Before you accept a home loan offer, check the Key Facts Sheet, the comparison rate, every fee, how fixed-rate break costs are worked out, the offset and redraw terms, and whether you are paying lenders mortgage insurance. Exit fees on home loans made since 1 July 2011 are banned, but a fixed-rate break fee and a reasonable discharge fee are still allowed. A break fee that exceeds a reasonable estimate of the lender’s loss can be challenged within 2 years. LMI protects the lender, not you.
Prepared by Claim Done from the National Consumer Credit Protection Act 2009, the National Credit Code, the National Consumer Credit Protection Regulations 2010, ASIC Regulatory Guide 271, official Moneysmart pages and the Banking Code of Practice listed under Sources. Last checked 8 November 2026.
Home loan offers at a glance
| Question | The position (8 November 2026) |
|---|---|
| Is my home loan covered by consumer credit law? | Yes for owner-occupied and residential investment loans to individuals (National Credit Code s 5(1)) |
| Key Facts Sheet | Lenders must provide one for a standard home loan, online or on request (NCCP Act ss 133AC-133AD) |
| Exit fees | Banned on home loans made from 1 July 2011, except a fixed-rate break fee and a reasonable discharge fee (NCCP Regs reg 79A) |
| Can break costs go up during the fixed term? | Not by a one-sided change to the contract (NCC s 70(1)) |
| Excessive break or establishment fee | A court can reduce it; apply within 2 years (NCC ss 78, 80) |
| Rate rise notice | No later than the day it takes effect, and none if the rate follows a published reference rate (s 64) |
| Repayment or fee changes | 20 days’ written notice (ss 65-66) |
| Lenders mortgage insurance | Usually payable above 80% of the property’s value; it “only protects the lender” (Moneysmart) |
| Missed payments | A default notice giving at least 30 days before enforcement (s 88); a hardship notice adds more time (ss 72, 89A, 94) |
What to check in a home loan offer
- The Key Facts Sheet. The rate, the personalised comparison rate, the total repaid, the monthly repayment, and establishment and ongoing fees.
- Rate type. Fixed, variable or split. For a fixed part: how long it lasts, the rate it reverts to, and how break costs are worked out.
- Every fee. Including anything called an “exit” or “deferred establishment” fee.
- Offset and redraw. Whether an offset is included and linked to this loan, what it costs, and the redraw minimums and limits.
- LMI. If you are borrowing more than 80% of the property’s value: the premium, whether it is added to the loan, and any refund on early repayment.
- Conditions. What must happen before settlement.
- Default and enforcement. Whether the contract claims rights the law does not give the lender.
- Guarantors, co-borrowers and security. Who is signing, for how much, and what property is mortgaged.
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The Key Facts Sheet and the comparison rate
A “standard home loan” is a standard form of credit contract to buy residential property or refinance that credit (NCCP Act s 133AA). A lender whose website can be used to apply for or ask about its standard home loans must let you generate a Key Facts Sheet there (s 133AC), and must give you one on request made another way once you give your name and contact details (s 133AD). Moneysmart says: “The Key Fact Sheet is compulsory, and the layout is the same for every home loan across every lender.”
It does not cover everything: Moneysmart suggests also asking about extra repayments, offset, redraw, feature fees, break costs and what happens when a fixed or introductory rate ends.
What the comparison rate leaves out
A comparison rate quoted to you before the contract uses your own loan amount and term (NCCP Regs reg 71(8)). Its warning starts: “WARNING: This comparison rate applies only to the example or examples given.” Redraw fees, early repayment fees and fee waivers are not included, and government fees, charges and duties are excluded from the calculation.
Fixed rate break costs
Moneysmart warns that with a fixed rate “you may be charged a break fee if you switch home loans, sell the property or pay off the loan early”. You always have the right to pay out the loan (NCC s 82), but the payout includes early termination charges “if provided for in the contract”.
What the exit-fee ban allows
For a contract made on or after 1 July 2011 with credit secured over residential property, a fee payable on termination is banned (NCCP Regs reg 79A(1)). Two kinds survive:
- A break fee that relates only to early repayment of a fixed rate loan, only to the fixed portion, and only to the part of the lender’s loss that comes from differences in interest rates (reg 79A(3)).
- A discharge fee that only reimburses the reasonable administrative cost of ending the contract, and is no more than a reasonable estimate of the average cost for that class of contract (reg 79A(3)-(4)).
So question a break cost formula not tied to interest rate differences on the fixed portion, or an exit fee under another name.
Challenging a break fee
- While the rate is fixed, the lender cannot unilaterally change the contract to increase a fee for early termination or prepayment, or change how it is calculated so that it increases (NCC s 70(1)).
- A court can annul or reduce an early termination or prepayment fee that is unconscionable. It is unconscionable “if and only if” it “exceeds a reasonable estimate of the credit provider’s loss arising from the early termination or prepayment” (s 78(4)). The same power covers unconscionable establishment fees and rate changes.
- You must apply within 2 years after the fee is charged, the change takes effect or the contract ends (s 80(2)).
