Interest Only Home Loans
If you’ve ever bought an investment property, likely you might be familiar with interest only home loans. They have lower repayments and the same features as ordinary loans, but interest only loans are usually for an investor.
How it works
A principal and interest loan is still the loan most borrowers take. Loan repayments include interest and principal, allowing home owners to pay down the loan in full by the end of the loan term.
With an interest only home loan, repayments are only the interest part of the loan. The principal is paid out in full at the end of the loan term.
As borrowers only repay the interest, these type of loans have lower payments than principal and interest loans.
In summary
- lower repayments
- loan terms usually between two and five years
- pay out principal in full at the end of the loan term
