According to Savings.Com.Au “In recent years, interest-only home loans accounted for around 40% of all outstanding Australian mortgages.”
Interest only loans essentially allow you to free up your cash flow and give yourself more options.
Firstly, it enables you to “buy time” delaying higher repayments to help with special circumstances such as a temporary reduction of income or increase in expenses.
For example, this is useful when setting up your home, organising renovations or paying for moving costs where there is a high up front cost.
Secondly, if you’re looking to get started in property investment then an interest-only loan can assist you do so on a modest budget.
If managed properly, an interest only loan will enable you to invest in a property, only pay the interest on the loan and then sell the property to cover the principal, and make a profit.
Why pay the principle on a tax deductible investment, when you can put that money on your own non-tax deductible owner occupied home?
Interest only loans permit you to delay the repayment of the borrowed amount (the ‘principal’) for a fixed term.
Instead of paying back the interest and the principal amount, the aim is to only pay the interest of a loan.
For this reason interest only mortgages usually have a lower payment amount.
These interest only loans are generally for a fixed term around 3-5 years, in Australia the maximum term is 10 years.
10 year interest only loans are just one of the core products that we offer here at Loan Guides.
If you would like to learn more just click on the Let’s Talk button below or call us directly on (08) 8263 4009.
We are open Monday to Friday 9.00am to 5.30pm excluding public holidays.
Our guarantee is that if you are not happy with our product, we will refinance you for free!