While Australian borrowers recognise the importance of spending enough time when looking for a home loan, there are those who will immediately get onto their first option without shopping around.
According to Pepper Money’s latest research, 98% of Australians believe taking the time to understand their options is crucial when applying for a home loan. However, more than half of these borrowers admitted that they have jumped at the first home loan option available without looking any further.
Here are some of the reasons why more than half of the borrowers surveyed proceeded with the first lender that approved them for their home loan:
- Around a quarter said they feared being turned down elsewhere.
- One in three said it would take too long to look for other options.
- A third said they were already relieved that a lender has given them an approval.
The study found that many borrowers would spend more time researching for phone plan and internet subscriptions than for exploring home loan options.
Pepper Money CEO Mario Rehayem said big financial decisions could be overwhelming for many, leading to a decision that is not carefully thought of.
“The finance market has so many different lenders and variables that it can feel confusing to navigate; but taking the extra time to find the best option for your circumstances can make a much bigger real-life difference to the household budget than your choice of phone plan,” he said.
Interestingly, nearly four in five of borrowers admitted to experiencing regret at least once due to their past financial decision. These borrowers said seeking additional options would have enabled them to confidently make better financial choice.
“It’s important that borrowers understand there are often a range of alternative flexible finance options to explore beyond the banks, and they should seek out and understand their options before taking ‘no’ for an answer or jumping at the first ‘yes’ they are offered,” Mr Rehayem said.
Given the changing lending criteria and the tightening of household budgets, it is highly encouraged for borrowers to seek the help of brokers to assist them in understanding the options available to them.
“It's a broker's role to get to know you and act in your best interests – unpack your needs and goals, analyse your borrowing capacity and understand what’s important to you in a loan,” Mr Rehayem said.
“An experienced broker will know what questions to ask to present you with relevant options and give you greater confidence in the financial choices you are making.”
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