Or at least that is until you consider the growing number of people now retiring with a mortgage. According to the ARC Centre of Excellence in Population Ageing Research, 36 per cent of Australians are retiring with a mortgage. Considering that figure was 23 per cent just 10 years ago, this is cause for serious concern.

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But what if someone buys a property with a 40-year mortgage when they’re 24 instead of 34 and just moves the decade forwards instead of backwards? Here’s where reality rubber hits the road.

Say you take out a loan of $600,000 on a 30-year mortgage term. With an interest rate of 5.99 per cent, the monthly repayments will come to $3594, while the interest paid over the lifetime of the loan will be $594,206.

By comparison, on a 40-year mortgage you’ll save $296 on the monthly repayments – which come in at $3297 – but the interest paid over the lifetime of the loan will grow by $243,422 to $837,628.

All of that’s before you even consider factoring in things such as refinancing, renovations or drawdown equity loans, which commonly pop up for Australian home owners.

What’s more, the increase in the amount you can borrow is arguably not great enough to justify the vast sums of interest you’ll pay.

According to Canstar data, an individual on a full-time wage would be eligible to borrow up to $24,000 more on a 40-year mortgage than they would on a 30-year term, while a couple working full-time could borrow up to $48,000 more.

Sure, an extra $20,000 on auction day certainly helps, but if the eventual price tag for that boost runs into the hundreds of thousands of dollars, it’s simply not worth it.

More than that, though, it’s important to remember why some lenders now offer 40-year loans. While they might save families a couple of hundred dollars a month on mortgage repayments and increase their budget in the short term, let’s be clear: these extended mortgages are about banks making more money, plain and simple. That’s quite literally their business.

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And this is the problem with the great Australian dream, and one of the biggest collective markers of success being affixed to a necessity. Perhaps this is why the conversation around housing is so fraught for many of us and why it can end in arguments.

Owning a home is a necessity because we all need somewhere to live and are entitled to have a secure roof over our heads. But over the past three decades, property has been an incredible vehicle for wealth generation thanks to market shifts and government policies such as negative gearing.

It’s understandable then that the 31 per cent of Australians currently renting are desperate to get their foot in the door and join the 67 per cent of Australians who own a home, and use whatever means necessary to do so, even if that means taking on an additional debt that will run into the hundreds of thousands of dollars.

Adding a full decade onto mortgage terms just so that people can afford to own a home is a sign of how far things have gone the wrong way. It’s a step that only adds further pressure to younger generations where many are already financially struggling.

Necessity may be the mother of invention, but that doesn’t mean all inventions born this way are good. Forty-year term mortgages can safely be added to the list of terrible ideas.

Victoria Devine is an award-winning retired financial adviser, bestselling author and host of Australia’s No.1 finance podcast, She’s on the Money. She is also the founder and co-director of Zella Money.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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