Banks must provide Borrowers with Mortgage Fact Sheets

 Home buyers will need to do more active checking before signing off on their loans, with the Monetary Authority of Singapore (MAS) now requiring banks to provide prospective borrowers with a fact sheet during credit facility discussions.

The fact sheet aims to help potential borrowers get the basic information regarding mortgages, such as the repayment schedule and loan quantum.

The sheet will include notes informing the borrower that the bank reserves the right to charge for extra payments if the value of the property drops. Customers will also be informed that monthly repayments could rise if interest rates climb.

For example, the monthly repayment on a 20-year, S$1 million mortgage may rise by around S$1,500 if the interest rate edges up from two to five percent.

Banks are also mandated to provide fact sheets whenever there are changes to the proposed facility’s key features. This can be in printed, written or any electronic form, with the bank keeping a copy of it.

Moreover, the bank is required to obtain a written self-declaration from the borrower, which states that he has received the fact sheet prior to signing the mortgage agreement.

Consultants feel that the latest safeguards will also protect the interests of banks.

Meanwhile, Lui Su Kian, Head of Deposits and Secured Lending at DBS Bank, said that “mortgages are a long-term commitment... and customers should be aware of how the loan type will fit into their lifestyle and how interest rates are determined, as this will have a direct impact on their monthly budget.”