25 year vs 30 year home loan term

A little known way of saving thousands in interest over the course of your loan.

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Buying a home usually requires getting a home loan. One of the most important factors to address when getting a home loan is the loan term, and this often varies between 25 and 30 years. Most people prefer paying their home loan off as soon as they possibly can—and with good reason.

While the five year difference might not seem like much at the onset, it can make a considerable financial difference in the long run.

Home loan comparison

Rates last updated December 16th, 2018
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Loan purpose
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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.59%
3.61%
$0
$0 p.a.
90%
Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online. Available with just a 10% deposit.
3.59%
3.59%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
3.57%
3.58%
$0
$0 p.a.
80%
Get a very low interest rate and avoid big fees. Apply online for full approval in under 30 minutes and add a 100% offset account for $10 a month.
3.54%
3.58%
$0
$0 p.a.
80%
Get a competitive rate, save on fees and access a 100% offset account plus redraw facility. $900 cashback offer.
3.75%
3.75%
$0
$0 p.a.
70%
A simple mortgage with no application or ongoing fees that has extra repayments plus split and redraw options. Requires a 30% deposit.
3.64%
3.66%
$0
$0 p.a.
80%
A simple mortgage with a competitive interest rate and no application or monthly fees. Borrow up to $2000000 from a convenient online lender.
3.64%
3.64%
$0
$0 p.a.
70%
A low interest rate home loan with no application or ongoing fees.
3.54%
3.57%
$0
$0 p.a.
80%
A competitive variable essentials interest rate product aimed at refinancers looking to switch to a lower rate.
3.85%
3.85%
$0
$0 p.a.
80%
Low fee loan with extra repayments. Pay no application and ongoing fees and take advantage of split and redraw options.
3.49%
3.53%
$250
$0 p.a.
80%
A very low variable interest rate for borrowers with a 20% deposit. Add a 100% offset account for $10 a month.
3.87%
3.91%
$600
$0 p.a.
95%
A home loan with no ongoing fee and a redraw facility that you can borrow up to 95% LVR.
3.80%
4.05%
$0
$0 p.a.
70%
Earn tens of thousands of Qantas Points to spend on flights, hotels and more with this variable owner occupier mortgage. Competitive variable rate mortgage that requires a 30% deposit.
3.84%
3.85%
$0
$0 p.a.
90%
A flexible, basic mortgage for owner occupiers. Make extra repayments and take advantage of mortgage redraw facilities. Available with a 10% deposit.
3.88%
4.51%
$0
$395 p.a.
90%
Lock in a very competitive 2 year rate and get package discounts on your credit card and offset account. $1,500 cashback available (conditions apply).
3.68%
3.82%
$0
$10 monthly ($120 p.a.)
80%
Earn Velocity Frequent Flyer Points with this mortgage to spend on flights and more (for a limited time, subject to eligibility requirements). Redraw facility available on this variable rate home loan. Competitive interest rate.
3.59%
3.63%
$495
$0 p.a.
90%
Get a low variable interest rate and buy a property with just a 10% deposit. 100% offset account attached.
3.74%
3.74%
$0
$0 p.a.
80%
A basic owner-occupier home loan with a low variable rate that requires a 20% deposit.
3.87%