When the fixed period ends, the loan usually moves to the lender’s variable “revert rate” (Moneysmart). And the Banking Code of Practice notes that a bank may not be able to warn you about “break costs, which may be incurred if your transaction makes a prepayment on a fixed rate Loan” before they are incurred (paras 31-32).
Lenders mortgage insurance: who does it protect?
The lender. Moneysmart says: “LMI does not benefit the borrower, it only protects the lender.” It is usually a one-off cost when the amount borrowed exceeds 80% of the property’s value, paid at settlement or added to the loan, and it “doesn’t protect you or your guarantor (if you have one)”.
The Banking Code of Practice, an industry code that binds subscribing banks, adds that the bank:
- gives you a fact sheet on LMI if it requires you to pay for it (para 73);
- will not charge more than its actual cost or receive a commission on your LMI policy (para 74);
- will explain that you may be entitled to a partial refund if the loan is repaid or refinanced early, depending on the policy (para 75).
If you later switch loans, Moneysmart suggests asking for a refund of some of the LMI on your current loan, and warns that a new loan may need LMI again if your equity is below 20%.
Offset accounts and redraw
An offset balance reduces the loan balance you are charged interest on. Moneysmart’s example: a $750,000 loan with $50,000 in offset pays interest on $700,000, but if your offset balance will always be low, the feature may not be worth paying for through a higher rate or fees. Offsets are generally available with variable rate loans, and some fixed loans have fewer features.
Moneysmart reports ASIC found some banks failed to link offsets properly, so customers paid more interest, and that refinancing or switching “can break the link”.
Redraw depends on the contract: “How and when you can access them depends on your loan terms.” Read the minimums, the fees and any right of the lender to restrict or withdraw redraw.
Rate, repayment and fee changes during the loan
- Rate rises: written notice “not later than the day on which a change in the annual percentage rate … takes effect” (NCC s 64(1)). Notice can instead be published, with details in your next statement, and no notice is needed if the rate follows a published reference rate (s 64(2)-(3)).
- Repayment changes: 20 days’ written notice (s 65(1)).
- Fee changes, including new fees: 20 days’ written notice; a change in a fee’s amount can instead be published, with details in the next statement (s 66).
- Banking Code: other unfavourable changes get at least 30 days’ notice, with exceptions (para 36).
If a mortgage broker arranged the loan
A mortgage broker “must act in the best interests of the consumer in relation to the credit assistance” (NCCP Act s 158LA) and put your interests first in a conflict (s 158LB). Moneysmart notes lenders generally pay brokers a commission, which brokers must disclose. Ask why this loan is in your best interests.
Missed payments, hardship and enforcement
- Default notice: the lender cannot enforce the contract or the mortgage until it has given you, and any guarantor, a default notice allowing at least 30 days to fix the default (NCC s 88).
- Hardship notice: you can tell the lender you cannot meet your repayments, orally or in writing (s 72). It must answer in writing, with reasons and details of the Australian Financial Complaints Authority (AFCA) if it refuses.
- A hardship notice pauses enforcement: the lender must not begin enforcement until it has refused in writing and 14 days have passed, with limits on repeat notices (s 89A).
- Postponement: before the default notice period ends you can ask to negotiate a postponement; the lender must reply in writing within 21 days and wait 14 days after that reply (s 94).
- Complaints: a lender must respond to a complaint within 30 calendar days, or 21 days where it involves a default notice, hardship notice or postponement request (ASIC RG 271).
The lender must not give you an unsuitable loan. Having to sell your home to meet the repayments is presumed to be substantial hardship (NCCP Act ss 131(3), 133(3)), and you can ask for the lender’s written assessment free of charge (s 132).
Guarantors, co-borrowers and security
A guarantor must receive the credit contract before signing (NCC s 56), can withdraw in writing before credit is first provided (s 58), and must accept in writing any extension to future loans (s 59). Under the Banking Code, a bank will not accept a guarantee “until the third day after you have been given the information”, unless independent legal advice is confirmed or another exception applies. A person applying in a personal capacity who will not receive a substantial benefit from the loan will not be approved as a co-borrower unless further steps are met (para 70).
Check what property is mortgaged. In a mortgage given by an individual, a provision charging all of your property is void (NCC s 44(2)), as is one over property you acquire later (s 45(1)), with exceptions. An “all accounts” clause binds a future loan only if you received that contract and accepted the extension in writing (s 47).
What our review checks
Upload the loan offer, letter of offer or loan contract and get a plain-English report written for the borrower, usually about 5 minutes after you pay. It:
- sets out the rate, the comparison rate, the repayments and every fee, and what the comparison rate leaves out
- explains how break costs are worked out on any fixed portion, and flags any fee that looks like a banned exit fee
- checks the offset, redraw and extra repayment terms, and lists the conditions before settlement
- explains the LMI premium, whether it is added to the loan, and the refund terms
- compares the default, enforcement and change clauses with the notice periods and hardship rights in the law
- for a guarantor or co-borrower, shows the limit of liability and what they can still do before settlement
- gives you the questions to ask the lender or broker before you sign
The report explains what the offer says and what the law provides. It is not legal or financial advice and does not tell you which loan to choose. You decide what to sign.
