Average mortgage age in Australia

To get a mortgage, you have to be able to show a lender that you have the financial capacity to make your repayments. For younger Australians, 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.

But your mortgage loan term 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 look at switching loans to get a more competitive interest rate or more attractive home loan features. Doing this could also put 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 negotiate and see if you can get a more competitive interest rate from your current lender.

If your current lender won’t offer a rate reduction, you could consider refinancing your loan with a new lender to get a lower rate. If you’re able to get a rate reduction from your lender, it could translate to reduced mortgage repayments. If the lower repayments leave some room in your household budget, you could consider making 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.

When refinancing, consider your loan term. For example, if you’ve completed 10 years of a 30-year home loan, switching to another 30-year home loan means you’ll end up being in debt for a total of 40 years or more. Even if you switch to a lower interest rate, the longer it takes to pay off a home loan, the more money you may pay in interest charges on the property.

You may also be able to clear your loan’s principal faster by making extra repayments. Alternatively you could consider using an offset account, which is a 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 in turn means that more money in each mortgage repayment can go towards paying the principal rather than the interest, so you can pay off the mortgage that little bit faster.

Keep in mind that some lenders might charge fees or charge higher interest rates for an offset account home loan compared to a basic home loan. This could potentially affect the overall value an offset account offers.