Compare 30 year mortgages

The length of a home loan can vary depending on a range of factors, such as the amount being borrowed, the deposit required, property type and credit score. A 30-year mortgage is one of, if not the most, common term loan durations.

Taking out a 30-year mortgage means that you intend to pay back the principal amount borrowed and all interest owed within a 30-year period.

The reason a 30-year term is the benchmark for most home loans is because it more or less corresponds with the average length of a typical Australian’s full-time working career. The assumption is that you’ll be employed for the life of the loan and therefore predisposed to make repayments.

Home loans can have shorter or longer terms, as little as ten years or up to 45 years, depending on the lender and the type of loan on offer. It’s important to note that a shorter loan term will often incur sizable repayments in exchange for paying less interest over the term of the loan. A longer loan term typically means you’ll end up paying more in interest but your scheduled repayments may be more manageable.

 

Can you get a fixed term 30-year mortgage?

 

The likelihood of obtaining a fixed term loan for 30 years in Australia is slim to none. The United States is the only country in the world in which the 30-year fixed rate residential mortgage is the dominant home mortgage product, according to an article in the Journal of Real Estate Practice and Education.

In the US, government-backed home mortgage companies - the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) - buy and guarantee mortgages issued through lenders in the secondary mortgage market, where they are packaged as securities and sold to pension funds, hedge funds and insurance companies as investments.

Most Australian banks offer fixed rate terms up to five years but more commonly offer shorter agreements. The reason for this is that lenders must internally shoulder the risk of interest rates rising over the duration of the loan. In addition, borrowers face harsh penalties if they break these fixed terms in the hopes of refinancing their mortgage to a lower rate.

In some cases, it may be possible to re-fix your loan with the same lender after expiry and extend the length of your mortgage’s fixed-rate term. You may also be able to refinance your loan with another lender that also offers fixed interest rates. The cost and availability of these options may depend on the lender as well as your financial situation.

 

Can you split a 30-year mortgage?

 

A split rate home loan divides the interest charged into two portions, a fixed rate amount and a variable rate amount. This borrowing strategy may help to safeguard a segment of your loan against potential rate fluctuations.

Not every lender will allow you to split your home loan, so you’ll need to check with the bank and consult any terms and conditions before applying. If you do decide to split your loan, it doesn’t have to be 50/50 down the middle. For example, you may opt for a 70% variable rate home loan and pay 30% at a fixed rate.

 

Can you get a 30-year mortgage at 40 years of age? How about at 50?

 

Australia’s housing market, in particular throughout metropolitan cities, has become more and more unaffordable for first home buyers. Many Australians are buying their first property much later in life than previous generations.

Generally speaking, lenders calculate your borrowing capacity on a standard 30-year loan term. This means that if you’re purchasing a property at retirement age (67 years old) it’s reasonable to suggest that you won’t be around at 97 to settle the entire life of the loan.

In the past, banks were more willing to rely on the fact that they could sell your property to recoup any money owed on outstanding loan balances. These days, due to stricter regulations and greater market volatility, lenders must adequately establish a customer’s financial situation, particularly their capacity to make repayments without considerable hardship.

Consequently, the older you are the less likely you are to be approved for a 30-year home loan. While this isn’t the only factor lenders will consider, it does play a role in determining a customer’s borrowing capacity. This may be a daunting notion, considering nowadays it’s more common for buyers to apply for loan applications later in life, on the back of steep property prices.

Older individuals with excellent credit scores; considerable home equity; healthy superannuation funds; and/or other secure assets may be able to buck the trend and be approved for a lengthy loan period.

 

Should I apply for a 30-year mortgage?

 

By working out how much borrowing power you have, you can estimate the size of the home loan you can afford. Then, you can use our Home Loan Calculator to compare how different interest rates, loan terms and more can affect a home loan’s cost.

The amount you wish to borrow will likely have a significant effect on the length of your loan term. Average loan sizes ballooned to an all-time high of $618,729 at the beginning of 2022.

Many borrowers who choose a 30-year loan term instead of a 25-year term typically do so because the monthly repayments tend to be lower. Depending on interest rates, this may not always be the case.

 

 

There is more to a home loan than simply the interest rate at which you’re charged or the length of the term you agree to. You might consider comparing fees, features and benefits, such as customer service and consumer innovations, in order to find the lender that best suits your financial needs.