The average age to pay off a mortgage in Australia is 62. If you are reaching 62, relax! There are many retirees still paying mortgages. You are not alone.
Assuming that the average mortgage age in Australia starts somewhere between 25 and 34 years, then to work out the average age to pay off a mortgage in Australia, you just need to add a 25 to a 30-year term. This would make the average age to pay off a mortgage in Australia between 50 and 64 years.
But if you want to live a life of financial freedom, then it's important to shed all of your debt, says Shark Tank personality Kevin O'Leary. In fact, O'Leary insists that it's a good idea to be debt-free by age 45 -- and that includes having your mortgage paid off.
While the average age borrowers expect to pay off their mortgage is 59, the number of survey participants who have no idea when they will pay it off at all stood at 16%. In 2019, 9% of those asked didn't know and in 2020, 11% gave this answer.
50 years old: Most lenders will allow you to borrow but some may decline your application due to your age. 55 years old: Almost all lenders will require a written exit strategy, evidence of your superannuation and other assets that can be sold to repay the proposed debt.
Lenders have set the maximum age limit for a traditional mortgage to range from age 70 to a maximum of age 80. You can see how borrowers, aged 70, would be unable to secure a 25-year mortgage as they would be 95 years old when they were done paying off the loan.
Mortgages for over 50s
Many lenders will be happy to offer you a mortgage if you're over 50, with a standard 25-year term and competitive interest rates often available. In some cases, you may be asked to show evidence of your predicted retirement income.
Paying your mortgage off early, particularly if you're not in the last few years of your loan term, reduces the overall loan cost. This is because you'll save a significant amount on the interest that makes up part of your payment agreement.
Yes, a senior citizen can get a mortgage.
Many interest only lifetime mortgage providers don't restrict the term of their mortgages, so you are able to borrow over the term of your lifetime.
It's common for mortgage borrowers to opt for a longer repayment term in order to keep monthly payments low—typically 30 years. However, as time goes on, your income may increase or your lifestyle may change to free up more cash flow. If that's the case, you may be able to refinance your loan to a shorter term.
The Standard Route. The Standard Route is what credit companies and lenders recommend. If this is the graduate's choice, he or she will be debt free around the age of 58.
It's increasingly common for Australians to head into retirement with a mortgage. This is true for about 6% of retirees, and that figure is expected to grow as housing prices rise faster than earnings.
A mortgage has become a bigger and more significant part of the lives of Australians. The number of Aussies who own their home with no debt has halved over the past 20 years, while the number of retirees ending work with a mortgage has tripled.
Home ownership data from the 2021 Census show a home ownership rate of 67%, down from 70% in 2006. While the home ownership rate remained around 67–70% from the early 1970's, the rate for different age groups has varied markedly over this time.
There are also specific interest-only mortgages for over 70s, known as retirement interest-only mortgages. These are designed to help older borrowers who don't qualify for a standard residential mortgage and work in a similar way to traditional interest-only mortgages.
A lifetime mortgage is a type of equity release, a loan secured against your home that allows you to release tax-free cash without needing to move out. Lifetime mortgages are available to homeowners aged 55 or over. You can take the money as a lump sum or as series of lump sums.
A lender generally can't deny your loan application or charge you higher interest rates or fees because of your age. This rule applies to various types of lenders when they're deciding whether to give credit, such as an auto loan, credit card, mortgage, student loan, or small business loan.
For guaranteed savings and the security of owning your home debt free, paying off your mortgage earlier is a better option than investing your extra cash.
Another downside to paying off your mortgage early is the potential prepayment penalties. Because it eats into their ability to make a profit, lenders charge fees when you pay your mortgage off too early. While prepayment penalty fees can vary, most are a small percentage of the outstanding loan balance.
Mortgage terms explained
If you're like most people, you'll be on a repayment mortgage. This means that your plan and repayments are set up so that you'll eventually own your property outright. In other words, if you're on a 25-year term, after 25 years your house will finally be all yours.
It may be possible to obtain a 40-year mortgage. Any mortgage with a term longer than 30 years is not considered a “qualified mortgage,” which means few lenders will offer a loan that risky. Forty-year loan modification options for borrowers in distress are more common.
Equity release refers to a range of products letting you access the equity (cash) tied up in your home if you are older. You can take the money you release as a lump sum or, in several smaller amounts or as a combination of both.