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Mortgage quicksand: 1 in 8 extend home loan to lower repayments

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Stressed mortgage holders are adding years and possibly hundreds of thousands of dollars to their loans to reduce their monthly repayments, according to new research by Finder.

A Finder survey of 1,012 respondents – 292 of whom have a mortgage – revealed 13% have extended the length of their home loan in the last 12 months to lower their repayments.

That's roughly 429,000 borrowers who have added years to their loan term as they struggle to cope with rising interest rates.

Households paying the current average loan have seen their mortgage repayments rise over $21,000* a year on average since April 2022 when rates started to rise, when compared like-for-like.

*Average Aussie mortgage repayments

Cash rateAverage home loan rate*Average monthly repaymentAverage monthly increaseAverage annual repaymentAverage annual increase
April 20220.10%2.41%$2,441-$29,292-
June 20244.35%7.12%$4,209$1,768$50,508$21,216
Source: Finder, RBA. *Owner-occupier variable discounted rate. Repayments based on the average loan of $625,050 (ABS data analysed by Finder).

Finder's research found 7% of mortgage holders (equivalent to 231,000 borrowers) have extended the term of their loan by less than five years.

Worryingly 6% have added five years or more onto their mortgage – the interest implications potentially adding up to thousands of dollars over the life of the loan.

Richard Whitten, home loans expert at Finder, said borrowers were having to take drastic measures to afford their mortgage payments.

"While extending the length of your home loan will lower your monthly repayments in the short term, it's probably going to cost you a fortune over the long run.

"The average Aussie household has much less disposable income compared to a few years ago. Many are desperate for ways to slash their monthly outgoings, even if it means sacrificing their long-term financial health."

Whitten said even a small increase in the length of a loan term can add up to big differences in interest over the life of a home loan.

"Since lenders calculate interest daily based on the outstanding balance of a loan, over time that can add up to a significant extra burden in interest."

The average loan size in Australia is $625,050, according to ABS data.

Finder analysis shows paying that size loan off over 30 years would cost a typical homeowner $722,602 in interest based on a competitive variable rate of 5.99%.

Pushing this out to 35 years would add a whopping $147,457 extra to the total interest over the life of the loan.

For a borrower with a $1 million mortgage, the interest soars from $1,156,066 over the life of a 30 year loan, to $1,391,980 over 35 years.

Whitten encouraged those who extended their loan to look at ways to pay their debts down faster when they can afford to.

"When you're stretched, you need to lower repayments straight away. But if you find yourself in a position to do so down the track, consider putting extra money into your home loan to make up for the costs that come with extending your loan.

"Most variable mortgages have a redraw facility, so homeowners can make extra repayments and still get access to those funds in an emergency.

"If your loan has an offset account it's even better. You can park any extra savings there, get the full benefit of offsetting the interest charges and have complete access to the money when you need it," Whitten said.

Over a third (34%) of Australians say they struggled to pay their home loan in June, up from 26% in June 2022, according to data from Finder's Consumer Sentiment Tracker.

Have you extended the length (term) of your home loan in the last 12 months to lower repayments?
Yes, I extended the term of my loan term by more than 5 years6%
Yes, I extended the term of my loan by less than 5 years7%
No, I have not needed to extend the term of my loan87%
Source: Finder survey of 292 mortgage holders, May 2024


  • 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 1,012 respondents from May 2024, 292 of whom have a mortgage.
  • The Consumer Sentiment Tracker is owned by Finder and operated by Qualtrics, an SAP company.
  • The survey has been running monthly since May 2019.

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