Interest Only mortgage loans. What’s Interest Only?
Understanding some essential things about an interest home that is only will allow you to determine whether or not it is the proper payment selection for you.
A mortgage payment typically is made of two parts:
- The component that is principal the total amount you borrow (your loan balance)
- The attention component – the quantity the lending company costs in your outstanding stability
By having an Interest home that is only, your minimum repayments is only going to protect the attention costs on your own loan for an agreed period of the time.
What this means is your loan stability won’t reduce throughout the period that is interest-only because you aren’t making any principal repayments.
Interest levels for Interest Only mortgage loans are generally greater than Principal & Interest mortgage loans (where your payments cover both the main as well as the interest).
A pursuit just mortgage might be suitable if you’re trying to find:
- Ways to increase your taxation deductions as home investor
- A way that is temporary lower your outbound costs along with manage a short-term earnings decrease ( e.g. If you should be getting parental leave or spending academic expenses while you’re studying)
An period that is interest-only designed for CommBank Investment mortgages and Owner Occupied home loans.