Granite’s 40-Year Loan Is Assessed Over 35 Years. On a $700,000 File That Buys About 2.6% More Capacity and Costs About $356,000 More Interest

What Granite has actually launched

Granite, the non-bank brand owned by ColCap Financial, announced on 2 October that its 40-Year Extended Home Loan is available from 6 October 2026. Granite’s own product page sets out the shape of it: a maximum 40-year term, with the full term available up to age 45 and reducing incrementally to age 50, and no equivalent age restriction flagged for investors. Loan sizes run from $150,000 to $3.5 million, with maximum limits varying by property location. Maximum LVR is up to 95%, which the page notes is inclusive of any risk fees — its Lenders Protection Fee or Construction Risk Fee — and company and trust borrowers are capped at 80%. Construction is in scope. It is variable rate only, with a 100% offset, redraw and unlimited extra repayments, and residential security only.

Interest-only sits at a maximum of five years for owner-occupiers and ten years for investors. On fees, Granite’s page lists a $379 annual facility fee, nil application and settlement fees, a $595 discharge administration fee that is waived if the loan reaches full term, a $250 account variation fee, a $450 facility variation fee, and residential valuations waived.

Then the line that actually matters for a serviceability result. Granite’s page states that borrowers on this product are assessed over a longer period of up to 35 years, above the standard 30.

Michael Csavas, chief commercial officer at ColCap Financial, framed the launch around client constraint, saying that “brokers know their clients are facing challenges in achieving the property they want,” as reported by Australian Broker on 2 October. Both Australian Broker and Broker Daily also reported the accompanying repricing and an SMSF change — covered further below — which have not been published as a primary rate schedule we have been able to read, so they are attributed to those outlets rather than stated as settled fact.

The lever is the assessment period, not the term

Here is the mechanism, because it is worth being precise about. Serviceability calculators take an assessed monthly repayment capacity and convert it into a maximum loan by amortising it over an assumed term at an assessed rate. Stretch that assumed term from 30 years to 35 and the same repayment capacity supports a larger loan. That is real. It is also small, and it gets smaller the higher the assessment rate goes.

On The Broker Times’ own numbers: hold the assessed monthly repayment constant, and moving the amortisation period from 30 years to 35 years lifts a $700,000 maximum to roughly $718,400 at a 9.00% assessment rate — about $18,400, or 2.6%. At 8.50% the gain is about 3.0%. At 9.50% it falls to about 2.3%.

None of which means the lever is useless. An extra $18,000 of capacity is the difference between a conditional decline and an approval on a thin file more often than brokers would like to admit. But it is a nudge, not a solution, and it should be positioned to clients as one. A borrower told that a 40-year loan is available will reasonably assume it unlocks a materially bigger purchase. It does not.

What 2.6% looks like next to $356,000

The other half of the trade is the contract term. On a $700,000 principal-and-interest loan at 6.25% a year, with the rate held constant and fees and offset excluded, the comparison looks like this.

The monthly saving from 30 to 40 years is about $336, or roughly $4,030 a year. The additional interest is about $356,000. On those numbers a client would need to bank the monthly saving for close to 88 years to offset the extra interest — which is another way of saying the saving does not offset it. The trade is not cash flow versus cost in any balanced sense. It is a modest, immediate, visible cash-flow gain against a very large, deferred, invisible cost.

That asymmetry is not a criticism of the product. Granite’s own page is upfront about it, flagging higher total interest costs, slower equity growth and higher repayments after any interest-only period, and pointing borrowers toward independent financial advice. The point for brokers is that the asymmetry is exactly the kind of thing a file gets reviewed against later, and the client’s recollection of the conversation will be the monthly figure.

The equity question that never makes the email

Repayment and interest totals are the familiar comparison. The one brokers raise less often, and clients understand faster, is how much of the loan is actually gone after a decade.

On the same $700,000 at 6.25%, after ten years of scheduled repayments the balance sits at about $589,664 on a 30-year term, $622,969 on 35 years and $645,455 on 40 years. In principal repaid, that is about $110,300 on 30 years against about $54,500 on 40 — roughly half.

Worth noting on the credit side: because serviceability is assessed over 35 years while the contract can run 40, the assessed repayment is higher than the contracted repayment at settlement. On our figures that gap is about $136 a month at 6.25% on $700,000. It is a deliberately conservative design choice and a small cushion. It is not large enough to change the shape of the trade.

