Enter the loan, rate, term and interest-only years. The calculator shows the interest-only repayment, the higher repayment that follows, and the extra interest compared with paying principal from the start.
An interest-only loan charges only the interest for a set period, usually up to five years, so the balance does not fall. On $600,000 at 6% over 30 years with five years interest-only, the repayment goes from $3,000 to about $3,866 a month.
When the period ends, the whole loan is repaid over the years that are left, so the repayment rises by more than the interest-only saving.
Part of the investment property loans guide.
The next sold sign could be yours.
A free 30-minute call shows where you stand.
Book my free callInterest-only and after
Interest-only for the first years, then principal and interest over what is left of the term.
Estimates only, at a constant rate. Lenders assess the higher repayment after the interest-only period, at their buffer rate. Not credit advice.
Confirm your numbers.
Charles and the team recently assisted me with the refinance of my investment property.
Charles and the team recently assisted us with a refinance of our investment property. Recommend Charles and the team to all
Charles at Links Property Finance made buying our first home so much easier than we expected. As first home buyers, we had a lot of questions around borrowing capacity, our deposit and the different government schemes available to us. Charles explained everything clearly, compared different lenders and kept us updated throughout the whole process. He was always easy to reach and made sure we understood what was happening from pre approval right through to getting our home loan approved. We would definitely recommend Links Property Finance to anyone looking for a mortgage broker, especially first home buyers who want someone to guide them through the process.
Charles Touma, Mortgage Broker.
The starting figures: $600,000 at 6% over 30 years, interest-only for the first five.
During the interest-only years you repay nothing off the balance. Afterwards, the full balance must be repaid over a shorter time, 25 years instead of 30 in the example, so the repayment is higher than if you had paid principal and interest from the start.
Lenders assess you on that higher repayment at their buffer rate, which is why interest-only can reduce borrowing power.
Mostly investors, who may prefer to keep cash flow free or direct extra money to a home loan that is not tax deductible. Owner-occupiers sometimes use a short interest-only period during parental leave or a renovation.
With an offset account, money held in offset still reduces interest. The interest-only home loans guide explains when it suits and when it does not.
Four checks that decide whether it is worth it.
Multiply the loan by the annual rate and divide by 12. On $600,000 at 6%, that is $3,000 a month.
The loan switches to principal and interest over the remaining term, so the repayment rises. On the example loan it goes from $3,000 to about $3,866 a month.
Over the life of the loan, yes, because the balance stays higher for longer. In the example it costs about $44,700 more in interest.
Sometimes, with a new application. The lender reassesses your income and the loan at that time.
No. Money in an offset reduces interest in the same way on interest-only and principal and interest loans.
Compare with the repayments calculator, or read the interest-only home loans guide.
Charles can show how lenders assess the higher repayment and whether interest-only suits your plan, as an investor or owner-occupier.
Prefer a callback?Charles calls back within one business day. No documents needed yet.
General information only, not credit or financial advice. Figures assume a constant rate and are not a quote.
