Interest only loans


Interest-Only Loan: Under an interest-only loan, usually the borrower makes no principal repayments.

The repayments are for the amount of interest only, which has accrued on the loan. These loans are usually for a short period of around 1 to 5 years.

Why would you choose an interest only loan? Typically used by investors or where cashflow is tight for a short period of time, they can maximise their cashflow which could mean they can hold more properties and hopefully make a big profit from them.

its important to understand how you’re going to make the ongoing repayments when you’re thinking about taking an interest only loan.

In most cases there’s nothing preventing you from paying principle if you so choose, and you can switch back to P&I payments as well. Consider them a tool that works particularly well in certain circumstances.

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Two Red Shoes Copyright © 2020 All rights reserved. Call on 02 9002 0380, 0404 494 929, email us  or 'old school' fax 02 9002 0381

Jarrett Group Pty Ltd atf Jarrett Group Discretionary Trust trading as Two Red Shoes hold Australian Credit Licence No: 428614 and are members of an external dispute resolution scheme. Details of our complaint resolution process can be found here or please see our credit guide. All information contained on this site is general information only, and does not take into account your particular financial situation or needs. You should consider your personal objectives, financial situation along with the recommendations of your trusted advisors.

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