A poor understanding of finance maybe costing homebuyers as they fail to spot hidden fees and charges on their home loans accoding to a survey commissioned by financial services provider CUA.
More than 1,000 Australians aged from 25-49 were surveyed in the CUA National Mortgage Survey during July, with half of the survey respondents currently holding a mortgage.
The survey revealed that 43 per cent of people misunderstood what was meant by a comparison rate and a further 28 percent admitted they didn’t know what was meant by a comparison rate.
It also found 33 percent of non-mortgage holders did not think they could ever afford to buy a property and 39 percent of respondents feared they would be priced out of the market unless property prices stay the same or decrease.
Andy Rigg, CUA chief operating officer, member services, said property buyers need to be careful that what looks like a very low rate doesn’t actually have lots of nasty hidden fees and charges.
“Comparison rates are useful in helping property owners choose the most suitable rate for existing and new home owners by looking behind the headline interest rate to also factor in fees and charges,” he said.
“It is a concern that fewer than one in three Australians (29 percent) understood what was meant by a home loan “comparison rate”. Lenders are required to disclose the comparison rate so home owners can compare lenders on an even playing field by seeing what the actual cost of their loan will be, including fees, rather than just the annual percentage rate.