Equity, refinancing, offset account, bridging loans — these are some of the home-financing terms Australian borrowers have limited knowledge about, a recent Westpac poll showed.
According to the survey, nearly half of Aussies do not understand how an offset account works and what home equity means. Furthermore, roughly two in five Australians do not grasp the meaning of refinancing loans and how it can help reduce their financial burden.
"It’s surprising to see the number of Australians who aren’t familiar with key home loan concepts," Westpac general manager of homeownership Will Ranken told The Daily Telegraph.
He said this situation could mean that some home seekers are taking the plunge without enough knowledge of the market.
Aussies are also oblivious to the auction process, the survey found. In fact, over half of the poll's respondents said they would opt to go for a private purchase because auctions “scare” them.
"Auctions can be daunting, but again, by doing their homework and being well-prepared, home buyers can feel confident to make the most of current opportunities," Ranken said.
Despite the shortcomings amongst Australian borrowers, the survey also found that eight in 10 of those who are planning to buy have already made efforts to educate themselves about home financing and how the market works.