Lenders must disclose key home loan facts
On January 1, 2012, the federal government put valuable information in the hands of home buyers when it rolled out key home loan facts sheet legislation. Under banking reform, it is now compulsory for a lending institution to provide borrowers with a key home loans facts sheet, but only on request.
The key home loan facts sheet legislation aims to make it simpler for borrowers to compare similar products before they apply for a home loan. This is the best news for Australian borrowers who can avoid a financial disaster by being thoroughly prepared and informed when making their big decision.
The facts sheets must be a standardised document regardless of the home loan type or lender. This makes it easier to compare various loan products against the same set facts to help identify what each one is actually offering and locate the best one for you. It's particularly useful for first home buyers to compare loans side by side and give them extra bargaining power.
Within key home loan facts sheets, important information is highlighted, such as a product's headline and comparison interest rates, fees and charges, and the total financial cost over the life of the loan. It's not an offer for credit; the potential borrower will still need to apply for the loan and meet a lender's criteria.
When it comes to home loans, borrowers will almost always be better off comparing home loan products before signing on the dotted line with one lender. By comparing several mortgages and using these key home loan facts sheets, a borrower is more likely to end up with a home loan that suits their circumstances. One reason for this is to find a suitably affordable interest rate. For instance, by going with a home loan with a rate of 6.35 percent, rather than say a rate of 7.30 percent, a borrower with a $400,000 home loan could potentially be about $240 better off each month, saving themselves more than $72,000 over 25 years!
So before you sign up for a loan, make sure you shop around and ask for a key home loans fact sheet to make it easier to get the best loan for your needs. Use the RateCity home loan repayment calculator to work out your mortgage repayments. And also remember to always read the product disclosure statement before signing up to any financial product.