Who Interest Only Loans Are Suitable For
Interest only loans may be suitable if you:
- Are a property investor managing cash flow
- Plan to sell the property in the short term
- Expect your income to increase in the future
- Want to reduce repayments temporarily
- Are using a strategic investment approach
These loans are commonly used in investment property strategies where cash flow is prioritised.
How Interest Only Loans Work
During the interest only period:
- You only pay the interest charged on the loan
- Your loan balance remains the same
- Repayments are lower than principal and interest loans
Once the interest only period ends:
- The loan converts to principal and interest
- Repayments increase
- The remaining loan balance must be repaid over a shorter term
We help you understand how repayments will change over time so you can plan ahead.
Interest Only vs Principal and Interest Loans
Choosing between interest only and principal and interest loans depends on your financial strategy.
Interest Only Loans
- Lower repayments initially
- Loan balance does not reduce
- Repayments increase later
Principal and Interest Loans
- Loan balance reduces over time
- More consistent repayments
- Lower total interest over the life of the loan
We help you compare interest only loans with principal and interest options to determine what suits your situation.
How Long Can You Have an Interest Only Loan?
Most lenders offer interest only periods between 1 and 5 years.
The right term depends on:
- Your investment strategy
- Expected future income
- How long you plan to hold the property
- Your long-term financial goals
Risks and Considerations
Interest only loans are not suitable for every borrower.
Important considerations include:
- Higher repayments after the interest only period ends
- No reduction in loan balance during the interest only phase
- Higher total interest over time
- Potentially higher interest rates
We help you assess whether this structure aligns with your long-term financial plans.
Can You Refinance an Interest Only Loan?
Yes, interest only loans can be refinanced.
Borrowers may refinance to:
- Extend the interest only period
- Switch to principal and interest
- Access a better rate
- Consolidate debts
Refinancing depends on your financial position and lender criteria.
We help you review your options and determine whether refinancing is the right move.
How We Help With Interest Only Loans in Perth
As a mortgage broker in Perth, we help borrowers compare interest only loans from multiple lenders rather than relying on one bank.
Our team can help with:
- Comparing interest only loan options across lenders
- Assessing borrowing capacity
- Structuring loans for owner occupiers or investors
- Explaining loan features and repayment options
- Managing the loan application process
With access to multiple lenders, we help you structure a loan that supports your strategy and cash flow.
Speak With Our Team About Interest Only Loans in Perth
If you are considering an interest only loan, it is important to understand how it fits into your overall financial plan.
Speak with our team today to explore interest only loan options in Perth and find a structure that suits your needs.