The path to homeownership along a 40-year route continues to gain traction.
While some lenders have quietly been offering 40-year mortgages for years, the products have largely flown under the radar. That's changed in the last two years with the likes of Pepper Money, RACQ Bank, G&C Mutual Bank, Great Southern Bank, MA Money and Teachers Mutual, under the Australian Mutual Bank brand, extending loan terms.
This week AMP Bank became the newest entrant, launching a 40-year loan term called Equity Flex investment loan. The niche product is aimed at property investors. But it also underscores the growing list of Australian lenders willing to write mortgages that run longer than the traditional 30-year ceiling.
In practice, a 40-year mortgage is a trade-off: The longer loan tacks on an extra decade of repayments and added interest. The difference between a 30-year and 40-year loan on a $650,000 property could be as much as $350,000 over the course of the life cycle, $400,000 on an $800,000 property. But the longer-term loan also lowers monthly payments.
"It's worth it for the right borrowers," Richard Brown, principal and broker at Sydney-based Mortgage Choice, told Australian Broker. "For the right investors, it is absolutely a good introduction and a good offering. And one of the reasons that it's come into more focus just recently is because of the changes that happened in the budget. That has made a product or a loan like a 40-year loan even more attractive to certain investors."
The 2026 to 2027 federal budget eliminated negative gearing tax breaks for investors who purchase existing properties after 11 May 2026. After 1 July, investors cannot use negative gearing losses to offset wages and other non-property income.
"That makes it harder for investors to hold onto property, particularly early on," Brown explained. "So in the first few years of owning the property, that's when the biggest difference is between your outgoings and the income. What a 40-year mortgage does — particularly one like AMP's where borrowers can choose to make interest-only repayments for up to 10 years, and the bank won't require them to requalify for the loan during that time — it improves your cash flow and makes it easier to hold onto the property in those early years, typically when cash flow is under the most pressure, because obviously the repayments are lower."
In 2024, after introducing an extended version of its 40-year loan to the market, Pepper Money told Australian Broker that "most customers pay above the minimum required repayments and don't see out the full 40-year term; most get back on their feet and will refinance their mortgage when their circumstances change. The extended mortgage term hands over more flexibility and control to the customer. They can opt to pay the minimum in times of need, or pay extra when times are good."
AMP is among the biggest lenders yet to embrace 40-year mortgages, a move that could help push the once-niche product further into the mainstream. At present, Australia's Big Four banks — Commonwealth Bank of Australia (CBA), ANZ, National Australia Bank (NAB) and Westpac — do not offer 40-year loan terms, limiting both consumer choice and price competition. AMP's product is also the one of the first aimed specifically at investors.
"Property investing has always had a long-term focus. But the budget changes and ongoing cost of living pressures have put an even greater premium on cashflow management," said Sean O'Malley, group executive at AMP Bank. "For many investors, the question is no longer just whether a property is a good investment. It's whether they have the flexibility and financial capacity to hold that investment and maintain their strategy through changing market conditions and evolving tax settings. This includes new investors no longer having access to negative gearing benefits."
The steady stream of new entrants suggests 40-year mortgages are evolving from a niche curiosity into a legitimate lending category. And as the market expands, borrowers gain more choice, while brokers stand to benefit from new lending opportunities and additional revenue streams.
In fact, Australia has around 2.3 million individual property investors, with roughly 70% owning just one investment property, according to data from the Reserve Bank of Australia (RBA). Meanwhile, Australian Bureau of Statistics (ABS) data shows that investors borrowed $41.5 billion for new dwelling purchases and refinanced more than $36 billion in housing loans in the March quarter of 2026 alone. Many of those borrowers are likely to turn to brokers as they weigh up their financing options.
"Brokers have been telling us that more investors are looking for ways to improve cashflow and strengthen their holding power, particularly as lending, tax and economic conditions evolve," said Michael Christofides, AMP bank director lending and everyday banking.
Brown added: "It's not necessarily about having another revenue stream for brokers. It's about brokers having more options in their toolkit to help their clients achieve their goals. If a 40-year loan term helps an investor to keep progressing on their investment journey, then it's a good thing. And brokers are in a really good position to educate around the pros and cons of any loan; brokers are in a really good position to actually talk through advantages and disadvantages to different types of loans.
"As a broker, our job is to get the best loan and put our clients in the best financial position," he continued. "So any sort of innovation around loans and mortgages is a good thing for brokers, the market and borrowers."
