Differing views on 50-year mortgage

Squirrel adviser Nathan Miglani says, “there is no need for it and there has never been demand for it. A 30-year mortgage is more than enough."

He says with most people working for only 40 years, they don’t want to go into retirement with a mortgage hanging over their heads.

“And while the banks have separate rules for buyers over 50, it is still easy to get a mortgage for investment property, but for owner-occupiers there has to be an exit strategy.”

As an example, Miglani points to clients 62 and 59 buying a $1.2 million property paying a $600,000 deposit. Squirrel has secured a 15-year mortgage because they are still in high-paying jobs, but they will be selling down after they are 65.

“It's a myth, banks discriminate. Most of the banks are actually happy to help as long as there is a clear exit strategy in place,” he says.

On the other hand, Patel thinks New Zealand will end up with a 50-year mortgage sooner or later because it is not the “swear word” it once was.

“I know that people think inter-generational debt is to be avoided at all costs, but in a world with inflation and if you have investment debt, then 50 years to pay it back is better than 30 years.”

With a longer term mortgage is going to be easier to pay it back, he says. “Yes, there is more interest to pay, but for an investor receiving rent, it is also subject to inflation and rises.”

Patel says he would advocate a 50-year mortgage for investors but not home owners. “If you are borrowing money and not putting it into another income generating asset, like property investment, then getting a 50-year mortgage for a swimming pool or more holidays is a bad idea.”