December 2018. The announcement of the removal of the 30 percent cap for new interest-only residential mortgages will allow lenders to offer more choice for customers, leading to an increase in competition across the industry, particularly for smaller and regional banks.

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 able to access these redraw funds at anytime through an offset account.

For example

Loan amount : $200,000

Available Redraw (offset) : $50,000

Interest charged on $150,000

What is the loan term of an interest-only home loan?
Some lenders are now offering up to 10-year loan terms, and once this expires your loan will revert to a principal and interest loan.

The main benefit is to minimise your monthly repayments and with the free available cash surplus either purchase a second investment property or start repaying in your own terms the principal on an offset account. Increase positive cashflow – Leverage – Maximum flexibility.

What is the loan term of an interest-only home loan?
You can choose up to a 10-year loan term, and once this expires your loan will revert to a principal and interest loan or switch lender to start another 10-year loan term. Your repayments will increase after this period in order to reduce your loan down by the end of the term.