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Interest-only loans are becoming a thing of the past – what are they?

In the past year, lenders have significantly reduced the number of interest only loans they offer and approve for borrowers. Right now, CoreLogic reports that only 16% of loans have interest-only repayments.

What are Interest Only Loans?

Interest only repayments allow a borrower to reduce their monthly repayments so that they’re only paying off the interest portion of their loan. This means the customer won’t be reducing their loan balance but will have a slightly lower repayment.

This strategy can be effective for managing cash flow but should only be considered with the guidance of a mortgage broker.

What’s important to know is that sometimes interest-only loans automatically revert to principal and interest. This could throw a wrench into your budget if you’re not ready.

Let me know if I can help you run some numbers on loan repayments and their finer details.


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