More than half of Australian homeowners do not fully understand key home loan concepts, with many turning to social media and artificial intelligence for financial guidance instead of professional advice.

A survey from Money.com.au found that 58 per cent of homeowners admit they do not fully understand crucial mortgage terms. The national survey included more than 1,000 Australians.

The loan-to-value ratio (LVR) was identified as the most misunderstood concept, with 26 per cent of respondents saying they do not understand it. This figure affects borrowing eligibility, interest rates and whether a borrower must pay Lender’s Mortgage Insurance (LMI).

Redraw facilities and offset accounts followed closely behind, with 17 per cent unsure how either works. LMI itself confused 16 per cent of those surveyed, whilst comparison rates were unclear to 14 per cent. 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 per cent rate of confusion around key loan concepts, whilst Gen X came in at 58 per cent and Baby Boomers at 59 per cent.

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 per cent increase from the previous year.

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,” Mr Burgess said.

He said too many borrowers were relying on generic online information and social media opinions to understand how mortgages work. One in five Australians say they trust AI tools like ChatGPT for home loan information.

“Too many borrowers are graduating from what I’d call the Facebook and AI university,” Mr Burgess said.

Mr 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 per cent, which would have triggered another LMI payment. Another couple 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,” he said.

“If you’re unsure about anything, don’t be afraid to ask your Lender or Mortgage broker to break it down for you.”

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