Arabic version: قروض الرهن العقاري لأربعين عاماً تخفّض الدفعات وترفع التكاليف

According to SBS News, a growing number of Australian lenders are offering 40-year home loans, giving some buyers a way to lower monthly repayments while extending their debt by an extra decade.

AMP recently announced a 40-year mortgage product for investors, joining Credit Union SA, Unity Bank, Great Southern Bank, RACQ Bank, Bank of Us, Liberty and Pepper Money. Canstar data insights director Sally Tindall said many of the products are aimed at younger people and first-home buyers.

Canstar calculated that extending a $600,000 mortgage by 10 years could cut initial monthly repayments by about $288. However, the borrower could pay nearly $275,000 more in interest over the life of the loan.

Tindall said the longer term may improve a borrower’s chance of loan approval, but urged prospective borrowers to consider whether the amount they seek is too high for their financial circumstances. She also warned refinancing could be difficult because relatively few lenders offer such loans and rates may be less competitive.

Finder personal finance expert Sarah Megginson said more lenders may respond to demand as housing becomes harder to reach, with lower monthly costs offering short-term budget relief. Tindall said APRA regards very long-term lending as higher risk and argued that greater housing stock and lower prices, rather than longer debts, are needed to improve affordability.