Applying for home loans is so much fun—said no Australian ever. And that’s not hyperbole, according to a new survey from St.George bank.
The 2018 St.George Home Buying Survey asked Australians across the country about the barriers to applying for a home loan, and the answers weren’t what you might think.
For years we’ve focused on one major hurdle to home ownership, and that’s money. It’s hard to forget the uproar caused by avocado toast, or the shock of seeing dilapidated fixer-uppers going for millions in sought-after locations.
But despite the challenges people face when it comes to saving money for a home loan, a lack of cash may not be the only issue at play.
The St.George Home Buying Survey
St.George Bank found that there are a whole list of things Aussies would rather do than fill out a home loan application. 20% of us would rather visit the dentist, while 19% of us would prefer to pull up a seat at the dinner table with our in-laws.
The list doesn’t stop there; 18% of those surveyed would choose peak hour traffic over home loan applications, and 16% would opt for a 14-hour flight without entertainment.
When you put it that way, it seems that traditional home loan applications are a real drag. So much so, that of the estimated 2.2 million Aussies who intend to buy their first home in the next five years, 48% are putting it off for fear of the application process.
According to the survey, these are the top three things that put people off about buying a home:
- 25% said there was too much red tape or paperwork
- 20% hate not knowing where you stand
- 20% are frustrated by how long the process takes
But is this a case of perception getting in the way of reality? After all, if some of those surveyed are first home buyers, how can they be familiar with the end-to-end process?
Though it seems that first home buyers would have limited experience with home loan applications, they may be on to something. Research reveals that it’s not all in our heads; applying for a home loan really is a lengthy process.
The Home Loan Application Process
A 2018 report from Deloitte Access Economics, The Value of Mortgage Broking, talked to the experts—mortgage brokers—to find out more about the home loan application process.
It turns out that completing loan applications and following the process through to settlement is the most time-intensive part of the job. In fact, only 12 percent of a mortgage broker’s time goes to tasks completed after settlement.
If you’ve been following along, you probably see a solution to the problem already. Yes, home loan applications are time-consuming – but that’s why there are professionals who can do the heavy lifting for you.
Home loans can be confusing, especially if you’ve never been through the process before. But using a mortgage broker can lighten your load considerably, both in terms of time, money, and peace of mind.
The Deloitte report found that the average mortgage broker has 13.8 years’ experience in the industry, considerably more than most first home buyers. Nearly 60 percent of mortgage brokers are themselves owner-occupiers, so they understand the process on a personal and professional level.
Data shows that mortgage brokers actually contribute to more competitive mortgage prices. They also offer important services and help educate customers on a wider variety of choice.
More than half of new residential home loan settlements during the September 2017 quarter were completed by mortgage brokers, and 23 percent of brokers’ customers are first home buyers.
So why aren’t more first home buyers using mortgage brokers? Here’s where false perceptions might be at work. Mortgage brokers aren’t just salespeople who want to sell you a product for their own advantage. If that was the business model, it would crumble.
It’s in a mortgage broker’s best interest to help match you with a home loan that suits your needs, or they aren’t going to get repeat business. And when 70 percent of your business comes from your existing customers, it’s important to keep them happy.
The home loan application process isn’t something that most Aussies look forward to, and it may be awhile before it’s preferable to sitting in rush hour traffic. But if you’ve got ‘buy a house’ on your list of things to do in the next five years, it might be time to take action.
Remember, with a little help from a pro, it might not be as bad as you think.