You wouldn’t buy a car without first giving it a test drive, so why would you make the biggest financial decision of your life without arming yourself with as much information as possible?
Almost half of next home buyers do not fully understand major components of home loans, according to Westpac’s latest Home Ownership Report.
The report, which surveyed over 1,000 Australian home owners, identified education gaps amongst next home buyers, including:
- Over half (56 per cent) of next home buyers are too scared to purchase at an auction;
- Almost half (49 per cent) did not know exactly what equity is;
- Almost half (48 per cent) did not know exactly what an offset account is; and
- 41 per cent did not know exactly what refinancing is.
However, 84 per cent of next home buyers are taking steps to better educate themselves on home financing.
If you are considering taking out your first or next property, it is crucial that you arm yourself with as much knowledge as you can. This will ensure that you get the most competitive home loan for your financial needs and budget.
How to learn more about home loans
- Home loan guides
There are a few key aspects of a home loan that you should nail down before you sign on the dotted line.
These include what type of buyer you are, what type of rate you want, what fees and hidden costs are involved, what loan features you may or may not want and how much you should borrow.
RateCity’s home loan guide provides a comprehensive break down of these crucial questions so you can find the answer you need and choose the most competitive home loan for your financial situation.
- Explainer videos
If the thought of diving deep into a home loan guide makes you go a bit cross-eyed, home loan explainer videos may be more your vibe.
There is an abundance of these types of videos on YouTube, even from our own RateCity expert team. Just make sure you’re watching an Australian video, as different countries will have different rules and structures.
- Follow some financial experts
There’s a reason Scott Pape’s ‘The Barefoot Investor’ has been sold over 1.5 million copies and is a #1 best seller in Australia.
For years Aussies have been turning to financial experts who can break down even the most complicated of concepts into plain English or simple to follow steps.
If you want to deepen your knowledge of home loans and the property market, it pays to hear what the experts have to say.
Here are 10 experts you need to follow on Twitter:
Where to find them
Financial guru and author of ‘The Barefoot Investor’.
Financial commentator and author of 20 bestselling books.
Financial commentator and literacy campaigner. Author of ‘A Real Girl’s Guide to Money’.
National personal finance writer for NewsCorp
Channel Nine finance editor
Finance and business editor at Channel 7.
Head of research for CoreLogic & king of property graphs.
Senior research analyst and property analyst for Domain.com.au
Personal finance writer for Sydney Morning Herald and The Age
Senior reporter for AFR with a focus on real estate.
- Use comparison tools
If the Banking Royal Commission has taught Aussies anything, it’s that loyalty is dead.
Just because you’ve been with the same bank since you were a child, doesn’t necessarily mean they’ll give you the most competitive home loan across the market with a low interest rate, no fees and all the features you could ever dream of.
The most effective way to find the right type of home loan for you is to utilise comparison tools such as comparison tables and calculators.
Comparison tables allow you to search, filter and compare home loan products from across the market that suit your specific needs, such as which loan may suit you if you only have a 5 per cent deposit, or which loans have an offset account.
Home loan calculators are a great resource to understand just how much you can afford to borrow without blowing your budget. You can enter in your own details (how much you’d like to borrow, the repayment frequency etc.) to get a good estimate of what your repayments may look like.
To avoid mortgage stress, financial experts recommend not paying more than 30 per cent of your pre-tax income towards your home loan.