What you need to know about Interest Only repayments.

By August 9, 2021 Tips No Comments

There are many occasions which are suitable for Interest Only mortgage repayments . For example, when you earn a significant portion of variable income such as commission/bonus, for investment properties when you have owner occupied debt, maternity leave or if you are self-employed.

Banks don’t automatically grant Interest Only repayments and may only allow them in certain situations. You will pay a premium for interest only of between 30-60 basis points above a principle & interest rate for the same product. Generally, the maximum term is 5 years interest only, on an owner-occupied loan or 10 years on an investment loan.

Interest only repayments will reduce your borrowing capacity too as it shortens the residual principle & interest term. To extend an interest only term you need to go back through a full re-assessment, it is not automatically extended.

If you have any questions, please feel free to reach out.


Written by Tom Morison

I have a genuine desire to create a strong reassuring sense of trust, confidence and satisfaction for my clients. It’s important that I provide you with the knowledge I have so you can make the best decisions for yourself with my guidance.
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