Forty years is not the new part

It would be easy to write this as the arrival of the 40-year mortgage. It is not. On a comparison-site tally updated 23 September 2026, money.com.au listed eleven lenders already offering 40-year terms in Australia — Australian Mutual Bank, AMP Bank, Bank of Us, Bluestone Home Loans, Credit Union SA, Great Southern Bank, MA Money, Liberty, Pepper Money, RACQ Bank and Unity Bank — and noted that none of the big four do. That is a single outlet’s count rather than a regulator’s register, so treat the list as indicative and check your own panel, but the direction is clear enough: long terms are an established non-bank and mutual feature, not a novelty.

What is worth reading closely is the assessment period being moved in the same announcement. A 40-year term with a 30-year assessment is a pure cash-flow product; it does not improve capacity at all. A 40-year term assessed over 35 years is a capacity product as well, and that combination is the part brokers should be asking their other long-term lenders about. The right question to put to a BDM this week is not do you offer 40 years. It is what term does your calculator amortise over.

Two levers, one calculator

Readers who followed our coverage of Connective’s white label launching at a 2% servicing buffer will recognise the pattern, and it is worth being clear that this is a different lever. The buffer changes the rate the calculator assesses at. The amortisation period changes the term it spreads the repayment over. Both expand capacity, both sit outside the client’s visible loan terms, and both are choices the lender has made rather than facts about the client.

The distinction matters because the two levers are not comparable in size. A buffer reduction of one percentage point moves a capacity result by a far larger margin than stretching the amortisation period by five years. A broker who understands that will not oversell the 35-year assessment, and will not conflate the two when explaining to a client why one lender says yes and another says no.

It also matters prudentially. APRA’s APS 220 requires ADIs to apply a serviceability buffer of at least 3.0 percentage points over a loan’s interest rate unless APRA determines otherwise. Granite is not an ADI, so neither APS 220 nor the APG 223 practice guide binds it. Non-bank lenders are regulated under the National Consumer Credit Protection Act 2009 and its responsible lending obligations, not APRA’s prudential standards — which is precisely why assessment settings can differ across a panel, and why the broker sitting between them is the one holding the explanation.

One point of context from the prudential side, since it bears on long terms generally: APG 223 does not set a maximum loan term. It does say that APRA expects interest-only periods offered on residential mortgage loans “to be of limited duration, particularly for owner-occupiers,” and that a prudent ADI would consider future changes in a borrower’s circumstances, including “the likely lower income and repayment capacity during the impending retirement of a borrower.” That is guidance addressed to ADIs, not a rule applying to Granite. It is still a useful articulation of the risk a 40-year term concentrates.

What RG 273 asks your file to show

General information only, and you should confirm how it applies to your own process with your licensee or compliance adviser — but the relevant paragraphs are worth knowing by number, because this is a product that invites a thin file note.

The best interests duty sits in sections 158LA, 158LB, 158LE and 158LF of the National Consumer Credit Protection Act 2009, and ASIC’s guidance is RG 273. Among the matters RG 273.48(b) lists for consideration is “the term of the loan, the amount to be borrowed and the outcome the consumer would like to achieve.” RG 273.73(c) asks brokers to consider “the term and structure of the credit product relative to the consumer’s objectives.” On cost, RG 273.51 makes the point that the cost of a credit product can significantly affect the outcome the consumer achieves, and RG 273.54 states that “a failure to consider cost and investigate the lowest cost options available to the consumer may suggest non-compliance” with the duty. RG 273.84 addresses the situation where a consumer has a strong preference for a feature that may not suit them, and says brokers should make reasonable efforts to explain why it may not be appropriate. On records, RG 273.165(b) points to keeping records of “the consumer’s needs, objectives, priorities and preferences.”

The age tail, sharpened by 95% LVR

Granite’s full 40-year term runs up to age 45, reducing incrementally to age 50. A borrower who takes a 40-year term at 45 finishes the loan at 85. At 40, they finish at 80. At 35, at 75.

That is not a prohibition, and plenty of those clients will refinance, sell, downsize or pay the loan out decades early — most 30-year loans never run 30 years. But the file is assessed on the contract in front of it, and the combination worth pausing on is a long tail against a high starting LVR. The product allows up to 95% LVR inclusive of risk fees. A borrower in their forties, at 95% LVR, on a 40-year term, repaying roughly half the principal they would have on 30 years in the first decade, has a thin equity position for a long time.

