A longer loan term can still cost more

A lower scheduled repayment can improve short-term cash flow, but it does not prove that a loan is cheaper or that a lender will approve more. The contract term, interest-only period and serviceability assessment answer different questions.

The practical comparison is the payment now, the payment after any interest-only period, the total interest over the full structure and the term the lender uses to assess affordability.

What the new 40-year product changes

AMP Bank launched Equity Flex on 30 July 2026 for eligible investment borrowers. The published features include a term of up to 40 years, a 6–10 year interest-only period, offset and redraw, and a maximum 80% LVR. AMP states that serviceability is assessed on a maximum 30-year principal-and-interest basis.

That distinction matters. The contractual schedule may spread repayments over longer, while the affordability test can still use a shorter principal-and-interest period. This is product information, not a recommendation, and it should not be read as owner-occupier eligibility.

Worked example: $600,000 at 6.50%

During a 10-year interest-only period, the monthly interest is about $3,250. After those 10 years, the principal is still $600,000. Repaying it over the remaining 30 years would require about $3,792 a month.

A standard 30-year principal-and-interest loan at the same unchanged rate produces about $765,000 in total interest. Ten years interest-only followed by 30 years principal and interest produces about $1.16 million in total interest.

The longer structure lowers the initial scheduled payment, but adds roughly $390,000 of interest before principal reduction starts. This mathematical illustration assumes monthly repayments, a constant 6.50% rate and no fees, extra repayments or product changes. It is not an AMP quote, lender assessment or approval.

Three terms to keep separate

Loan term — the contractual period available to repay the loan.

Interest-only period — the period in which scheduled repayments generally do not reduce principal.

Serviceability assessment — the lender's affordability test using verified income, expenses, debts, an assessment rate and an assessment term.

What to request before a loan discussion

• Initial repayment — the scheduled payment during the opening period.

• Post-interest-only repayment — the payment once principal reduction begins.

• Total interest — the estimated cost across the complete structure, not only the first year.

• Assessment basis — the rate and term used for serviceability, plus lender-specific policy.

• Flexibility — offset, redraw, extra-repayment rules and any fees or restrictions.

Bottom line

Cash-flow flexibility can be useful, especially for an investment strategy, but a smaller payment today can come with a larger payment later and substantially more interest overall. Compare the whole structure and the lender's assessment—not the opening repayment alone.

Sources

AMP Bank — AMP Bank launches 40-year investor loan

AMP Bank — Equity Flex Loan

Moneysmart — Choosing a home loan

Moneysmart — Interest-only home loans

General information only. This is not financial advice. Loan options and eligibility depend on your personal income, liabilities, assets and lender assessment criteria.