🤔 Client Question: "What is an Interest Only loan, and Why would I have one?
Answers...
WHAT? An Interest-Only loan is where loan repayments are only accrued interest, and no principal is paid off, for a specified amount of time.
WHY? There's a few reasons. Mostly the interest only loans provided are for investment purposes, generally done under tax or financial advice.
For both Home Loans and Investment Loans, Interest Only is an option.
💰 They are generally on a slightly higher interest rate (interesting back story to this)
💰 There should be a reason to request this if it's on your principal residence loan
💰 In the long run, the total amount of interest paid on the loan could be higher (*see graph, all else being equal)
💰 You can request up to 10 years' Interest Only (many lenders offer 5, some 10)
💰 Your Borrowing Power reduces when you increase Interest Only years
💰 Yes, you can get 100% Offset Accounts with Interest Only Loans (sometimes not if it's a Fixed interest rate)
💰 Yes, you can choose either Variable or Fixed (or both) interest rate types.
Truly Finance's mortgage broker advice, financial services and property strategies are generally complimentary. We do this for the best interests of our clients and we strive to be the best mortgage brokers!
James Brett. Principal. Awarded Mortgage Broker ☎️ 0439 591 759
Victor Simone. Principal. Legend Mortgage Broker ☎️ 0449 659 029
Andrew O'Brien. Superstar Mortgage & Finance Broker ☎️ 0451 308 292
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