More than half of Australian homeowners do not fully understand key home loan concepts, according to new research that points to a growing reliance on social media and artificial intelligence for financial guidance.
A survey commissioned by financial comparison platform Money.com.au and conducted by Pureprofile in 2026 with a nationally representative sample of more than 1,000 Australians found that 58% of homeowners admit they do not fully understand crucial mortgage terms.
The loan-to-value ratio (LVR) – a figure that affects borrowing eligibility, interest rates, and whether a borrower must pay Lender’s Mortgage Insurance (LMI) – was the most misunderstood concept, with 26% of respondents saying they do not understand it. Redraw facilities and offset accounts followed, with 17% unsure how either works. LMI itself confused 16% of those surveyed, comparison rates were unclear to 14%, and one in 10 homeowners said they do not fully understand home equity.
The confusion was not limited to younger borrowers. Gen Z and Millennials each recorded a 61% rate of confusion around key loan concepts, while Gen X came in at 58% and Baby Boomers at 59%.
The findings come as more Australians are actively reviewing their home loans. According to data cited by the Australian Banking Association, more than 640,000 homeowners refinanced their mortgages in 2025, a record level and a 20% increase from the previous year. ABA said the trend reflects borrowers shopping around for better rates and loan features.
Money.com.au mortgage expert Nick Burgess attributed part of the problem to borrowers turning to unverified online sources for financial guidance.
“If you don’t have a firm grasp on basic mortgage terms and features, you’re likely not maximising your loan’s potential and could end up paying more interest over the loan’s life or dragging out your mortgage for longer than you need to,” Burgess said.
“Too many borrowers are graduating from what I’d call the Facebook and AI university. They rely on generic online information to understand how a mortgage works, as well as social media opinions. Also, one in five Aussies say they trust AI tools like ChatGPT for home loan information, so the risk of misinformation is getting out of hand.”
Burgess described real-world consequences of the knowledge gap, including a first-home buyer in Sydney who attempted to refinance without realising their LVR remained above 80%, which would have triggered another LMI payment, and a couple who kept $200,000 in a standard savings account rather than an offset account because no one had explained how offset accounts reduce interest charges.
“Your mortgage is likely the biggest debt you’ll ever take on, so it pays to understand key concepts like LVR, how the comparison rate differs from the advertised rate, and the difference between an offset account and a redraw facility. If you’re unsure about anything, don’t be afraid to ask your lender or broker to break it down for you,” he said.
