New provisions on home loan agreements

New provisions on home loan agreements will come into force today, the Consumer and Competition Division said.

The regulations will protect consumers signing agreements up to Lm80,000.

According to the regulations, the creditor is obliged to provide the consumer with detailed information, including his (the creditor's) name and address, the form of guarantee needed, the type of interest rate, related costs as well as whether property valuation is needed and information about early repayment.

The regulations introduce a method for calculating and disclosing the total cost of the credit as a percentage per annum. This method has to be included in home loan agreements and must feature in advertising and promotional material that stipulates a rate of interest or another numerical figure related to the cost of credit.

The regulations prevent credit providers from imposing unreasonable penalties for early repayment. If this happens, the consumer will be entitled to a proportional reduction in the total cost of the credit.

"An infringement of these regulations constitutes an offence and specific penalties apply. The regulations make it clear that the rights granted to consumers may under no circumstances be surrendered," the division said.

The consumer affairs director will monitor the regulations and has the power to investigate complaints and provide information and advice to consumers and lenders.

More information can be obtained by calling 2144 6250/5.