First home buyers are clueless about buying process
An alarming 61% of first home buyers failed a basic property buying literacy quiz, compared with only 27% of owner occupiers, and a quarter of investors.
Home loan lender ME Bank tested the knowledge of 1,000 Australians who are looking to buy their first home or have already purchased an owner occupied or investment property.
But it turns out that those buying their first home were not as clued up as they would like to think, despite nearly 70% of respondents saying they feel confident about making financial decisions, and around half saying they understand the property buying process and related costs.
Director of Successful Ways, Scott Durrant said a lack of education about the buying process could be costing first time buyers thousands.
“It is 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 Scott.
According to the research, these are the biggest gaps in first home buyer knowledge:
- 88% of first home buyers don’t understand that lenders’ mortgage insurance covers lenders, not borrowers.
- 85%t of first home buyers don’t know there’s no cooling off period when buying at auction, compared to 66% of investors.
- 78% of first home buyers don’t know that you need to pay the deposit on auction day.
- 66% of first home buyers don’t know what conveyancing is) with 38% incorrectly thinking that the term refers to checking boundaries or physical issues with your property before you buy.
- 63% of first home buyers don’t know what an offset account is.
How first home buyers can be more informed
- Do your home work. Successful Ways run seminars for First Home Buyers to help people understand the entire buying process and how to get started.
- Crunch the numbers. There are online calculators to help you understand things like borrowing power and what your repayments could look like.
- Independent advice. Speak to independent experts like a mortgage broker who can answer all your unanswered questions.
“Some Aussies fail to educate themselves because they find finances boring and complex and think they know best, while others find working with numbers difficult and put their head in the sand.
“But like it or not, financial decisions including buying a property is best made on facts – a hunch or a guess could lose you thousands,” Scott said.
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