Thousands of Kiwis desperate to get on the property ladder are signing up to 30-year mortgages - but many are saddling themselves with a lifetime of debt.
First-home buyers struggling to afford soaring property prices and older people refinancing after marriage splits are spreading repayments over longer terms but lumping themselves with tens of thousands of dollars more in interest.
Some will need to be working well into their 70s to pay off their home or risk losing it in a mortgagee sale.
Three-decade mortgages make up about half of some banks' new lending and the average age of a first-time buyer is now 34.
A Kiwi borrower buying a median-priced $416,000 home with a 20 per cent deposit on a floating 6 per cent interest rate would pay $717,965 over the life of a 30-year loan, according to Sorted's mortgage calculator. They could save $146,135 on a 20-year term.
And though brokers say most clients now opt for 30-year mortgages, many pay off their loans much faster by upping weekly repayments.
The Herald asked major banks for a breakdown of their long-term mortgage lending.
Kiwibank, Westpac and ANZ said 30-year loans made up about half their new lending last year, or were standard loan periods, though borrowers often made extra payments to shorten their mortgages and save money. ASB did not respond.
Loan Market mortgage adviser Bruce Patten said 30-year mortgage approvals were now "the norm".
But as the age of first-home buyers rose, more homeowners would have to work into retirement to pay off debt. "That's the natural progression. Houses are more expensive, they're older, so they need a longer term to afford the repayments."
Mr Patten also saw a lot of older "marriage split" clients, whose equity had been halved, seeking a longer-term loan. Many still had young children. "They don't really have a choice if they want to be in their own home. They literally could not afford it unless they took the longer term."
Professor Robert Hargreaves of the School of Economics and Finance at Massey University said banks appeared to have become more willing to offer 30-year loans.
As house prices soared, the longer term allowed buyers to spread smaller monthly repayments, keeping their servicing costs low.
"[But] it basically means a hell of a lot more interest. So in general terms, it's not a smart thing to do."
Westpac spokeswoman Haley Ritchie said the average age of first-home buyers was 34.
"As with all lending, if the term of the loan exceeds the estimated future term of the borrower's earning capacity, then we work with them to identify a strategy for repayment and/or reduction of debt."
Stefan Herrick of ANZ did not give specific figures but said there was no upper age limit for loans. Each application was assessed on the customer's ability to comfortably repay it.
BNZ's acting director of retail, David Bullock, said most new home loans over the past year were for terms under 25 years.
Cutting the cost
Tips to save on your mortgage:
• Increase your weekly repayments above the minimum required by your bank.
• This will drastically reduce interest costs and shorten your loan repayment period.
• Make lump-sum payments against the principal if you can afford it.
• If circumstances change, you still have flexibility to reduce repayments to the minimum if you're on a 30-year loan.
- Source: Mortgage Link mortgage broker Stuart Wills