Resetting your mortgage to 30 years: what does the lower payment cost?

A longer term cuts what you have to pay each month, but you pay interest for more years. That breathing room may be worth it for your household. Put a dollar figure on it before deciding.

A lower rate and a longer term can come in the same refinance. The rate lowers the cost of borrowing. The extra time may raise the interest bill.

No. Here you are replacing an existing loan with a new term of up to 30 years, potentially undoing years of repayment progress. A 40-year mortgage starts with a longer contractual term and has a different set of lender and eligibility limits.

Our 40-year mortgage guide compares those products. For this decision, start with the years you have left today. If there are 20 years remaining, the meaningful comparison is 20 versus 30, not 30 versus 40.

Write down what the lower payment solves. Is it a temporary income gap, a lasting rise in essential costs or simply wanting more money left each month? If it's temporary, decide when you'll review the repayment.

A longer term may give you useful breathing room. Otherwise a short-term change can quietly become the way you repay the loan for the next 30 years.

If you're struggling to pay already, contact your existing lender about assistance. Don't assume a refinance will be available: the new lender still needs to assess your application. Hardship assistance may include changing the term or temporarily adjusting payments.

You can also ask your current lender about extending the term without switching banks. The documents, costs and approval depend on the change you're asking for and your circumstances.

If you only need extra money for repairs, ask whether the additional borrowing can be assessed separately while the existing balance keeps its remaining term. Compare that with refinancing the combined debt over a longer term. A separate split still needs approval and can have different rates or fees; compare the total repayments and interest, not just the smaller top-up payment.

Suppose you owe $500,000 with 20 years left. Here's what happens if you keep that term or reset it to 30 years, using a hypothetical 6% rate for both.

You free up about $584 a month. If you make only the scheduled payments throughout, you pay about $219,474 more interest.

After 5 years, the same calculation leaves about $424,498 owing on the 20-year schedule, versus $465,272 on the reset loan. That's around $40,774 more debt if you sell or refinance then.

Keeping the old payment means roughly $7,013 of extra repayments each year above the new minimum. That fits within CommBank's $10k fixed-year allowance, but exceeds ANZ's $5k ceiling. Other extra payments count too. This is why we check the product rules before suggesting you simply keep paying the old amount.

These are illustrations, not a forecast or current offer. They assume monthly payments, a constant rate, no fees, no offset and no extra repayments.

Using the same rate makes the effect of the term clear. An offset is a linked account whose savings balance reduces the amount of your loan charged interest.

You can test your own balance and term with Moneysmart's repayment calculator. A smaller monthly repayment on its own doesn't tell you which loan is cheaper.

Macquarie offers loan terms from 5 to 30 years on its Basic and Offset home loans. That gives us a useful starting point for comparing your remaining term with a fresh 30 years. Its variable loans allow unlimited extra repayments. If the aim is a lower required payment while you keep paying more, that flexibility matters.

The choice between Macquarie Basic and Offset also matters. Basic has no offset, while Offset has an annual facility fee. An offset reduces interest rather than the contractual repayment. We compare the fee and likely savings before recommending a feature you may not use. Our Macquarie home loan review explains the products.

CommBank allows up to $10k in additional repayments per fixed year on its Fixed Rate home loan without an Early Repayment Adjustment or administrative fee. Interest in Advance loans are excluded. If you want to reset the term and later catch up, check that your planned extra payments fit. Our CommBank home loan review covers the wider trade-offs.

For ANZ home loans, the fixed-rate extra-repayment allowance is the lesser of $5k or 5% of the loan amount at the start of the fixed period, each year. Exceeding it can trigger an Early Repayment Cost. A plan that works within CommBank's allowance may exceed ANZ's. Read our ANZ home loan review before comparing the fixed options.

These are product differences, not approvals to extend your loan. We still check your income, debts, property, proposed finish date and the lender's assessment. A refinance to 30 years needs approval even if you've comfortably paid your existing loan.

NAB's Alternative Refinance Assessment can consider the same or a longer term for eligible external owner-occupied principal-and-interest refinances that fail standard servicing. It is not a general approval to restart any loan at 30 years.

The pathway requires the same individual borrowers, no more than 2 applicants, up to 80% LVR with no lenders mortgage insurance, and debt-to-income of no more than 6.

The existing loan must be at least 12 months old with clear repayment conduct. The new rate must be no higher, and the amount is capped at the existing limit plus 1%. Full verification still applies; investment, interest-only, foreign-income and guarantor cases are excluded.

For an existing $500,000 limit, the 1% cap is $5,000 above that limit, not an unrestricted cash-out facility. We would check the complete eligibility rules and explain the extra interest before treating a longer term as an option.

Broker check: Send us your balance, rate, repayment and years remaining. We can compare keeping the current finish date with a longer term, then check the products that fit your income and repayment plan. Ask for a free assessment before you accept a lower-payment quote.

We also check whether staying with your current bank could solve the problem without refinance costs. We will explain which lenders we can arrange rather than imply that every product mentioned here is available through us.

Refinancing doesn't automatically mean starting again at 30 years. Ask the new lender to approve a term matching the years left on your existing loan, as well as quoting the longer term you're considering.

For each quote, get the repayment, estimated total interest and fees. Check discharge, application, valuation and registration charges, plus a break-cost quote if you're ending a fixed rate early.

Ask whether you will pay those costs from savings or add them to the loan. Added costs become debt and can attract interest too.

Then ask what you'd still owe after 5 years. That's especially useful if you expect to sell or review the loan before it's paid off. Similar payments can leave you with different balances.

Our refinance guide explains how to compare loans over the same years remaining. Once you've made that comparison, you can decide separately whether extending the term is worth it for your budget.

In the worked example above, paying about $3,582 a month would still clear the debt in about 20 years, even if the approved term were 30. That assumes the rate stays at 6%, the loan allows the extra payments and you keep making them.

That approach gives you a lower contractual minimum without necessarily taking the whole 30 years. The risk is practical: you drop to the minimum for a while and never put the payment back up.

If you choose to keep paying more, arrange it deliberately and review the amount when the rate changes. Check extra-payment limits, particularly on a fixed portion. Our guide to paying off your home loan faster explains ways to reduce the balance sooner.

Keep an emergency reserve as well. Paying every spare dollar into an account you can't readily access may leave you short when something goes wrong.

An eligible offset can reduce interest while leaving savings accessible. How quickly you repay the debt still depends on your payments and the loan rules. Check which loan it links to and the account fee.

Add the proposed term to your age. Will you still be repaying the loan when you plan to reduce work or retire? Discuss how the balance would be repaid if your income changes before applying.

Build that plan around what you can realistically support now. Don't make a future inheritance, property price gain or another refinance the thing that has to rescue it.

Ask our Brisbane mortgage brokers for both written comparisons: your remaining term and the proposed 30 years, including fees, total interest and debt left after 5 years. Call 1300 088 065.