The real measure of your wealth is how much you'd be worth if you lost all your money.
Unborn Trump defends Iran strike secrecy with Pearl Harbour joke
Pearl Harbor attack: December 7, 1941
Trump’s birthdate: June 14, 1946
So he's admitting Iran was an unprovoked attack aimed at controlling energy. As was Pearl Harbour.
“Bluesky is like twitter but without nazis”
I love this planet & stars chart from XKCDbecause it’s technically correct but also completely useless.
“It’s obscene,” she says. “I’ve worked since I was 18, I’ve been a teacher for 15 years. It shouldn’t be this hard.”
The prospect of entering retirement with a mortgage is quickly becoming a glaring reality for more Australians. The odds of a median, near-retiree household still having a mortgage balanceare now roughly 50-50, according to analysis by financial services consulting firm Credere Consulting.
The Melbourne Institute’s latest Household, Income and Labour Dynamics in Australia survey shows the proportion of retirees who own their homes outright dropped from 75 per cent to 66 per cent in the decade to 2023, and the share of those with a mortgage increased from 13 per cent to 17 per cent.
And things are getting worse, not better. More than a third (36 per cent) of Millennials expect to carry a mortgage into retirement, according to a survey of 1800 Australians published late last year by Vanguard. A quarter of those Millennials, currently aged between 30 and 45, plan to use superannuation to clear the debt once they have access to the money.
“If Australians are expected to retire in the traditional retirement years, how are they supposed to manage ongoing mortgage repayments if they have relatively modest super balances? It just becomes a very tough equation,” Vanguard Australia managing director Daniel Shrimski says.
Bella and John Maxwell, co-founders of The Mortgage Coach, work with first home buyers to help them structure their home loans. They say that on a variable interest rate of 6.19 per cent, a dual-income couple with an $800,000 mortgage taken out at age 38 would still owe approximately $500,000 by age 55.
“For decades, Aussies believed that if you worked hard, you made your repayments, the mortgage would naturally disappear before retirement,” Bella says. “That’s the story that we’ve been told. What’s changed is that the loans are much larger. Now people are entering the market later, and the mass of modern mortgages means progress can be a lot slower than what people realise.”
The concern is that Australia is edging toward intergenerational mortgage debt. That is, people retiring with outstanding mortgages and their children inheriting property that still carries a loan.
First home buyers are also entering the market years later than their parents did. In the past five years, the average first home buyer age has increased to 34, according to Westpac, while some broker networks put the average first home buyer age at 37. Roughly one fifth of Westpac’s first home buyer lending the past 12 months has been to people aged over 40.
Terdich’s own parents, in large thanks to her mother’s line of work in finance, were able to buy a home that, even then, was considered a bargain. And they were able to pay the mortgage off in less than a decade.
“They were able to secure a much lower [rate] loan compared to everyone else,” she says. “Mum said her deposit was $3000. I was like, ‘Oh, OK, so you just kind of picked it up for a six-pack.’”
Terdich has been able to lean on her parents to help save for the deposit for the townhouse that she and her partner bought in Pakenham, Victoria in 2022 when she was 35. She may receive more help to pay off all or some of the mortgage once they die.
Grace Terdich will have around $270,000 left on her mortgage at age 55. Louis Trerise
“It’s literally taking, to support Millennials buying houses, people dying,” Terdich says. “Which is a dark thing to look at, but realistically, [my parents] also think about how [the house] is going to benefit me, which is really messed up.”
Watson Wealth managing partner Elliot Watson has seen clients who are not only buying property later, but who are now concerned about working well into their 60s, and delaying other milestones such as starting a family.
“Every child costs money, and that reduces your ability to borrow and service a loan,” he says. “So you get stuck in a rock and a hard place between starting your family and wanting a home for the family.”
Active versus passive participation
John Maxwell says that an unintentional setback for borrowers can be refinancing too frequently, which can “reset the clock” on the loan term.
“In a standard mortgage, it can take up to 21 years before half of each repayment is actually reducing the principal. So when borrowers refinance in the first five years and reset the loan back to 30 years, they may have barely touched the balance.”
The key strategy to reduce your mortgage faster is to make repayments that are greater than the minimum amount, resulting in less interest paid. “The challenge that we’re seeing in our day to day is that most households are juggling work, raising kids, managing rising costs, so those extra payments don’t always happen or ever happen,” Bella Maxwell says.
By actively engaging with the mortgage, borrowers can begin to develop a sense as to what freeing up some of their cash flow can allow for, and the difference that it can make. As AFR Weekend previously reported, on an $800,000 loan with a 30-year term at 5.5 per cent, increasing monthly repayments from $4542 to $5000 would shave almost six years off the mortgage, and save almost $200,000 in interest.
Watson says that accessing superannuation to reduce the mortgage can be reasonable if there’s $100,000 to $200,000 left on the loan. There’s also the option to downsize when the time is right.
But he says that the impact of even modest top-ups each month can play a big part in lowering the burden before it gets to that point.
A $500,000 mortgage at 55: Millennials face grim retirement
Rising property prices, later market entry, and frequent refinancing now extend loan terms well past borrowers reaching their 60s
“It’s very important to know where your money goes,” Watson says. “Understand the impact an extra $100 a week in repayments can make over a year, over five years, over 10 years. That will make a substantial difference.”
