A home loan is usually the biggest debt New Zealanders will have but many homeowners are not aware of even the basics on mortgage repayment and home loan terminology, according to the results of New Zealands first Adult Financial Knowledge Survey.
One of the major findings of the ANZ-Retirement Commission Financial Knowledge Survey was that understanding home loans was a weak area of financial knowledge, even among some of those who have current mortgages.
Twenty-five percent of mortgage holders were not aware that increasing the frequency of repayments from monthly to fortnightly would minimise interest.
A third of mortgage holders were unable to correctly identify that there was no repayment penalty for variable home loans.
Twenty-three percent did not know the meaning of the word equity.
Respondents who did not have a mortgage fared even worse on most of the home loan questions.
Retirement Commissioner Diana Crossan said the results on mortgages highlighted that people needed a lot more information about managing home loans.
New Zealanders love to own their own homes, and yet this survey shows that up to half of them do not know some of the most basic things about managing property financing.
The gaps in knowledge may deter borrowers from paying off debt quickly and enhancing their financial position over the long term.
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