Interest only repayments

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What are Interest Only Repayments?

Interest only repayments are exactly that: you only pay the interest each time you make a repayment and therefore you never reduce the principle or the loan balance. This makes the actual monthly repayments lower in value.

Why Interest Only Repayments?

Many investors choose an investment home loan with the option to make interest only repayments. This is because it is more convenient to calculate your overheads such as repayments and income, as well as the expectant short-term ownership of an investment compared to an owner-occupier.

Some owner-occupier mortgagees choose to make interest only repayments if they are renovating, rebuilding or are in a tight financial position but because the balance does not reduce, the loan term may become extended which means you will pay more interest. Institutions will generally also limit the amount of time an owner-occupier can take up interest only repayments.

To work out what interest only repayment loans look like for you use our Australian Home Loan Calculator to find out how much you will need to pay for any given loan amount. Also read through our Australian Home Loans Guide to find out more useful home loans information.

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