The 50-Year Mortgage: Smart Strategy or Debt Trap?

Rayson L.
Nov 14, 2025
4 min read

Updated: Nov 17, 2025

Pros and Cons of a 50 year mortgage in Melbourne

In the Australian property market, it is common for a buyer to buy a house with the help of a mortgage. A mortgage is a home loan whereby a lender lends you the money, so you can own the property. Most buyers would need a mortgage facility when they buy properties as the price of a typical house in cities such as Melbourne are rising faster than a typical person's savings. Typical Australian mortgages ranges between 20 to 30 years.

What’s a 50-Year Mortgage?

A 50-year mortgage is exactly that: a home loan that runs for five decades. Australia has traditionally seen 20–30 year terms, but with property prices outpacing wages in some cities like Melbourne, Sydney and Brisbane, some Australian lenders have quietly introduced ultra-long terms to “help” borrowers lower monthly repayments and pass serviceability assessments. Forty-year terms are becoming common, and 50-year loans are being introduced in markets like the US.

On paper, a 40–50 year mortgage sounds great: lower repayments, bigger borrowing power, easier entry. In practice, it’s a financial marathon that can outlive your useful working years.

For this discussion, let’s assume you’re buying a $1 million home (around Melbourne’s median), with a 20% deposit, at 5.5% p.a. Note: longer terms often attract higher rates, and in Australia rates do move. Historically, rates in the high-teens aren’t unheard of.

Loan Comparison — $800,000 at 5.5% p.a.

Loan Term	Monthly Repayment	Total Repaid	Total Interest Paid
30 years	$4,542 /month	$1,635,232	$835,232
40 years	$4,126 /month	$1,980,558	$1,180,558
50 years	$3,919 /month	$2,351,258	$1,551,258

The Benefits: Why Some Buyers Like It

There’s no denying the appeal, especially for younger or first-home buyers trying to get into Melbourne’s market. Here are the main “pros”:

✅ Lower Monthly Repayments

Longer mortgage means lower monthly repayments, which can be good for some. At 5.5% interest, a $1 million property (80% loan = $800,000) over:

30 years costs about $4,542 per month
40 years costs $4126 per month
50 years drops to $3,919 per month

Repayment drops between 9% to 15% in a 40 and 50 year mortgage, compare to a 30 year. This can be enough to ease cashflow pressure, or get you through bank serviceability tests.

✅ Increased Borrowing Power

Banks assess loans on repayment ratios. A 50-year term stretches those repayments thin, helping borderline applicants qualify. For some, that’s the difference between buying a $900k townhouse in Glen Waverley and settling for a $700k one 10 km away in Clyde North.

✅ Flexibility (If You’re Disciplined)

If you treat the 50-year loan as temporary, with the intention to refinance, pay lump sums, or sell within 10–15 years, it can be a short-term affordability foot-in-the-door strategy. The danger lies in treating it as a lifetime plan.

The Cost: Why It’s Risky

Longer doesn’t mean better. It means you are paying more interest, slower equity growth (more of the growth is going to pay off the lenders), and higher lifetime debt. Putting the numbers together, at 5.5% interest for a $1million house in Melbourne, the total interest you are paying are:

30 year mortgage: $835,232
40 year mortgage: $1,180,558
50 year mortgage: $1,551,258

You are paying almost double the interest over a 20 year longer loan.

❌ Interest Nearly Doubles

Over 50 years, you’ll pay almost twice as much interest as a 30-year borrower. For that extra interest repayments, you could have bought a 2nd property.

❌ Equity Builds Painfully Slow

In the first decade, most of your repayments go toward paying off the interest, not principal. That means you own almost nothing after 10 years of paying faithfully. If property prices flatten, you risk being stuck with minimal equity and no leverage. To minimise this pain, ensure you buy properties with real good growth potentials. Do your own due diligence or chat with us, instead of taking the sales and marketing agent's words as the gospel truth. Sales agents work for the seller, not buyer.

❌ Retirement Risk

If you start a 50-year loan at 35, you’ll finish at 85. Unless you’re planning to work forever, or pass it on to the kids, and let them take over the repayment, that’s not sustainable. The longer your loan term, the less control you have over your financial future.

❌ Higher Total Cost of Living

Insurance, maintenance, and interest creep all compound over time. A long mortgage can quietly drain wealth that could’ve gone into super, shares, or investment properties.

Who Might Benefit (and Who Definitely Shouldn’t)

A 50-year loan can make sense in limited situations:

Investors planning to hold and refinance every few years.
High-income professionals with strong cashflow but short-term liquidity issues.
Strategic buyers who understand how to use debt as a tool.

But for most home buyers, it’s a false sense of affordability. It’s not a “cheap” loan. It is a slow bleed. You're actually paying almost double the interest. Your interest payments are more than the price of the house. Banks and lenders love this.

Loan Comparison: $800,000 at 5.5% p.a.

Loan Term	Monthly Repayment	Total Repaid	Total Interest Paid
30 years	$4,542 /month	$1,635,232	$835,232
40 years	$4,126 /month	$1,980,558	$1,180,558
50 years	$3,919 /month	$2,351,258	$1,551,258

⚖️ Summary

Term	Benefit	Drawback
30 years	Balanced repayments and equity growth.	Higher monthly cost.
40 years	Better cashflow flexibility.	You pay ~40% more in interest.
50 years	Lowest monthly repayment.	You pay almost double the interest.

Practical Man’s Take

For most people, a 50-year mortgage is the long zig-zag way up the mountain — same height, just slower, riskier, and you burn more fuel (interest). If the only way a property fits your budget is by doubling your total loan repayment, it probably is not the right property for you.

At Concierge Buyers Advocates, we guide clients through decisions like these. Devising strategies and identifying the right properties to buy that suit your budget and goals, instead of extending your budget to suit the property (like all sales agents do). We find you the right property strategies that actually build wealth, not just “make repayments work.”

Bottom Line

A 50-year mortgage reduces your monthly stress, but almost double your lifetime debt, compared to a 30 year mortgage. Use it only as a short-term lever, not a long-term lifestyle.

The smarter play? Focus on properties which will grow in value, so you benefit more from the growth. Buy well, buy within means, and negotiate the right price.