Buying a house in Sydney or Melbourne, if you pay the median price and get a big mortgage, could end up costing a lot more than you think.

Research by comparison website shows that a home-owner with a mortgage of at least $489,300 will end up paying $1 million over the duration of a 30-year loan, using the average variable interest rate of about 5.5 per cent.

Any property priced above $611,625 will end up costing the borrower $1 million, if the mortgage represents 80 per cent of the property’s value.

And if the property is in Sydney, where the median house price is $825,000, borrowers could hit the $1 million mark for their pile of bricks and mortar by just year 11 of the loan.

But, if they buy in Melbourne, where the median house price is $633,000, they won’t hit the $1 million mark until year 24, given a 20 per cent deposit and an interest rate of 5.5 per cent.

The median house price is the midway point of all the houses sold.

“When borrowers look at how much they can afford to repay for a home loan, they might not look down the track to how much they end up spending,”’s money expert, Michelle Hutchison, said on Monday.

“The danger lies with spending a lot more than necessary.”

Ms Hutchison said the value of a house would likely increase over the term of the 30-year loan – but that rise may not compensate for the amount a buyer ends up paying if they have a small deposit and haven’t shopped around for a good interest rate on their loan.

For example, an interest rate of 4.39 per cent – 1.11 percentage points below 5.5 per cent – would save $446 per month in repayments on a home loan of $660,000.


Price + Mortgage = Total cost

  • Sydney $825,000 + $660,000 = $1.349 million
  • Melbourne $633,000 + $506,400 = $1.035 million
  • Perth $530,000 + $424,000 = $866,673
  • Brisbane $475,000 + $380,000 = $776,735
  • Adelaide $421,000 + $336,800 = $688,433