The new 40-year loan joins a handful of others on the market and is being spruiked as a "realistic pathway" for younger Australians to enter the housing market.
Great Southern Bank, one of Australia's largest customer-owned banks, said it's responding to a clear need in the market.
A recent bank survey found 29% of Millennials would consider taking out a 40-year home loan if it meant more affordable repayments.
Great Southern joins non-bank lender Pepper Money that launched the first official 40-year home loan on the mortgage market in December 2024.
Smaller lenders, including RACQ Bank and G&C Mutual, also offer 40-year home loans but typically only to first home buyers.
See also: Should you take out a 40-year home loan?
A 'foot in the door'
Great Southern's chief customer officer Rolf Stromsoe said lower monthly repayments can be the difference between renting and buying a first home.
"This could be their 'starter home loan' - exactly what they need to get their foot in the door at the beginning of their home ownership journey," he said.
The new loan product comes with flexible repayment options and no fees for extra or early repayments.
However, as the bank's website warns, those opting for an extended term of 40 years will face a higher interest rate.
Even at the same interest rate, 40-year loan terms will see borrowers pay back substantially more in overall interest.
Here's how a $600,000 loan taken out at 5% p.a. interest stacks up for a homeowner making principal and interest (P&I) repayments:
| Loan duration | Monthly repayment | Total interest paid |
| 30 years | $3,221 | $559,535 |
| 40 years | $2,893 | $788,726 |
Source: InfoChoice Home Loan Calculator
That's more than $229,000 in extra interest over the longer term - or around 30% more.
Great Southern Bank's extended loan term option is available to first home buyers purchasing owner occupied properties and making P&I repayments with a maximum loan-to-value ratio (LVR) of 90% (including home loan fees).
The option is also available to the bank's internal home loan refinancers but not external refinance applicants.
See also: What is refinancing a home loan and what are the pros and cons?
Sign of the times
After the first advertised 40-year home loan hit the market in late 2024, analysts tipped there would be more to follow in response to Australia's runaway home price growth.
This week, new data revealed the national mean dwelling value cracked the $1 million mark for the first time.
Although there have been cuts to the official cash rate in February, May, and August 2025, they are expected to further fuel home price growth, particularly at the more affordable end of the market.
In May, AMP Bank offered its solution to Australia's housing affordability pressures, launching a 10-year interest only home loan option to owner occupiers.
The product is being targeted at retirees and pre-retirees looking to reduce their monthly mortgage repayments.
Many lenders may also offer longer loan term refinance deals to existing customers looking to reduce their monthly repayments.
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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 6.02% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
