Invest
Can you pass this basic financial literacy test?
More than six in 10 first home buyers are failing basic property buying literacy tests, compared with 25 per cent of investors. Do you pass the test?
Can you pass this basic financial literacy test?
More than six in 10 first home buyers are failing basic property buying literacy tests, compared with 25 per cent of investors. Do you pass the test?
According to a survey carried out by lender ME Bank, 61 per cent of first home buyers are “clueless” when it comes to purchasing property. In comparison, only 27 per cent of owner-occupiers and 25 per cent of investors failed the test.
“Financial literacy is a valuable asset and one of the biggest money savers over time, especially when it comes to buying what is likely to be the biggest investment of your life,” ME Bank head of home loans Patrick Nolan said.
“Some Aussies fail to educate themselves because they find finances dull and complex and think they know best, while others find working with numbers difficult and put their head in the sand.”
These were the top five buyer blind spots:
1. Who does lenders’ mortgage insurance cover?
2. Is there a cooling off period when buying at auction?
3. When do you pay the deposit if you’re buying at auction?
4. What is an offset account?
5. What is conveyancing?
According to ME, 88 per cent of first home buyers don’t understand that lenders’ mortgage insurance covers the lender, not the borrower.
Likewise, 85 per cent of first home buyers aren’t aware that there’s no cooling off period when buying at auction. However, 66 per cent of investors are aware.
Seventy-eight per cent of first home buyers don’t know that the deposit is due on auction day and 63 per cent don’t know what an offset account is.
Two-thirds of first home buyers don’t know what conveyancing is and 38 per cent of this group think it refers to checking physical issues and problems within the property.
“It’s difficult enough for those trying to get their foot in the door to save up a deposit and decide where to buy. A lack of necessary property buying knowledge is sure to increase the risk of young Aussies being caught out with unexpected costs, adding to the existing stress,” said Mr Nolan.
However, investors and home owners are also being tripped up.
Two-thirds of owner-occupiers and 65 per cent of investors aren’t certain of the key things that contribute to the amount of interested paid on a loan, while 54 per cent of investors also don’t know that the deposit needs to be paid on auction day.
“They could be seriously caught out if they win a bid and don’t have the money ready,” ME warned.
Across the board, nearly all buyers (90 per cent) understand that stamp duty is paid by the buyer and not the vendor, while 71 per cent understand that equity means the difference between the property’s market value and the amount owed to the bank.
Additionally, 69 per cent of all borrowers know borrowers pay less interest on a 10-year loan than a 30-year loan and 62 per cent know that banks consider a variety of factors when deciding how much to loan.
Read more of financial literacy here.
Property
Property price growth slows in July, but will this downward trend last?
Despite the impacts of lockdowns on the broader economy, the housing market continued to grow in July, albeit showing signs of an impending slow down, new data has revealed. ...Read more
Property
Millennials believe first home buyers need more support
Australia’s up-and-comers in the housing market say more needs to be done to slow rising house prices. ...Read more
Property
3 in 4 borrowers in trouble are in lockdown: ANZ
Despite offering support, ANZ said freezing home loan repayments will be the last resort, as three in four requests for support stem from NSW. ...Read more
Property
RBA gives APRA’s use of macro tools a tick of approval
Ahead of an expected move to impose tougher lending rules on the banks, the Reserve Bank has looked into previous attempts by APRA to cool the housing market. ...Read more
Property
Federal incentives are driving more first home buyers into the market
While property prices continue to grow, new research suggests that the government’s current crop of first home buyer incentives is having an impact on this segment of the market. ...Read more
Property
Why it now costs 130% more to service a mortgage than 3 decades ago
The lifetime cost of owning a home has increased by over 130 per cent in just three decades, new research has revealed. ...Read more
Property
Using the 30/30/3 rule for home buying during uncertain times
Thinking of buying a home? Uncertain economic times may have you double guessing your purchase, but the 30/30/3 rule can help you make this a reality. ...Read more
Property
Rental yields reach decade high, but not all markets move at the same pace
Changing consumer preferences towards lifestyle destinations and a lack of supply have led to record national price growth, albeit price fluctuations vary region-to-region, fresh figures show. ...Read more
The Olympic effect on property and equity investors; COVID-19 Disaster Payments and super
Listen now
Do lockdowns boost property prices? Are short-sellers levelling the playing field? Did you lodge your tax returns early?
Listen now
Will lockdowns halt the housing boom? Is the metaverse taking over? And the cons of lodging your tax returns early
Listen now
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Property
Property price growth slows in July, but will this downward trend last?
Despite the impacts of lockdowns on the broader economy, the housing market continued to grow in July, albeit showing signs of an impending slow down, new data has revealed. ...Read more
Property
Millennials believe first home buyers need more support
Australia’s up-and-comers in the housing market say more needs to be done to slow rising house prices. ...Read more
Property
3 in 4 borrowers in trouble are in lockdown: ANZ
Despite offering support, ANZ said freezing home loan repayments will be the last resort, as three in four requests for support stem from NSW. ...Read more
Property
RBA gives APRA’s use of macro tools a tick of approval
Ahead of an expected move to impose tougher lending rules on the banks, the Reserve Bank has looked into previous attempts by APRA to cool the housing market. ...Read more
Property
Federal incentives are driving more first home buyers into the market
While property prices continue to grow, new research suggests that the government’s current crop of first home buyer incentives is having an impact on this segment of the market. ...Read more
Property
Why it now costs 130% more to service a mortgage than 3 decades ago
The lifetime cost of owning a home has increased by over 130 per cent in just three decades, new research has revealed. ...Read more
Property
Using the 30/30/3 rule for home buying during uncertain times
Thinking of buying a home? Uncertain economic times may have you double guessing your purchase, but the 30/30/3 rule can help you make this a reality. ...Read more
Property
Rental yields reach decade high, but not all markets move at the same pace
Changing consumer preferences towards lifestyle destinations and a lack of supply have led to record national price growth, albeit price fluctuations vary region-to-region, fresh figures show. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
