0 Before you begin
A home loan, from asking to paying off, in six steps.
Easy Home Loans is a guide to the life of an Australian home loan, written and published by Dotto: what a lender may ask, what it must check, the papers it must hand over, what happens on settlement day, and how a mortgage comes off the title at the end. Each booklet below is one step, drawn from the law and the regulators’ own pages.
The instructions
Six booklets, in the order a loan happens
- 1The Key Facts SheetThe standard one-loan summary, box by box, and how to get one.
- 2What a lender asks forThe information and papers the regulator’s guidance describes.
- 3Responsible lending checksWhat the law makes a lender inquire, verify and assess before it lends.
- 4Lenders mortgage insuranceWhat it is, when it comes up, and who it protects, with a worked example.
- 5Settlement dayWhat happens to the loan and the mortgage when the property changes hands.
- 6Refinancing and dischargeSwitching lenders, paying a loan out, and clearing the title.
Check the contents
The papers a home loan hands you, part by part
Some parts arrive before anything is signed, some on request, and one only at the very end. The letters are ours; the duties behind them come from the National Consumer Credit Protection Act 2009 and the National Credit Code that forms its Schedule 1.
- A
Key Facts Sheet
A standard summary of one home loan, worked out for the amount and term you give. A lender asked for one, and given your name and contact details, must provide it. Booklet 1
- B
The lender’s assessment
A written copy of the lender’s assessment that the loan is not unsuitable, free, if you ask for it. Booklet 3
- C
Precontractual statement
The contract’s key terms, given before the contract is entered into or before you offer to enter it, whichever comes first.
- D
Information statement
A prescribed form headed “Things you should know about your proposed credit contract”. It must also be given before the contract is entered into.
- E
Contract document
Must set out the amount of credit, the annual percentage rate, the repayments, the credit fees and charges, and any mortgage with a description of the property.
- F
Mortgage
If it is a separate document, a copy within 14 days after the mortgage is entered into, unless you were already given one to keep. Booklet 5
- G
Pay-out figure statement
The amount needed to pay the loan out on a date you name, within 7 days of a written request.
- H
Discharge of mortgage
In Western Australia, a mortgage stays on the title until a discharge document is lodged with Landgate; banks do not discharge it automatically. Booklet 6
Read before assembly
The instructions printed on the contract itself
Flat-pack furniture comes with a line telling you to read everything first. A consumer credit contract comes with one too, set by regulation: Form 6 (or Form 7), “Disclosure about credit contracts”, a block of warnings headed “IMPORTANT” and “BEFORE YOU SIGN”. Some of its lines, as the regulation words them:
“READ THIS CONTRACT DOCUMENT so that you know exactly what contract you are entering into and what you will have to do under the contract.”
“Fill in or cross out any blank spaces.” “Get a copy of this contract document.”
“Do not sign this contract document if there is anything you do not understand.”
The same forms also say “if this contract document says so, you must take out insurance over any mortgaged property that is used as security, such as a house or car”, and that the credit provider cannot insist on any particular insurance company.
Spare parts