By Eleanore D. Sanchez
Most home buyers are not aware what a home loan “comparison rate” is, making them miss out on the best loans, a recent report said.
The National Mortgage Survey, commissioned by member-owned financial services provider CUA, found that 29% of Australians had low levels of financial literacy.
The government requires lenders to disclose the comparison rate so that prospective home buyers can shop around for the best deals by seeing what the actual cost of their loan will be, including additional fees, rather than just the interest rate percentage.
According to CUA chief operating officer for member services Andy Rigg, comparison rates help homebuyers choose the rate most suitable to their needs by giving them a glimpse of the computations of fees and charges behind the published loan rate.
Rigg emphasized that lenders are increasingly responsible for helping raise the level of financial literacy among the general public.
“We have a duty to make sure borrowers understand the tools they have at their disposal to find a home loan that best suits their situation,” he said.
Despite historically low interest rates though, the survey suggests that 33% of non-mortgage holders do not think they can afford to buy property, while nearly 40% say they fear they will be priced out of the market because of the steady rise in property prices.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan