The National Consumer Credit Protection Amendment Regulation 2012 (No. 1) have amended the Home Loan Key Facts Sheet (Background). Home loan providers have until 1 October 2012 to modify their systems to change the form.
The changes include:
1. there is a colour change to the boxes headed ‘Estimated cost of this home loan’ and the row “This means you will pay back” in a home loan Key Facts Sheet. This highlights to consumers the amount that they have to pay back on the home loan for every dollar borrowed.
2. the interest rate description in the box entitled “Description of this home loan” in a home loan Key Facts Sheet is amended to allow the producer of the home loan Key Facts Sheet to account for loans that may transition to a fixed, variable or a discount interest rate at the conclusion of the initial interest rate period. This means home loan providers will be required to describe future changes to the interest rate during the life of the contract more accurately.
3. note 16A for the term ‘valuation fees’ in the box located under the “Estimated cost of this home loan” table has been inserted. The note instructs the home loan provider to omit the phrase ‘valuation fees’ where it is not relevant to a particular home loan. These include circumstances where:
• a credit provider charges a valuation fee in all cases; and
• the amount of the valuation fee is included in the amount for establishment fees mentioned in the Key Facts Sheet.
4. a change has been made to the box entitled “What happens at the end of the fixed rate period?”. It introduces an additional paragraph that informs the consumer that when the fixed rate period ends, the rate will convert to a variable interest rate and tells them how much their current monthly repayment would change if interest rates do not change.
5. a new note 18 has been inserted referring to a paragraph in the box entitled “What happens if interest rates increase?”. The revised note allows the home loan provider to omit the paragraph if the information is not relevant or applicable to that type of loan, for example if the interest rate will be fixed for the entire term, or if the loan is a variable rate loan for which a fixed interest rate component is not available at the conclusion of the initial fixed rate period.
