What are they?
From 1 January 2012, the consumer credit legislation governing
disclosure on new home loans comes into effect. Amendments to the
National Consumer Credit Protection Act 2009 will require
all lenders who offer standard home loans to provide Home Loan Key
Facts Sheets to consumers on request.
The legislation introduces a standardised layout that all
lenders must adhere to when preparing a Key Facts Sheet and also
stipulates the content that must be included.
The intention of the legislation is to make it easier for
consumers to compare and select a home loan by requiring all
lenders to produce and present the Key Facts Sheet in the same
form.
What home loans require Key Facts Sheets?
The new reforms are in relation to Standard Home Loans which are
loans for the purchase of residential property or loans to
refinance existing credit that has been provided wholly or
predominantly to purchase residential property.
The legislation covers variable and fixed rate home loans.
Interest only loans and split loans are not covered. Split loans
enable consumers to split a loan between fixed and variable
interest rates.
What information must they contain?
All Home Loan Key Facts Sheets must contain certain information,
including:
- the total amount to be paid back over the life of the loan
(including the loan amount, interest and fees);
- whether any establishment fee or ongoing fees are payable;
- what the repayments would be for each month and each year;
and
- a personalised comparison rate (interest rate including
fees).
Key Facts Sheets must be A4 in size. The regulations also
stipulate the colours to be used for all text, headings and
backgrounds.
When must one be provided?
While the requirements relating to the form and content of a Key
Facts Sheet are strictly regulated, lenders are only required to
give a Key Facts Sheet to consumers on request.
Importantly, if the lender has a website that enables a consumer
to apply for or make an inquiry about a standard home loan online,
the lender must also ensure that consumers can access a Key Facts
Sheet from their website.
To view a sample Key Facts Sheet, please click one of the
following links:
Variable Home Loan sample
Fixed Home Loan sample
Authored by: Sally Christou, Cornwall
Stodart