What are Interest Only Home Loan?
Most home loans will require you to pay off the principal and interest in the repayments. This will mean that while you are paying the interest the value of the loan will decrease over time and you will eventually pay off the loan. There are other loans that are available and are suited to investors that allow you to only pay the interest portion of the repayments. These are called Interest Only Loans.
- Interest only home loans are loans that only require you to only pay the interest portion of the repayments. While you only pay the interest part of the repayments you will be saving money compared to those who are paying the interest and principal.
- Interest only loans are suited mainly to investors. Investors will usually use interest only loans to purchase a property and make minimal repayments. During this time they will hope that the property value will go up (or they will make renovations) so that when they resell the property they will make money.
- Caution. While your repayments are less compared to principle and interest loans, the loan amount will be the same in 30 years time compared to principle and interest where the loan will be paid off. Always get advice from your Imagine Home Loans broker.