A $500,000 mortgage will cost $1 million plus over 30 years

Australians with a mortgage of $489,300 or more will see themselves spending $1 million or over for the life of their 30 year loan, according to Finder’s research.

The statistic is calculated on an average variable interest rate of 5.5%.

In a situation where the mortgage is 80% of the property value, then a property bought for $611,625 or more will end up costing more than $1 million.

Michelle Hutchison, money expert at Finder, said that borrowers are not looking down the track to see how much they end up spending when they look to see if they can afford a home loan.

“While it’s likely that your home will increase in value over a 30-year loan term, it might not compensate the cost of a home loan as the money you end up spending can be greatly increased if you have a small deposit and don’t shop around for a good value deal,” she said.

“This research was based on the average variable rate of about 5.5% but borrowers need to remember that there’s a big difference between what lenders are offering, which can mean bigger costs for a home if you’re not careful.”

She notes that the lowest ongoing variable rate they are current recording is 4.39% from Heritage Bank, or 1.11% lower than the average variable rate.

“Take advantage of the online tools and comparisons of different home loans to help you find the best value deals,” she said.