Key Facts Sheets for Standard Home Loans
Phase two of the Federal government’s reform of the credit industry in Australia, which commenced in 2008 with COAG initiating the NCCP Act, is now being rolled out.
The treasurer has released the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Bill 2011.
As the name suggests the bill deals with standard home loans and credit cards. One aspect it introduces is new disclosure requirements for lenders offering home loans which we discuss below.Standard Home Loan
Lenders who offer standard home loans will now be required to make disclosure of key facts.
What, then, is a standard home loan?
It is defined as a standard form of credit contract under which the credit provider provides credit to purchase or refinance residential property.
Standard Home Loan
So lenders who offer such loans will be required, from 1 September 2011, to provide a document which contains the information and complies with the requirements prescribed by the regulations. The form of the Key Facts Sheet will also be prescribed by regulation. We have not yet seen the regulations.
The document is intended to summarise key facts about a given home loan. It is envisaged, according to the explanatory memorandum, that some of those key facts will include:
- The interest rate
- The “all in rate” which is described as the total cost including interest and fees
- The total cost of the home loan
- Particular product features
- Fees, and
- How monthly repayments will be affected if interest rates increase
Website requirements
If the lender has a website that can be used by a consumer to apply for, or make enquiry about a loan, then the lender must ensure that the website is also able to generate a key facts sheet for the particular consumer. The bill prescribes what the website is required to tell the consumer about how to generate a key facts sheet.
Next steps
Home loan lenders should review their website, systems, procedures and lending documents to ensure they will be ready for the commencement of these amendments.
Donovan Oates Hannaford, Lawyers is ready to assist.
Please contact Hadyn Oriti should you require any further information.
Hadyn Oriti
March 2011
P: +61 2 6583 0449
E: horiti@dohlaw.com.au