According to Mortgage Choice, only a few home buyers actually know how much their property will have cost them when it is finally paid off.
The mortgage broking firm crunched some numbers and revealed that the actual value of a $780,000 house in Sydney bought today will be $1,072,465 after 30 years based on a 20 per cent deposit and at the current interest rate of four per cent. In Melbourne, a $587,500 house would end up costing $807,786.
Among all the capital cities, Hobart is the cheapest, as a house bought today for $341,500 would cost $469,547 after 30 years.
While interest repayments add to the cost of a home, the good news is that lower interest rates mean that even though house prices are higher now than a few years ago, buyers are paying less over the long term in interest.
Meanwhile, new research by finder.com.au shows that property values will continue to rise, with almost every capital city in Australia having a million dollar plus median price by 2050. Sydney would have the highest median price at $6,444,988, followed by Melbourne at $6,077,067.
That being said, it pays to significantly reduce your mortgage repayments. Mortgage Choice national spokesperson Jessica Darnbrough advises borrowers to get an offset account that will offset the interest on the home loan and help borrowers pay their debt faster. It is also helpful to build a budget that you know you can stick to, all the while cutting out unnecessary expenses. She also advises borrowers to prioritise payment of credit cards so that you direct all your spare cash toward home loan interest repayments.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan