Bendigo Bank’s Interest Only Term Loan may appeal to first home buyers or investors and given the opportunity to get into the property market and make minimal home loan repayments. The loan has a low upfront fee and offers a competitive interest rate.
Repayments can be made weekly, fortnightly or monthly, a flexible option as many lenders allow only monthly repayments on interest only loans. Repaying more often helps you to keep interest costs down. You can repay the principal lump sum at the end of the term or renegotiate the loan.
Borrowers can take out this loan for a generous 10-year period on variable or fixed loans. As you only repay interest, this frees up cash for other purposes. Repayments are less than they would be for a principal and interest home loan, but the danger is that interest costs accumulate over time.
An added benefit is you can make free online redraws should you choose to pay additional funds onto the loan.
Bendigo Bank also offers a useful 100 per cent offset account facility. This is a great home loan feature as savings in this account are offset daily against your outstanding home loan balance, helping you to reduce interest expenses on the mortgage.
You can borrow up to 90 per cent of the value of the property’s value, but you'll need to pay for lenders mortgage insurance if your deposit is less than 20 per cent.
If you apply for a fixed rate loan, which allows you to lock in the fixed rate at the time of your application for up to three months until settlement, regardless of subsequent rate increases. If fixed rates are reduced the lower of the two rates applies.
The Interest Only Term Loan may suit investors and owner-occupiers looking to get into the property market without outlaying too much cash. You can use it to buy a home or land or to refinance. The product offers the flexibility of a fixed or variable rate. In addition, you can maximise tax deductions if you're an investor. However, you need to be aware that as repayments are directed only at the interest portion of the mortgage, your interest costs will be higher than those on a principal and interest loan.
The Bendigo Bank Interest Only Term Loan is a flexible loan if you want to get into the property market with minimum loan repayments. Investors or first home buyers can take this home loan out without incurring a big upfront free. Paying off just the interest within the loan term means you can take advantage of lower repayments, which may suit owner occupiers or investors who are confident of making a capital gain if they sell the property. However, the ongoing costs and one-off fees for some of the loan features may accumulate on this loan as well as interest payable, so you’ll need to do your sums and compare to other interest only and principal and interest loans to fully assess the pros and cons.
For an interest only loan with added benefits, look to Bendigo Bank’s Interest Only Loan and the options that may suit your needs.