For that client the conversation is about what happens at the far end: what the plan is, what the equity position looks like in ten years on the scheduled repayment, and whether a shorter term with an offset and voluntary extra repayments gets to the same monthly figure with a shorter contract. Often it does, and that is a better answer than the 40-year term. The offset and unlimited extra repayments on this product are genuinely the useful features — they just work on a shorter term too.

The partial pass-through, and what it signals

The context for all of this is the Reserve Bank’s 29 September decision to lift the cash rate 25 basis points to 4.60 per cent. The Board’s statement said that “inflation remains elevated and some of the upside risks flagged in August are materialising,” and that the Board “remains focused on ensuring that high inflation does not become embedded.” On the primary release, this is not a central bank signalling that it is done.

Against that, Australian Broker and Broker Daily both reported that Granite is passing on only part of the increase: 0.15 percentage points on standard owner-occupied loans at up to 80% LVR, 0.05 percentage points on standard investment loans at up to 80%, and rates above 80% LVR unchanged or reduced by up to 0.65 percentage points. The same reports have Granite raising maximum SMSF loan sizes from $3.5 million to $5 million for commercial property and residential refinances, with only five basis points passed through on SMSF residential refinances.

Two readings, and brokers should hold both. The charitable one is competitive pricing for share in the segments a non-bank wants. The cautious one is that absorbing part of a cash rate rise is a margin decision that can be revisited, and a client placed on a partially-absorbed variable rate carries the risk of catch-up repricing later. That is not an accusation about Granite’s intentions — nothing in the reporting suggests one — it is simply the structural position of any variable-rate borrower whose lender has not fully passed through a move. Worth a sentence in the file, and worth a diary note to re-check pricing in three months.

What to review this week

1. Run the 30-year result first, every time. You cannot explain what the longer assessment bought if you never priced the baseline. Make it a step in your process, not a reconstruction after the fact.
2. Put the lifetime interest figure in writing. One line, in dollars, in the same email as the monthly repayment. A client who has seen both the monthly saving and the lifetime cost is making a different decision from one who has only seen the first, and either way the disclosure is on the record.
3. Ask every long-term lender on your panel what their calculator amortises over. Thirty or thirty-five changes the result. Most brokers do not know the answer for their own panel.
4. Flag the age tail on any borrower over about 40. Write down the end-of-term age and what the plan is, however briefly.
5. Test the alternative before you recommend the long term. A 30-year loan with an offset, or a shorter term with voluntary extra repayments, frequently reaches the client’s target monthly figure without the lifetime cost. If it does, that comparison belongs on the file.
6. Diary a pricing review at three months for anyone placed on a partially-absorbed variable rate, and check current rates and policy with Granite or your aggregator before you lodge, not after.

What to watch next

Three things. Whether other long-term lenders follow Granite in moving the assessment period rather than just the contract term — that is where the competitive pressure now sits. Whether ASIC says anything about long-dated terms and best interests duty documentation, given it has had file quality and cost consideration in view. And whether the RBA’s next decision changes the assessment rates that make this lever weak; on the Board’s own language about embedded inflation, brokers should not plan on relief.

The bottom line

Granite has launched a competently built, honestly documented product that does something useful at the margin for cash-flow-constrained clients, and does almost nothing for capacity-constrained ones. The risk is not the product. The risk is a broker reading “40 years” and placing it as a capacity solution, on a client in their forties, at a high LVR, without ever running the 30-year number or putting the lifetime cost in writing. The arithmetic is not complicated and it takes two minutes. Do it before the conversation, not after the review.

Sources: Granite Home Loans, 40-Year Extended Home Loan product page (accessed 3 October 2026); Australian Broker, “Granite launches 40-year home loan and holds back on rate rise,” Mina Martin, 2 October 2026; Broker Daily, “Granite launches 40-year home loan,” 2 October 2026; Reserve Bank of Australia, Statement by the Monetary Policy Board: Monetary Policy Decision, 29 September 2026; ASIC Regulatory Guide 273, Mortgage brokers: Best interests duty; APRA Prudential Practice Guide APG 223, Residential Mortgage Lending, December 2022, and Prudential Standard APS 220; money.com.au, 40-year home loans, updated 23 September 2026. Repayment, total interest, principal-repaid and capacity figures are The Broker Times’ own calculations on the stated assumptions and are illustrative only.