Reduced monthly mortgage repayments adding years to term

According to a new survey by Finder, 13% of Australian mortgage holders have extended the length of their home loan in the last 12 months, adding years to their borrowing term to cope with rising interest rates, which have caused repayments to go up by more than $21,000 a year on average since April 2020. Two, 7% to around 231,000 borrowers have extended their loans by less than five years. 6% though have bumped theirs up by more than five years to afford their repayments. Extending your loan like that can drop your payments by even 100 or $200.00 a month, which for a lot of people really makes a huge difference. But experts are warning it could end up costing a fortune long term. An extra five years adding more than $147,000 in additional interest to the average loan of 625,000. That's based on a variable rate of around 6%. For $1,000,000 mortgage, it's even higher, an extra $234,000 in interest to over 35 years. Some mortgage brokers, though, say the pros outweigh the cons. Of course it's gonna cost you a few more bucks in interest, but long term I think you'll be far better off if you can keep your house batting the hatches. Change to an interest only loan for a couple of years so you can get through this storm that we're currently in. For those who do choose to extend their home loan terms, the advice is to make up the difference when you do have more money coming in, making extra repayments to pay it off faster.