alt Hacker News$1700 per month pays off a $350k loan in 17 years, does it not? That's assuming that the household income stays static over that time.
That is very reasonable. In Australia, 35 year mortgages are normal, and 25-30 year mortgages were normal 20 years ago. Why would your household income need to be 1/4 of the cost of the house to make it work?
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Do mortgages in Australia not have interest?
The payment is set up such that the interest is amortized over the life of the loan, so your earliest payments are almost all going to interest and the latest payments are mostly the principle.
This looks like a standard 30 year loan. If 100% of the 1700 went to principle and the was no interest then yeah, your 17 years works out, but then the bank makes no money.
> In Australia, 35 year mortgages are normal,
Are they? I was under the impressions that 25-30 was normal now.
> $1700 per month pays off a $350k loan in 17 years, does it not?
Noooo. Have a play with this Australian mortgage calculator - https://www.commbank.com.au/digital/home-buying/calculator/h...
I think you might be in for a shock.
The example rate on the calculator is 5.35, about right when the base rate is 3.6 percent (though you can get lower), using that your $350k mortgage will take 40 years to pay off at $1700 per month. A $300k mortgage would take about 30 years. Or a $230k mortgage could be paid in your 17 years.
None of these loan amounts will get you anywhere close to a house in Australia today. You're looking around $1 million for the average house in most of the capital cities, with very few available under about the $650k mark.
> $1700 per month pays off a $350k loan in 17 years, does it not?
No, it does not. You forgot the interest. Let's call it 6%, close to the current US average.
The interest by itself comes to more than $1700 a month!
Paying $1700 per month, you'll never pay off $350k, even with a 1000 year mortgage.
To pay in 17 years, you'd need to pay $2741 (plus fees) per month. Most of that will be interest at first, but it tapers down. If you want to start out not paying mostly interest, you'll need to pay at least $3500 (plus fees) per month.