Financial institutions who provide housing loans will now be required to provide a loan fact sheet to the person taking the loan.
The objective of the fact sheet is to help potential borrowers see the basic information of the loan in an easy to read format.
Borrowers will also be given projections of the loan repayment amounts if the interest rate changes. This is a good thing as some people might not be aware that the monthly loan repayment amount can change drastically if there is a big change in interest rates. Hopefully, it can encourage prudence among property buyers.
The sheet will also include notes such as the seller stamp duties that will be incurred if the buyer of the property sells it early.
In addition, fact sheets will have to be updated and provided to the buyer whenever there are changes to the loan’s key features.
The requirement to provide fact sheets will only apply to individual and not corporate borrowers.
For high net worth individuals or private banking clients, financial institutions will still need to give them the fact sheet if it is a standard mortgage loan. However, if the loan has a non-standard customised structures, where it is difficult to illustrate the residential property loan terms on a standalone basis in the Fact Sheet format, the FI will not be required to provide the Fact Sheet to these people.