3.91%
$0
$10 monthly ($120 p.a.)
90%
Get Velocity Frequent Flyer Points at settlement, monthly and every three years, plus the option to make up to $10,000 a year in extra repayments.
3.69%
4.86%
$0
$395 p.a.
90%
Special discounted rate for first home buyers. Start your home buying journey with 2 years of fixed repayments at a competitive rate plus package discounts. Available with a 10% deposit.
3.75%
4.72%
$0
$299 p.a.
95%
Owner-occupiers can enjoy a discounted fixed rate, a rate lock feature and the ability to make additional repayments.
3.68%
3.70%
$0
$0 p.a.
80%
A competitive variable rate mortgage for owner occupiers that comes with a no fee debit card with a $5,000 limit.
3.84%
3.85%
$0
$0 p.a.
70%
Keep your LVR at 70% or below and enjoy a special discounted rate. Also, pay no application or ongoing fees.
3.64%
3.78%
$0
$10 monthly ($120 p.a.)
80%
Earn Velocity Frequent Flyer Points on your mortgage (subject to eligibility requirements). Plus, access a 100% offset account to save on interest.
3.79%
3.79%
$0
$0 p.a.
80%
Access an offset account and pay no application or ongoing fees on this special variable rate for owner-occupiers.
3.79%
3.82%
$0
$0 p.a.
80%
An essentials variable investor mortgage with a high borrowing amount so you can fund a large purchase.
3.74%
4.13%
$0
$349 p.a.
90%
Get a sharp rate plus package discounts and a 100% offset account.
3.62%
3.62%
$0
$0 p.a.
95%
A low deposit mortgage with a competitive rate and plenty of flexibility. QLD residents only. Eligible borrowers can get a 15% discount on home and contents insurance for the life of their loan.
3.79%
3.80%
$0
$0 p.a.
90%
Get one free online redraw per month and pay no ongoing fees. Application fees are waived for loans above $150,000. Plus $1,500 cashback offer for eligible refinancers.
3.69%
4.12%
$0
$395 p.a.
80%
Unlock a range of savings with this competitive package home loan offer. Offset account and redraw facility included.
3.70%
3.70%
$0
$0 p.a.
70%
Get a discount for keeping your LVR at $70% or below with this innovative online lender.
3.64%
3.64%
$0
$0 p.a.
70%
A basic variable home loan that offers a competitive interest rate with no application fees and no ongoing fees.
3.84%
3.84%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a free redraw facility with this innovative online lender.
3.64%
3.59%
$0
$0 p.a.
80%
Fast, 100% online application process. Very limited fees. Optional offset account (with fee).
3.99%
3.92%
$0
$10 monthly ($120 p.a.)
90%
Enjoy a competitive fixed rate with no application fee. Earn Velocity Frequent Flyer Points to spend on flights and hotels. Terms and conditions apply.
3.71%
3.71%
$0
$0 p.a.
70%
A variable rate home loan that has a lot of flexible features. This loan has a 100% offset account.
3.89%
4.27%
$0
$395 p.a.
80%
New borrowers or refinancers can get a discounted rate with this package loan.
3.59%
3.58%
$0
$0 p.a.
80%
Apply online and get fast approval for this fixed rate, low-fee loan with redraw facilities. Add a 100% offset account for a small fee.
3.81%
3.81%
$0
$0 p.a.
80%
A home loan with a competitive rate and plenty of handy features. This product comes with a 100% offset account.
4.17%
4.21%
$600
$0 p.a.
95%
Variable rate home loan from one of the big 4 banks. Available with just a 5% deposit.
3.89%
3.91%
$0
$0 p.a.
80%
This variable rate loan keeps the features simple and fees low. This loan is offered by a 100% online lender.
