What is the ideal term for a mortgage?

I believe that having the longest term for our house loan is a good choice. The longer the loan period, the cheaper the monthly payment, which can help us qualify for a larger loan and build a larger portfolio.

People may claim that trade-offs are unavoidable. You'll pay more in interest if you take up a lengthier mortgage. But don't forget about inflation. Inflation is a borrower's best friend since it permits us to repay lenders with money that is worth less than when it was borrowed. Inflation rates and income fluctuate throughout time, making the loan more reasonable in comparison to everything else.

Please let me know your thoughts.

 

It's true, the longer the term, the more interest and cost you'll be paying. However that's based on a minimum repayment with no savings in the offset.

If you're making extra repayments or parked the money in the offset, then its a different story.

 

Paying down non deductible debt as fast as possible.

 

We are at a stage where we are selling an IP and planning to start smsf and combine our supers and put the sale $$$.
Or
Pay half of the PPOR loan (fixed part might fetch fees) and then take out another loan to buy IP and forget abt SMSF.

 

See now if APRA really wanted to make a difference to servicing numbers and reign in credit growth then the rules would be changed to limit mortgage terms to 25 or even 20 years….

 

Not sure I know anyone who would say a shorter term is better/preferred?
Sure pay it off in a shorter timeframe but always apply for the longest term you can get - it provides flexibility, you can still pay it off faster than normal if you like but you don't have to.

 

How long is string ?

Some people think the best loan balance is $0 and others think the best loan is IO and no principal repayments. Others have P&I and pay large extra amounts wanting to buid equity and others dont. If rates rise and rents fall and possibly even values fall a high debt wont be your friend. It could elave highly leveraged borrowers with a massive decade long issue. This is still the case in Ireland after prices and markets collpsed long ago. People cant afford to sell and the values have only after 20 years modestly recovered most but not all of the losses. Search Irish property bubble.

 

If you have an offset or redraw (just bout all mortgages) and manage it properly then the "loan term" is dictated by you adding funds to said facilities, therefore it makes sense to get the longest loan term possible, typically 30 years and manage the credit and your money wisely.

 

It depends on whether or not your spending habits are out of your control. Are you an impulsive buyer who tend to spend money on items that you can usually do without?

If the answer you above question is 'yes' then it's better to pay off your mortgage as soon as possible. Put every extra penny you have into your mortgage and try to get rid of you home loan asap.

On the other hand, if your spending habits are in your control and you spend money on things that you actually need, then opt for the longest mortgage term, refinance and and bump loan term to max again.
Lastly and most important, put all your cash into offset account and invest wisely.