84% of non-homeowners admit they don't know enough about home loans

author-avatar By on May 27, 2021
84% of non-homeowners admit they don't know enough about home loans

Most Australians dream of owning a home, but the vast majority of those yet to buy admit to not understanding how financial products like home loans work.

UBank's bi-annual Know Your Numbers survey found the majority of non-homeowners (84%) said they need to know more about financial products such as home loans, interest rates and deposits.

The survey of over 1,000 Australians found just over half (51%) of those surveyed admitted to having little to no knowledge about loan-to-value ratios (LVR) or knowing what the term even means (40%).

That number rose to seven in ten (70%) of Gen Z who said they have 'little to no knowledge' about LVRs, more than Baby Boomers (55%) Millennials (46%) and Gen X (42%).

Other financial terms Australians admit to having little to no understanding of include Lenders Mortgage Insurance (41%), offset accounts (38%), and negative gearing (37%). 

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner-occupiers. 

UBank CEO Philippa Watson said while there is a clear knowledge gap, the pandemic has encouraged many Australians to become more financially literate.

“Many customers come to us in search of ways to simplify their finances, particularly after the events of the past year,” said Ms Watson.

“One of the ways we can help them is to debunk the very common misconception that finance has to be complicated, because we truly believe every Australian should have the ability to understand and manage their finances.”

On the other hand, three in ten (31%) of Australians say they know a lot about refinancing, with 12% saying they have a 'perfect understanding'.

Additionally, one in four (24%) say they know a lot about comparison rates, while one in ten (10%) have a perfect understanding. 

“We know the appetite for home ownership is continuing to grow, with 56% of Aussies excited about the prospect of owning a home, up 13% since July last year," Ms Watson said.

“But knowledge is key and entering the property market with little to no knowledge of some essential financial terms and concepts could see Australians falling into common traps or getting themselves into situations they cannot manage."

Perhaps unsurprisingly, Baby Boomers are significantly more likely to understand how negative gearing works, with 34% saying they know a lot about it, compared with 25% of Gen X, 18% of Millennials, and 9% of Gen Z.

Photo by Daniel Gonzalez on Unsplash


The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.


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