A few hundred dollars a month can change how a home loan feels. It might leave room for childcare, an uneven month in the business or simply a buffer that stops every bill becoming a decision.
That is the appeal of a 40-year mortgage. Spread the debt over another decade and the required repayment can fall. But the lower number on the monthly budget comes with a much longer interest bill if you keep paying only the minimum.
The useful question is whether that breathing room is worth its price, and which lender’s version actually fits your circumstances. Pepper, Granite, Liberty, Great Southern Bank and AMP have options worth comparing, but their rules and repayment structures are different.
What the extra decade really buys
Consider a hypothetical $800,000 loan at an unchanged 6% annual interest rate, with monthly principal-and-interest repayments, no fees and no extra payments.
| Loan term | Monthly repayment | Total interest over the full term |
|---|---|---|
| 30 years | About $4,796 | About $926,706 |
| 40 years | About $4,402 | About $1,312,820 |
The longer term frees up about $395 a month. It also adds roughly $386,115 in interest if both loans run their full course. These are illustrations, not lender quotes; actual rates, fees and repayment timing change the result.
There is a less obvious difference if you sell or refinance earlier. After ten years, the same example leaves about $669,486 owing on the 30-year loan, compared with $734,168 on the 40-year loan. You would have reduced the debt by about $64,682 less, before considering any change in the property’s value.
A 40-year term does not force you to take 40 years to repay. Extra payments can shorten it where the product allows. But the plan needs to work even if income does not rise and refinancing is unavailable.
Compare the loans, not just the term
These are selected options, not an exhaustive market list. Published limits remain subject to assessment, and the longest term, highest borrowing percentage and lowest advertised rate may not be available together.
Pepper Money: flexibility beyond first-home buyers
Pepper’s variable home loans offer terms of 10–40 years, with principal-and-interest or up to five years of interest-only repayments. Unlimited extra repayments make this worth investigating if you want a lower required payment but intend to pay more when cash allows.
The optional offset sub-account carries a monthly fee. Compare your actual rate and total fees against a shorter-term offer rather than assuming the additional decade is free. Nor should a 40-year option on one Pepper product be assumed to apply to its construction loans.
Granite: a broader purchase, refinance and building option
Granite’s 40-Year Extended Home Loan covers eligible owner-occupiers and investors buying, refinancing or building. It accepts salaried and self-employed applicants, as well as company and trust structures under its policy.
For owner-occupiers, the full term is available up to age 45, then reduces for applicants up to age 50. The product is variable-rate only and has a $379 annual facility fee. Companies and trusts have an 80% borrowing limit against the property’s value, rather than the advertised maximum of 95% including risk fees for eligible borrowers.
Granite is worth checking when a first-home-buyer-only product would exclude your situation. Ask about the retirement plan, property restrictions and applicable risk fees before relying on the headline limits.
Liberty: an option when income paperwork is the obstacle
For self-employed borrowers, Liberty’s Low Doc home loan combines alternative income verification with published terms of 10–40 years. It lists borrowing of up to 85% of the property value.
The important cost distinction is its 0.25-percentage-point interest-rate loading for terms above 30 years, alongside a $295 annual fee. If the shorter term is affordable, ask for both quotes. You may otherwise pay more for the longer term in two ways: a higher rate and more years of interest.
Great Southern Bank: a narrower first-home route
Great Southern Bank’s extended-term Basic Variable and Offset Variable loans are worth comparing for eligible first-home purchases. At least one applicant must be a first-home buyer, all applicants must be aged 18–40, and the home must be owner-occupied. The maximum borrowing percentage is 90%, including fees.
Its eligibility rules exclude government-scheme loans and guarantors. Extended terms also attract a higher rate. If you are weighing a government-supported purchase against a longer term, have both routes assessed rather than assuming they can be combined.
AMP: a different proposition for investors
AMP’s Equity Flex is investment-only, secured against investment property, with a total term of 31–40 years and borrowing up to 80% of the property value. At least one loan split must have six to ten years of interest-only repayments; its annual package fee is $415.
This may warrant investigation when an investor deliberately wants an extended interest-only period. The principal on that split is not being repaid during that period, however, and repayments rise when principal-and-interest payments start. It is a different decision from spreading principal repayments evenly over 40 years.
Does a longer term mean you can borrow more?
Not necessarily by the amount a repayment calculator suggests. Granite assesses repayment capacity over up to 35 years. AMP uses a maximum 30-year principal-and-interest period, or the actual period if shorter. The lender’s assessment and your household budget need to work separately.
Athena also deserves a distinction. Athena Select shows a 40-year borrower example, while Athena’s Tailored product document specifies 10–30 years. Before comparing an Athena-arranged 40-year offer, identify the actual lender, product and terms. Do not assume standard Athena pricing applies.
Make the lower repayment earn its place
Before choosing, request 30-year and 40-year quotes for the same borrowing amount, including fees, any term-related rate loading and the balance remaining after five or ten years. If interest-only payments are involved, include the payment after that period ends.
Then decide what the monthly saving will actually do. A necessary buffer is different from using the lower repayment to justify a more expensive property. For a Flexdoc home-loan discussion, bring your current loan or proposed purchase details, income evidence and the repayment you can sustain. That gives us a useful starting point for testing the trade-off, rather than simply asking for the longest term available.
General information only. Product terms can change; individual eligibility and suitability require assessment.