3.72%
3.74%
$0
$0 p.a.
80%
Save on interest by taking advantage of a 100% offset account along with no ongoing fees or application fees.
3.84%
3.82%
$0
$0 p.a.
80%
A fixed rate loan with free redraws, few ongoing fees. Apply online with a fast approval process.
3.69%
4.08%
$0
$349 p.a.
90%
Package your loan with other AMP products and save on rates and fees.
3.69%
4.75%
$0
$395 p.a.
90%
Enjoy a competitive rate with no application fee for this package loan.
3.99%
4.13%
$0
$10 monthly ($120 p.a.)
80%
A competitive variable rate home loan with no application fee.
4.04%
4.07%
$0
$0 p.a.
90%
For a limited time, pay no application or settlement fees. You can also take advantage of a free redraw facility.
3.59%
4.14%
$395
$0 p.a.
80%
A one year fixed rate offer with no ongoing bank fees.
3.75%
4.00%
$0
$248 p.a.
70%
Borrowers with a 30% deposit can get this competitive rate. Cut down on interest costs with a 100% offset account.
3.97%
3.99%
$0
$0 p.a.
80%
Package your owner occupied loan with investment loan and receive a discounted investment rate. 100% offset account included.
3.99%
4.44%
$395
$0 p.a.
80%
Pay no ongoing fees on this investment loan fixed for 3 years.
3.70%
3.90%
$0
$0 p.a.
70%
Enjoy all the benefits of the Basic Home Loan and take advantage of an offset account.
3.89%
3.94%
$0
$0 p.a.
90%
Borrow up to 90% of the value of the property you're buying, and pay no application fee.
3.94%
3.94%
$0
$0 p.a.
70%
Investors with a 30% deposit can get this low rate loan to fund their property portfolio. Take advantage of split and redraw facilities.
3.91%
3.92%
$0
$0 p.a.
80%
Investors can go from application to approval in as little as 20 minutes with this innovative online lender.
3.74%
4.01%
$395
$0 p.a.
80%
A competitive fixed interest rate product with no ongoing bank fees.
3.99%
3.92%
$0
$0 p.a.
80%
A variable interest-only loan for investors. Fast application, low fees, optional offset account. 100% online lender.
4.29%
4.31%
$0
$0 p.a.
80%
Investors will pay no application or ongoing fees for this interest-only loan.
3.74%
3.74%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule.
4.18%
4.18%
$0
$0 p.a.
80%
Investors get a 100% offset account and pay no application or ongoing fees on this loan from an innovative online lender.
3.89%
4.24%
$0
$0 p.a.
80%
Fix your rate and minimise repayments for 2 years with this interest-only investor mortgage.
3.94%
4.95%
$595
$0 p.a.
95%
Borrow up to 95% LVR of the value of the property you're buying and pay no application or ongoing fees.
3.99%
4.86%
$0
$0 p.a.
80%
Access a fee-free 100% offset account and pay no application or ongoing fees.
4.29%
4.26%
$0
$0 p.a.
95%
A competitive 3-year fixed rate loan with a high max insured LVR.
3.89%
3.91%
$0
$0 p.a.
80%
Investors can go from application to full approval in as little as 20 minutes with this innovative online lender.
4.14%
4.81%
$0
$0 p.a.
80%
Pay no application fees and access a fee-free redraw facility with this fixed rate loan.
3.84%
3.91%
$0
$0 p.a.
80%
Get instant online approval and flexible repayment options with this fixed rate mortgage for investing.
3.99%
3.99%
$0
$0 p.a.
80%
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.
3.89%
3.91%
$0
$0 p.a.
80%
Lock in your interest rate for 2 years and enjoy flexibility, an optional offset account and a fast online application process.

