Special consumer credit provisions for mortgages

The National Credit Code (NCC) contains special consumer credit provisions relating to mortgages. It is a strict liability offence for a credit provider to enter into a guarantee or a mortgage that contravenes these provisions.

In addition to the criminal penalty, the offending mortgage provision may be either void or unenforceable, depending on the NCC section breached.

Sections 41 to 53 of the NCC provide special requirements and obligations in respect of mortgages which secure obligations under NCC regulated contracts or related guarantees.

Specifically, there are special provisions relating to:

• • mortgages that the NCC applies to and exemptions from the provisions of the NCC;
• • the form of mortgage and content;
• • restrictions on the property which can be the subject of an NCC regulated mortgage;
• • provision of certain documents to the mortgagor by the credit provider;
• • restrictions and requirements for certain types of mortgages;
• • the maximum amount which may be secured; and
• • assignment or disposal of mortgaged property.

For more information, see Special consumer credit provisions for mortgages.

Special consumer credit provisions for reverse mortgages

There are specific obligations and requirements under the NCCPA and NCC that regulate reverse mortgages. These are in addition to the obligations and requirements set out for all regulated credit contracts and mortgages generally.

Specifically, there are special provisions relating to:

• • pre-contract disclosure obligations and representations regarding the credit contract and reverse mortgage;
• • additional responsible lending obligations for credit providers and credit assistance providers;
• • requiring a debtor to obtain independent legal advice about the credit contract and reverse mortgage;
• • negative equity protections and tenancy protection provisions in reverse mortgage credit contracts;
• • enforcements rights that must not be included in the credit contract; and
• • preventing the credit provider from prohibiting early payment of reverse mortgage credit contract in certain circumstances.

For more information, see Special consumer credit provisions for reverse mortgages.

Special consumer credit provisions for guarantees

The National Credit Code (NCC) contains special consumer credit provisions relating to guarantees. It is a strict liability offence for a credit provider to enter into a guarantee that contravenes these provisions.

In addition to the criminal penalty, the offending guarantee provision may be either void or unenforceable, depending on the NCC section breached.

Sections 54 to 62 of the NCC provide special requirements and obligations in respect of guarantees which secure obligations under NCC regulated contracts.

Specifically, there are special provisions relating to:

• • the form of the guarantee;
• • disclosures which must be provided to the prospective guarantor prior to signing the guarantee;
• • provision of certain documents to the guarantor by the credit provider;
• • circumstances where a guarantor may withdraw from a guarantee, or limit the application of the guarantee;
• • limitations on the liability of guarantors; and
• • special provisions for guaranteeing certain credit contracts.

For more information, see Special consumer credit provisions for guarantees.