A recent study conducted by Finder involved more than 1000 Australian participants. Surprisingly, 30% of the respondents disclosed that they would consider opting for a 40-year loan term if it helped in lowering their mortgage payments to a more manageable level.
Finder research found an extra 10 years on a loan would drop monthly repayments for a $641,416 average mortgage by around $300 per month.
But it would also cost the average borrower $316,000 more in interest over the lifetime of a mortgage.
“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,” Cooke added.
“Fortunately, I was able to sell the apartment a few years later.”
SCU, Teachers Mutual Bank and UniBank have previously offered 40-year loans specifically to first-home buyers.
Resimac, Pepper Money and the Police Credit Union also have in the past on a case-by-case basis.