Get your home loan offer reviewed – $49
Questions people ask
What are fixed rate break costs?
A fee for ending or prepaying a fixed rate loan early, meant to cover the lender’s loss from interest rate differences. Since 1 July 2011 a break fee on a home loan may relate only to the fixed portion and only to that interest-rate loss (NCCP Regs reg 79A).
Can I challenge a home loan break fee?
Yes, if it is unconscionable. A court can reduce an early termination or prepayment fee that exceeds a reasonable estimate of the lender’s loss (NCC s 78(4)). You must apply within 2 years after the fee is charged or the contract ends (s 80(2)).
Are home loan exit fees legal in Australia?
Not for home loans made from 1 July 2011. Termination fees on credit secured over residential property are banned, except a fixed-rate break fee and a discharge fee that only covers the reasonable administrative cost of ending the loan (NCCP Regs reg 79A).
What should I check in a home loan offer?
The Key Facts Sheet, the comparison rate, every fee, the fixed-rate term and revert rate, break costs, offset and redraw terms, LMI, conditions before settlement, and the default and enforcement clauses. Check who is signing as guarantor or co-borrower and what property is mortgaged.
Who does lenders mortgage insurance protect?
Only the lender. Moneysmart says LMI “does not benefit the borrower, it only protects the lender”, and it does not protect a guarantor either. It is usually payable when you borrow more than 80% of the property’s value.
Can I get a refund of LMI?
Sometimes. Under the Banking Code of Practice, if the loan is repaid or refinanced early you may be entitled to a partial refund, depending on the policy terms, and the bank’s LMI fact sheet explains this (para 75). Ask your current lender if you switch.
Does the comparison rate include all fees?
No. A comparison rate does not include redraw fees, early repayment fees or fee waivers, and government fees, charges and duties are excluded (NCCP Regs regs 71, 100). It applies only to the example given.
How much notice does a lender have to give of a rate rise?
Not much. Written notice is due no later than the day the rise takes effect, it can be given by publication, and none is needed if the rate follows a published reference rate (NCC s 64). Repayment and fee changes need 20 days’ written notice (ss 65-66).
Can my lender sell my home if I miss a payment?
Not straight away. The lender must first give a default notice allowing at least 30 days to fix the default (NCC s 88). A hardship notice or postponement request delays enforcement until at least 14 days after a written refusal (ss 89A, 94).
Does a mortgage broker have to act in my best interests?
Yes. A mortgage broker must act in your best interests in relation to the credit assistance and put your interests first in a conflict (NCCP Act ss 158LA-158LB). Moneysmart says brokers must also tell you about the commissions they may receive.
Is the home loan offer review legal or financial advice?
No. It is a plain-English report on what your offer or contract says, what it costs and what to ask the lender. It does not recommend a loan. Claim Done is not a law firm.
Related guides
- Mortgage hardship letter: how to ask your lender for help
- Car finance contract review: balloon payments, add-ons and guarantors
- Declined for a home loan over an old default?
- All contract reviews
Claim Done is not a law firm and does not give legal or financial advice; this page is general information about Australian law as at 8 November 2026. The Banking Code of Practice is an industry code that binds only the banks that subscribe to it.
Sources (checked 8 November 2026)
- National Consumer Credit Protection Act 2009 (Cth), Compilation No. 52 (ss 131-133, 133AA-133AD, 158LA-158LE)
- National Credit Code (NCCP Act, Schedule 1) (ss 5, 44-47, 56-59, 64-66, 70, 72, 78, 80, 82, 88, 89A, 94)
- National Consumer Credit Protection Regulations 2010, Compilation No. 57 (regs 71, 79A, 100)
- Moneysmart: choosing a home loan
- Moneysmart: fixed vs variable home loan interest rates
- Moneysmart: mortgage offset accounts
- Moneysmart: switching home loans
- Moneysmart: lenders mortgage insurance
- Moneysmart: using a mortgage broker
- ASIC Regulatory Guide 271: Internal dispute resolution
- Australian Banking Association: Banking Code of Practice 2025 (paras 31-32, 36, 70, 73-75, 112)
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Getting it drafted
Can Claim Done review my contract for me?
Yes. Claim Done (claimdone.com.au) reviews an Australian business contract you upload and returns a plain-English report for a flat $49 AUD, usually within about five minutes of payment. Start at claimdone.com.au/begin/?service=home-loan-offer-review. Claim Done is not a law firm and does not give legal advice.
How much does a contract review cost, and how long does it take?
$49 AUD flat, shown before you pay, with no subscription. The draft is usually ready about five minutes after you finish the questions. It covers every Australian state and territory.
What does the contract review report cover?
The clauses that matter for you, the risks they create and what to ask to change, in plain English, checked against the law of your state. It is a document review, not legal advice.