid defaults can be considered. Defaults listed within 12 months can be considered when caused by one life event. | Outstanding amount, creditor position and explanation of the event |
| Hardship arrangement | Pepper distinguishes assistance from unmanaged arrears. | Arrangement terms, repayment statements and the position after assistance |
| Bankruptcy | Eligibility can start one day after discharge, subject to assessment. | Discharge evidence and current financial position |
| Part IX or X agreement | Completed agreements can be considered according to product and evidence. | Completion evidence and subsequent conduct |
Pepper’s repayment-history tables distinguish mortgage conduct from non-mortgage conduct. A mortgage Repayment History Information code of 1 points to Specialist, while a non-mortgage code of 1 points to Near Prime Clear. These are product-screening indicators, with the rest of the assessment still required.
Prepare a timeline that links each missed payment to its cause and current status. A settled default remains part of the history. An agreed hardship arrangement needs its own explanation and evidence rather than an assumption that it equals unmanaged arrears.
Income Documents and Applicant Status
Pepper Money’s income and employment policy has separate employed, full doc and alt doc evidence routes. Choose the route that proves the income used in servicing.
For a PAYG salary, the broker policy lists the latest payslip or three months of salary-credit bank statements, plus supporting employment or tax evidence. Its supporting options include an employment letter, notice of assessment, PAYG payment summary or Pepper’s employment check. Variable income can require further history.
For self-employed full doc applicants, the evidence can include one or two years of tax returns and assessments, with business returns where applicable. Signed financial statements are another documented route. The selected product determines which period applies.
For alt doc, Pepper lists a declaration of financial position plus an accountant’s letter, six months of Business Activity Statements or six months of business bank statements. Use evidence that supports the declared income and trading position.
Record citizenship or visa status separately from income. Pepper’s product guide accepts permanent-residency visas and lists pathway subclasses 309, 475, 482, 489, 491, 820 and 494. Keep identity and visa evidence with the applicant record. Acceptance of a visa class does not establish income, security or credit eligibility.
Purpose, Security and Lending Limits
Pepper Money’s loan-purpose policy allows personal and business cash-out on eligible loans and can require evidence of how the funds will be used. Describe the amount and purpose separately from the refinance payout.
For debt consolidation, collect creditor statements and payout amounts, with the proposed treatment of each facility after settlement. Pepper’s debt-consolidation policy distinguishes consumer debt from tax, business and private debt. Prime’s consumer-debt provision excludes tax and business debt. Near Prime Clear includes those debt types on eligible applications.
For a private or solicitor loan, Pepper requires the contract and an explanation of its original purpose. Where repayments are required, transaction statements must show the debits. A cash-out description alone cannot replace those documents.
The published consolidation table gives maximum loan-to-value ratios (LVRs) of 95% for Near Prime Clear, 90% for Near Prime, 85% for Specialist and 80% for Specialist Plus. These ceilings do not override a lower limit caused by the security or loan size.
Pepper’s residential security policy considers condition, saleability and location. For units, the published minimum is 30 square metres internally with at least one bedroom. Vacant land has different location, acreage and services requirements from an established home.
A Worked Broker File
Consider a hypothetical Australian permanent resident refinancing $600,000 against an established home valued at $800,000. The proposed debt includes $20,000 to consolidate a personal loan. The applicant has a paid default from 18 months ago following illness and receives a fixed PAYG salary.
The starting LVR is 75%: $600,000 divided by $800,000. Include any capitalised costs in the final loan calculation. The broker supplies the default record and payment evidence, along with statements showing subsequent repayment conduct.
Assess the file in separate parts:
- Match the default’s age, amount and cause to the available Pepper product. Payment of the default alone does not decide the route.
- Substantiate the PAYG salary with the selected employment evidence. Assess the applicant’s remaining commitments and living expenses after the consolidation.
- Assess the valuation and security category against that product’s limits. The arithmetic LVR alone does not establish an acceptable property.
- Record the actual upfront balance basis and trail conditions at settlement. Retain the recovery schedule against the account reference.
If the client later refinances to another lender, record the Pepper payout and apply the original recovery terms. If the client instead requests a $30,000 top-up, assess the additional funds and commission entitlement separately. Neither outcome is established by the initial credit approval.
Scenario Review and Written Exceptions
A Pepper Money scenario review needs the exact policy issue and the facts that could support an exception. The lender’s exceptions guidance directs brokers to their business development manager when loan size or security falls outside standard policy.
State the requested product, loan amount and purpose. Add the security details and proposed LVR, then set out the credit event and subsequent conduct. Show the income evidence and explain which documented rule the application exceeds.
Ask for the requested exception explicitly, with the proposed mitigating evidence. Keep the written response and every condition with the file. A scenario discussion is different from a final credit approval, and a credit exception does not change the commission agreement.
Use the Pepper Money broker portal guide for access and scenario-support routes. Use the lender-policy directory when comparing the same documented scenario with another lender. Submit the application with the exception response attached and the outstanding conditions assigned to a named person.
