Yes, you can get a 15-year mortgage in Australia, with lenders offering terms from 15 to 30 years (or even longer), though 30-year terms are most common. A 15-year loan means higher monthly payments but significantly less total interest and faster equity build-up, making it a good option for those who can afford the larger repayments and want to be debt-free sooner.
The maximum Interest Only payment period over the life of a loan is 15 years for Investment Home Loans and 5 years for Owner Occupied Home Loans, so long as there is at least 5 years remaining on the Contracted Loan Term.
You'll typically need a credit profile above 620. Your debt-to-income ratio (DTI) should be less than 50%. In addition to your down payment, you'll need enough funds to cover closing costs.
Harder to qualify
Because a 15-year mortgage comes with a higher monthly payment compared to a 30-year mortgage, lenders may see greater risk potential if your DTI is high. Also, the higher your DTI, the higher your interest rate is likely to be.
The standard mortgage term in Australia is 30 years, but some lenders now offer up to 40 years. Longer terms lower monthly repayments but significantly increase total interest paid over the life of the loan.
Using this free income calculator, the approximate income you need to buy a $500,000 home, assuming you need a $400,000 loan, is $77,000 gross per year, excluding superannuation.
The 28/36 rule in Australia is a financial guideline for borrowing, suggesting housing costs shouldn't exceed 28% of your gross monthly income, and total debts (housing, car loans, credit cards) shouldn't surpass 36% of your gross monthly income; it helps prevent mortgage stress by ensuring you can afford repayments, though Australian lenders often use slightly different (sometimes higher) benchmarks like 30% for housing costs, plus an APRA serviceability buffer.
The disadvantage is that, with a 15-year loan, you commit to a higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments that will pay off their loan in 15 years.
If you pay $200 extra a month towards principal, you can cut your loan term by more than 8 years and reduce the interest paid by more than $44,000. Another way to pay down your mortgage in less time is to make half-monthly payments every 2 weeks, instead of 1 full monthly payment.
If you've ever wanted to cut the length of your mortgage in half to get you on the right track to paying off your home loan as fast as possible, you can do that by refinancing from a 30-year to a 15-year mortgage. Your monthly payments will be higher, but don't let that scare you!
If your lender offered you a 7.00% interest rate on a 15-year loan for $100,000, you could expect your monthly payment — principal and interest — to be about $898. If you had a 30-year loan at the same rate, a $100,000 mortgage payment could be about $665 per month.
The biggest advantage to a 15-year mortgage is saving money. Because a 15-year loan typically has a lower interest rate than a 30-year loan and you pay the loan off faster, you'll save money during the life of your loan.
First, the borrower must have a steady employment history or have worked for the same employer for at least two years. Secondly, the borrower must have a valid Social Security number, lawful residency in the U.S., and be of legal age to sign a mortgage in their state.
Annual income: $70,000 (around $5,833 per month) Estimated mortgage repayment: about $2,500 per month on a $420,000 loan at 6.25% Ongoing homeownership costs: between $650 and $1,200 per month (covering rates, insurance, strata, and maintenance)
Expect to pay about $1,798 to $2,201 per month for a $300,000 mortgage with a 30-year loan term, depending on your interest rate and other factors. Learn more about the upfront and long-term costs of a home loan.
Bear in mind that you'll need stronger financials to qualify for a 15-year mortgage, because the monthly payments are higher. Lenders will want to see a higher income and lower debt-to-income ratio.
For a $400,000 loan at 7% annual interest, the principal and interest monthly payment is approximately $2,661.21 for a 30-year term, while for a shorter 15-year term, it's around $3,595.31, with payments varying based on the loan's duration and any included taxes or fees, sayCredible.
Red Flag #1: When they offer you a rate that's lower than the APR. When a mortgage's APR is much higher than the actual rate, it means that the fees are a lot higher, too - and you'll be paying them over the life of your loan. A low rate might be enticing, but you have to consider the long-term cost.
In this example, you'd likely need an annual income of around $58,000 per year to comfortably afford a $200,000 home while staying within recommended housing cost limits. Keep in mind that your down payment is less than 20%, you'll likely be required to pay private mortgage insurance (PMI).
Ways to make extra payments on your mortgage
To borrow $800k in Australia, you generally need a gross annual income of around $140,000 to $180,000+, depending heavily on interest rates, deposit size, existing debts, living expenses, and lender policies, with a common benchmark being repayments under 30% of your income, suggesting an annual income of about $170k for an $800k loan with typical interest. Using a borrowing calculator from a major bank (like NAB, Westpac, or CBA) is essential for a personalized estimate, as factors like shared income with a partner also significantly affect your borrowing power.
Yes, $120,000 is generally considered a very good salary in Australia, well above the average full-time wage (around $90k-$100k) and median income, allowing for comfortable living, savings, and investments, though perceptions vary greatly depending on location, family size, and lifestyle goals, with some feeling it's barely enough due to high costs like housing in major cities.