Once you sign on the dotted line you have certain obligations to the lender for the money you have borrowed, and you also have rights as their customer. Understanding your obligations and rights can help you manage your mortgage better.

Borrower’s rights:

• In New South Wales, a mortgage broker must provide a Finance Broker Contract before they can approach lenders on your behalf. (It is expected that the other states will soon adopt the NSW system.)

• The lender must provide a credit contract, which sets out the terms and conditions of the loan in clear terms – especially the financial information. This is referred to as a Letter of Offer.

• The lender must advise clients and potential clients, either directly or via a newspaper advertisement, of any interest rate increases before they come into effect. This does not apply to a reduction in rates.

• The lender must advise of any repayment increases, at least 20 days prior to the change. This must be in writing directly to the borrower or their representative. This does not apply to a reduction in repayments.

• A loan statement must be provided to the borrower at least every six months.

• The borrower can dispute statements, and if necessary use a tribunal to have unjust transactions varied or cancelled.

• The borrower can pay out the entire loan early at any time (fees and charges may apply to some loans if you do this).

• The borrower can terminate a credit contract before drawing down.

• The borrower may have the repayment date extended in financially hard times.

• The lender must provide a payout figure within seven days of written request.

Borrower’s obligations:

• Be truthful and factual in all details provided in the loan application.
• Make all the repayments by the due date.
• Keep the property in good repair and not undertake any major alterations without the lender’s consent.
• Insure the property for its full value, and not do anything to void the policy.
• Do not sell, lease or mortgage the property without lender’s consent.