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Average mortgage age in Australia
According to the Australian Bureau of Statistics, over half of Australia's first home buyers in 2019-2020 were aged between 25 and 34 years old. There was also a 6% increase in recent first home buyers where the main reference person for the household was aged under 35 (61%), compared to 2017–18 (55%).
Assuming that the average mortgage age in Australia starts somewhere between 25 and 34 years, then to work out the average age to pay off a mortgage in Australia, you just need to add a 25 to a 30-year term. This would make the average age to pay off a mortgage in Australia between 50 and 64 years.
The average age for property ownership could also be affected by the cost of property and cost of living. An increase in property prices could lead to a scenario where some families may not be able to purchase a property at any time in their life. Some older households could enter their retirement without the security of owning their own home, or may still be paying the mortgage when they reach retirement age.
To get a mortgage, you have to be able to show a lender that you have the financial capacity to make your repayments. At the age of 30, the mortgage application process may be relatively straightforward. But as you get older and inch closer to retirement, lenders may see you as a higher-risk borrower. For example, if you’re 60 and you’re applying for a mortgage that carries a 30-year term, lenders may have concerns about your ability to pay off the mortgage over the subsequent 30 years.
Beating the average age to pay off a mortgage in Australia
Your current mortgage is not absolute. Financial situations change, both at a personal and global scale, which can lead to you needing to re-evaluate whether your existing mortgage is serving you well. You may re-evaluate and look at switching loans to get a more competitive interest rate or more attractive home loan features. Doing this could also place you closer to paying off your mortgage and help you beat the average age to pay off a mortgage in Australia.
Before switching lenders, you could see if you can get a more competitive interest rate from your current lender. If your current lender isn’t offering a rate reduction, you could consider refinancing your loan to a new lender. While doing so, you need to be careful about your loan term. For example, if you’ve completed 10 years of a 30-year home loan, switching to another 30-year home loan may not make sense because it means you’ll end up being in debt for a total of 40 years or more. You could instead look at other ways to make efforts to clear your loan’s principal amount by making more repayments.
Apart from this, you can consider having an offset account. An offset account is a savings or transaction account where the account’s balance is considered when calculating interest. For example, if you have a principal amount of $300,000, and $50,000 saved in your offset account, your interest will be calculated as if you only owe the lender $250,000 on your mortgage. This can help you allocate more money toward paying off the principal component of your mortgage. Some lenders might charge fees for an offset account or charge higher interest rates compared to basic home loans.
If you’re able to get a rate reduction from your lender, it could translate to reduced mortgage repayments. If the lower repayments give you a surplus, you could consider adding additional payments towards your loan, reducing the principal amount of the mortgage. You’re then a step closer to owning your home and reducing the total interest charges on the mortgage.
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Product database updated 09 May, 2024
