When it comes to home loan knowledge, there are sizeable gaps in consumer awareness. In fact, according to CoreLogic’s Housing Affordability survey, most Australian’s worry about the size of a deposit required to buy property. But, some 58% of Australians are unaware lenders will finance more than 80% of a home loan. Based on these facts, let’s look at what you could be missing.
The latest Housing Affordability survey conducted by CoreLogic suggests that:
- 58% of Australians don’t know lender’s loan over 80% of a property’s value.
- Only 50% surveyed knew about stamp duty concessions for first home buyers.
- 29% knew that limits applied to investor lending.
- Some 35% of non-homeowners thought they could afford a home deposit of at least 9%.
Therefore, CoreLogic suggests that a sizeable portion of these non-homeowners could afford to buy a home. Nonetheless, by not knowing more about the market, they felt reluctant to pursue it any further.
A lack of awareness, according to philosophers, plays a vital role in how we better ourselves. Aristotle said we are what we repeatedly do. This principle also applies to home buying. If you believe you can’t afford a home, then you won’t push yourself to achieve your goal. So, what is this lack of lending awareness costing you?
- Home ownership – If you’re renting, then you’re paying someone else’s mortgage. Thus, you’re effectively paying off their house and increasing their assets, not your own.
- Higher dwelling prices – The longer you wait to buy a home, the higher home prices become. Sure, home prices rise and fall with the market. However, over decades homes increase in value.
- Increasing your equity – A property typically increases in value as it ages. Plus, you’ll reduce your mortgage over time. Therefore, as the year’s pass, your net worth will increase.
According to CoreLogic a lack of awareness meant that a lot of Australians were missing stamp duty concessions. These concessions help to reduce home buying costs. For instance, from July 1st new legislation abolished stamp duty for first home buyers purchasing a property below $600,000 in Victoria. New South Wales introduced a similar scheme for property valued under $500,000, while Queensland’s threshold is $550,000.
Sharpening your knowledge is as simple as talking to industry specialists – a broker or lender can explain your entitlements. Plus, they can explain any terms and conditions. It’s also a clever idea to do your independent research. You can do this by simply typing keywords into a search engine and then going through the results.
- Contact a broker or lender – If you’re not sure of what you’re entitled to, then contact a professional. By setting up an appointment, you can discuss your needs, and the broker or lender can assess what you can afford to borrow. At this time, they’ll discuss your options and define costs and savings requirements. This service is free. Also, you’re not bound to take out a loan.
- Using the internet for research – These days the internet is an excellent resource of information. Of course, this is providing that you visit reputable sites. Some of the best for mortgage information include the big banks, and other lenders, as well as your state government. These sites show you how much you can borrow, what your costs are and where you can save.