Benefits of Interest Only Loan

What are the benefits of interest only loans?

Unlike a conventional loan where each loan repayment consists of both interest and principle (meaning your loan balance reduces with each payment), on an interest only loan you are only required to pay the interest calculated on your loan each month. This is particularly helpful to investors who wish to pay the smallest repayment amount.

One of the fantastic benefits to our interest only home loan is the redraw option, this means you can make either additional repayments or lump sum payments and only be charged interest on the loan balance amount. With the added flexibility of being about to access these redraw funds at anytime.

For example

This also assists people who to make both short and long term investments/purchases and are only charged interest on the loan balance.

What is the loan term of an interest only home loan?

You can choose up to a 10 year loan term at loans.com.au, and once this expires you loan will revert to a principle and interest loan. Your repayments will increase after this period in order reduce your loan down by the end of the term.

Why choose interest only?

Some of the reasons that customers select interest only include:

• If you want to decrease your repayments in the short term, you would choose interest only for a period to do this

• Your loan is for investment purposes

• The property you have purchased is going to become an investment property in the future

• You want to be able to use the principal funds for other uses, such as investment