Help wanted: First home buyers wrestle with complex options

Across all stages of home buying, applying for a home loan is the leading area where first home buyers say they wish they had more help.

December 28, 2020

  • One in two (49%) first home buyers say choosing a home loan is the number one area of the buying process where they need support
  • Seven out of ten (71%) first home buyers want more support when it comes to making decisions around financing a property purchase.
  • Among these first home buyers who need more support, 39% would like someone to guide them through the loan process, 26% need someone to develop their knowledge and confidence.

The latest research by leading mortgage broker Mortgage Choice, confirms that taking out a home loan is a process shrouded in mystery for many first home buyers, and 71% would like more help choosing a loan.

An independent survey conducted by global market research consultancy, CoreData on behalf of Mortgage Choice, found that across all the stages of a buying a home, applying for a loan is the aspect where first home buyers (49%) are most likely to need the support of others.

Lack of confidence holds first home buyers back
One in two (57%) first home buyers report being ‘highly’ or ‘reasonably’ confident that they understand the home loan features best suited to their needs, however one in three (32%) have ‘minimal’ confidence.

Over one in ten (11%) have no confidence at all in their ability to distinguish which home loan is right for them. The widespread lack of knowledge and/or confidence around how home loans work, can make choosing a home loan a daunting process for first home buyers.

The top five challenges first home buyers identified in securing a home loan include:

  • 47% Understanding how the whole process works
  • 46% Making sure they are getting the best deal possible
  • 45% Making sure they qualify for the loan amount and property they want to buy
  • 41% Establishing what they can afford to comfortably pay back
  • 37% Understanding what (if any) government support they qualify for.

Not surprisingly, 71% of first home buyers say they wish they had more support to make decisions around choosing their first home loan. Among these first homeowners, 39% rank ‘someone to help guide me through’ as the top source of support they wish they had, 26% just want someone to help build their knowledge and confidence.

Susan Mitchell CEO of Mortgage Choice, said, “Home loan interest rates are at historic lows, which is great news for first home buyers. But the research suggests that the biggest challenge many first home buyers face right now, is not financial – rather it’s uncertainty about how the buying process works.

“Mortgage brokers are home loan experts and not just in regards to the home buying and home loan process. Brokers understand the uncertainties first home buyers face, and they are able to break down the process into simple steps, free from jargon that can be so confusing for home buyers.”

“Taking out a home loan is a major financial commitment, and first home buyers, quite rightly, want to be sure they have the loan in place that is right for their needs. Brokers understand this, and will provide straightforward explanations about why they are recommending a particular loan or lender. This is incredibly empowering for first home owners, who can make an informed choice regarding the home loan that best matches their circumstances.”

46% rely on a mortgage broker
When it comes to seeking support, one in two (50%) first home buyers rely on family, friends and work colleagues, 46% turn to a mortgage broker, and 36% rely on online information.

Ms Mitchell said, “It always makes sense to research widely, but first home buyers can easily experience information overload. We live in an age where a Google search will turn out thousands of articles on the same topic. Turning to friends and family for the same information may also deliver conflicting opinions, which can leave first time buyers feeling overwhelmed - and no clearer on where to start when it comes to a home loan.

“Knowledge really is power when it comes to buying a first home and an experienced mortgage broker will be the home loan expert on your side right through the process.”

“Not only are mortgage brokers consistently up to date with ever-changing lender requirements, they also act as a mentor for first home buyers, explaining the home loan process, taking the time to answer questions, and coaching first home buyers through the steps they need to take to become home loan ready,” concluded Ms Mitchell.

About the research
The Mortgage Choice research is based on research commissioned by Mortgage Choice and conducted by CoreData between 14 and 27 October 2020. The research was conducted via a quantitative online survey, gathering a total of 1,023 responses from Australians across the country aged between 21 and 60 years old who are either a ‘First home buyer’ (494 respondents) or a ‘Homeowner/Investor’ (529 respondents).


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