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Factsheets to help borrowers
Released 5 January 2012



Lenders must now provide a home loan factsheet on request under the Federal Government's new banking reform legislation introduced on 1 January 2012.     

Damian Smith, CEO of financial comparison website RateCity, said home loan factsheets will make it easier for borrowers to compare apples with apples before they apply for a home loan.

"Anything that simplifies the lending process and encourages greater transparency in the home loans market is a good thing for competition.

"The factsheets will be standardised so lenders will be required to provide borrowers with information in the same way, making the comparison process easier. This will help first-time borrowers in particular compare loans side by side, and give them just a little more bargaining power – which is a good thing," he said.

Important information will be highlighted within the factsheet, such as the headline and comparison interest rate, fees and charges, the total financial cost over the life of the loan and information about the impact of rate changes.

"You’re always going to be better off by comparing a few different loan offers, and using these factsheets plus financial comparison websites such as ratecity.com.au, will give more borrowers the chance to get the right loan and shave a bit more off their costs,” he said.

Borrowers stand to save tens of thousands of dollars over the life of a home loan if they compare home loans and opt for the best available for their circumstances, said Smith.
 
"Moving from the average of the major bank's standard variable rate of 7.30 percent to one of the cheapest comparison rates available on the market, at just 6.35 percent, a borrower with a $400,000 home loan could potentially save around $240 in monthly repayments and more than $72,000 over 25 years," he said.