Mega mortgages: 1 in 3 Aussies would take out a 40-year home loan
Australians are being warned to consider the long-term financial implications of mega mortgages before applying, according to new research by Finder.
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A Finder survey of 1,013 respondents revealed 30% of Australians – equivalent to 6.2 million people – would take out a 40-year home loan if it reduced their monthly repayments to a more affordable level.
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Four lenders currently offer 40-year mortgages in Australia – three of those exclusively to first home buyers, Finder analysis shows.
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The average home loan size in Australia reached a record high of $641,416, according to data from the Australian Bureau of Statistics (ABS, September 2024).
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That's up by 37% from September 2019 when the average home loan size in Australia was $467,403.
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Graham Cooke, head of consumer research at Finder, said paying your mortgage from now until 2065 has pros and cons.
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"Owning a home has felt out of reach for an increasing number of Aussies.
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"A 40-year loan can help some buyers get into the market sooner by reducing monthly repayments.
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"While these loans may have lower monthly repayments, they typically end up costing a lot more over time."
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Finder analysis shows that while the monthly repayment for the average Australian loan of $641,416 would drop by over $300 on a 40-year loan compared to an identical 30-year loan, the full repayment would cost the borrower $316,000 more.
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"Essentially, these loans give you a reduction in your monthly cost in exchange for a significant increase in the cost of your mortgage overall.
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"Borrowing costs and house prices have combined to make the housing market less affordable for many Aussies.
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"While 40-year loans do offer a lower cost route to getting your first foot on the housing ladder, staying with them until the end can be very expensive."
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Cooke said competition was returning to the home loan market.
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"I naively took out a 40-year loan when purchasing my first apartment, only to quickly realise how costly it would be in the long run. Fortunately, I was able to sell the apartment a few years later.
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"The good news for those struggling is that what goes up must come down, and the cash rate has now fallen – welcome relief for those who have overextended themselves.
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"Before extending your loan term to ease cash flow pressure, consider refinancing to a cheaper variable rate first."
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Would you take out a 40-year home loan if it reduced your repayments to a more affordable level?
| Yes | 30% |
| No | 70% |
| Source: Finder survey of 1,013 respondents, January 2025 |  |
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Methodology
- Finder's Consumer Sentiment Tracker is a monthly recurring nationally representative survey of more than 60,000 respondents.
- Figures in this release are based on 1,013 respondents from January 2025.
- The Consumer Sentiment Tracker is owned by Finder and operated by Qualtrics.
- The survey has been running monthly since May 2019.
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Sources
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