Compare up to 4 providers

25-year loan term

25years
A 25-year loan term is generally standard in Australia and tends to correspond with the average Australian's peak earning years. While the monthly repayments are higher in comparison to what you’d normally pay during a 30-year loan term, the overall interest you pay is lower.

Take the following example into account. You borrow $400,000 at 5.5% p.a with a loan that requires you to make monthly principal and interest payments. For a 25-year loan term you'd have to make monthly repayments of $2,456, the total payable interest would be $336,905, and the total you'd have to repay over the course of the loan would be $736,905. On the other hand, for a 30-year loan term, your monthly repayments would stand at $2,271.16, the total interest payable would be $417,616, and your combined repayments would total $817,616.

The same loan repaid in five fewer years would save you $80,711, definitely a considerable sum. The flipside is that you'd be paying an extra $184.84 each month in the form of repayments.

30-year loan term

30years
People who apply for 30-year loan terms tend to do so because of the lower monthly payments they attract, or because they do not qualify for higher repayments. For example, consider a $300,000 home loan with a 25-year term and 6.5% p.a. rate, paid off via monthly principal and interest payments. In this case, your monthly repayments would stand at $2,025.62. By simply increasing the loan term to 30 years, the monthly repayment comes down to $1,896.20, a reduction of around $130.

What you have to bear in mind is that while the monthly repayments come down when the loan term increases, the amount you pay in the form of interest increases. In the given example, if you choose to repay the loan in 30 years, you'd be paying close to $75,000 more in the form of interest over the life of the loan.

How to find out how much you could save

You can use our loan repayment calculator to find out how much you could save over the life of your loan. All you need to know is the interest rate you'll be paying, the loan amount, whether you're paying interest only or principal and interest, and how often you'll be paying.

How to minimise the duration of your mortgage

  • Reduce your loan term and make extra payments. Shorter loan terms may make more financial sense than longer terms simply because they can result in considerable savings—the sooner you pay off your loan, the more you tend to save in the amount of interest payable. You can even pay the loan off sooner than its original term and this can lead to further savings. For example, by simply increasing the frequency of your repayments from monthly to fortnightly, you can save on the interest that the outstanding balance attracts on an everyday basis.
  • Use an offset account. Setting up an offset account linked to your home loan can also lead to savings via the interest route. The balance in your offset account works at reducing your home loan's interest. For example, if you have an outstanding loan balance of $220,000 and have $20,000 in your offset account, interest is only calculated on $200,000.
  • Consider refinancing. If you think you can get a better deal in terms of interest rate, consider refinancing your home loan. It’s always a good idea to review home loan interest rates given that they change from time to time, and if the interest rates fall there’s no reason why you shouldn’t benefit. In such a scenario, you can continue making the same repayments and look forward to a reduced loan term and lower interest payable.

When you take out a home loan, paying attention to the loan term is crucial. If you think you can pay the loan off in 25 years, as opposed to 30, it can save you a fair amount of money. On the other hand, if you want to make reduced monthly repayments, a 30-year loan term could well be ideal.

Marc Terrano

Marc Terrano is a Lead Publisher at finder. He's been writing and publishing personal finance content for over five years and loves to help Australians get a better deal.

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UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000

Take advantage of a low-fee mortgage with a special interest rate of just 3.59% p.a. and a 3.59% p.a. comparison rate.

HSBC Home Value Loan - (Owner Occupier P&I)

Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online. Available with just a 10% deposit.

loans.com.au Essentials - Variable (Owner Occupier, P&I)

A competitive interest rate home loan with interest only options. Interest rate 3.64% p.a.
comp rate of 3.66% p.a.

Tic:Toc Live in Loan Variable Rate - Principal & Interest

Get a very low interest rate and avoid big fees. Apply online for full approval in under 30 minutes and add a 100% offset account for $10 a month.

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3 Responses

  1. Default Gravatar
    RonaldJune 21, 2014

    Hi! How about multiple-currency account loan? Is it worth for property investors who buy and hold for the long run? The advantage that I understand is the low interest rate (under 2% pa interest only) if one will to take up a foreign currency loan (like Japanese Yen, HongKong dollar, Singapore dollar)….Thanks.

    • finder Customer Care
      ShirleyJune 23, 2014Staff

      Hi Ronald,

      Thanks for your question.

      Unfortunately the advice you’re looking for comes under investment advice. You’ll need to consider the structure of your portfolio and how of it will be funded by a foreign currency.

      Please speak to your trusted financial advisor about this, or someone who is licensed in the field.

      Cheers,
      Shirley

    • finder Customer Care
      MarcJune 23, 2014Staff

      Hi Ronald,
      thanks for the question!

      Unfortunately I can’t comment on whether or not this is a good strategy for you. I’d recommend consulting a financial planner before using this strategy to purchase a property. These home loans are generally designed to be used for non-residents being paid in a foreign currency.

      I hope this helps,
      Marc.

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