40 Year Mortgages Come With Massive Interest Costs

Posted on February 18th, 2014 · Posted in News

Desperate homebuyers are locking themselves into 40-year mortgages and forking out hundreds of thousands of dollars more in interest costs to do so.

Multiple lenders are offering home loans spanning four decades but experts are concerned about the extended mortgage periods that stretch out across an entire working life.  A recent survey found there are 17 40-year home loan deals available on the market from seven different lenders.

On a $400,000 loan with an average interest rate of 7% the customer would end up forking out an additional $235,000 in interest costs than they would if they chose a 30-year-old loan period.

The Mortgage and Finance Association of Australia’s chief executive officer, Phil Naylor, warned people against taking out these lengthy mortgage periods.  “If you let the mortgage run the full 40 years you end up paying a mountain of interest,’’ he said.  “For the extra interest you pay over the course of the loan that probably far outweighs the benefit you get by paying smaller payments each month.”

If you’re considering refinancing or you are a new borrower looking to enter the market, don’t be fooled by the ‘too good to be true’ offers in the market today.  Let us help you Strengthen Your Financial Future by contacting us today for a FREE finance review.

 

 

 

Original Story Source: news.com.au