Australians don’t know home loan jargon
A new survey has revealed how little Australians understand home loans.
Research by Gateway Credit Union has found Australians’ understanding of their own home loans and the associated terminology has worsened over the last two years.
The mutual bank’s Mortgage Holder Sentiment Report 2017 found that 20% of Australians are unsure whether or not their current home loan offers a redraw facility. 28% said they were uncertain whether their current home loan offered an offset account, and an alarming 47% said they were unsure if their current home loan offered splits.
“A home loan is a significant financial commitment and it seems many people are entering into it blindly and under-utilising their loan facilities, and potentially missing out on saving thousands in interest over the life of their loan,” Gateway chief customer officer Lexi Airey said.
Airey said 43% of borrowers had no idea how many offset accounts could be linked to their current home loan.
“If borrowers are unaware that they have these options available at their disposal they could have funds sitting idle instead of serving the dual purpose of a savings buffer and helping to reduce the life of a home loan.”
The survey also found that many Australians are unfamiliar with the terminology surrounding home loan features. According to the survey, 14% said they do not understand the term “redraw facility”, 18% said they did not understand the term “offset account” and 40% said they did not understand the term “split home loan”.
“In the current environment – when we hold high levels of household debt, have easy access to credit and property prices across the nation are elevated – it’s never been more important to have strong financial capability. Many Australians aspire to home ownership and invest significant amounts of time in making this dream a reality so it’s only fitting that we should be doing the most when it comes to educating ourselves on the financial aspect,” Airey said.