What are the Benefits of a Longer Mortgage?
Longer mortgages are not for everyone, and while there are many disadvantages, there are also benefits! Anyone as young as 18 can apply for a mortgage. This means that longer mortgages allow younger couples and adults to become homeowners for a fraction of the price.
While it is true that longer mortgages can increase interest costs, it does lower the monthly payments significantly.
Lower Monthly Payments
One of the highest benefits of having a longer mortgage is that you have lower monthly payments as well! These lower monthly payments can help you pay other bills and save. Typically, mortgages are also less expensive than rent, which can save you thousands of AUD each year!
More Time to Save
When you have a longer mortgage, there is also adequate time to save for important things. For instance, you can start putting money aside for school, children, and retirement earlier because less money is spent on a mortgage compared to a 30-year mortgage. While the interest does accumulate and increase over the years, you don’t feel it since your monthly mortgage bill stays low.
You Can Repay Mortgage Loans Early
If you time your payments right and have a job that provides you with good money, you can save to repay your mortgage loan early. For instance, it is not uncommon for an individual to knock 10 to 20 years off of their mortgage by making additional payments.
While longer mortgages are usually seen as negative, there are benefits to them! If you play your cards right, you can have low monthly mortgage bills, give yourself time to save for big purchases, and you can also repay the long mortgage loans early.