Interest only repayments

What are the risks and benefits of interest only loans?

While there may be benefits to having “interest only repayments” on your loan for a period of time [e.g. lower repayments during the Interest Only period or possible tax advantages for Investment Loans (refer to your Accountant for advice)], there are also other factors that need to be considered.

Risks to be considered with interest only loan:

The following list shows some of the main risks that should be considered when weighing up whether an interest only loan is the suitable option for you:

  • More paid in total interest over the full term of the loan.
  • Total cost of the loan will be higher over the full term of the loan.
  • Your repayments will increase after the interest-only period  (the loan balance remains the same but the loan term at the end of the interest only period is shorter)
  • No equity being built during the Interest Only term (excluding any movements in the value of the property). Greater risk of going into negative equity if there is a significant downturn in the property market.
  • Failure to carry out any planned strategy; e.g. pay off other higher interest debt; invest saving in the repayments; redirect the repayment savings to other investments; etc, may negate any advantage in having an Interest Only loan
  • You will owe exactly the same amount of money at the end of the Interest Only period as you owe now – you’re just servicing a debt instead of paying it off or improving your situation.

Refer to the Lender’s loan offer documentation prior to signing to ensure you are aware of any Lender specific requirements.

Benefits to be considered with interest only loans:

The following lists some of the benefits that may be derived by selecting an interest only loan:

  • Possible tax advantages for Investment Loans (please refer to your Accountant for advice).
  • Redirect the surplus funds to pay off debts that are at a higher interest rate.
  • Reduce costs for a period of time when first moving into a property to cover items to be purchased.
  • Reduce costs for a period of time to suit lifestyle needs, e.g. during maternity leave; while returning to studies; career break; etc.
  • Self-employed or variable income (e.g. commissions/bonuses) – may need flexibility in repayments because of fluctuating income.
  • Future Investment – free funds up for other investments (other property, shares, etc).
  • Temporary and one-off expenses – may be a strategy used by First Home buyers or for Construction Loans to free up cash for unexpected (or expected) purchases and to set themselves up.
  • Bridging Finance – keep outgoings low during the bridging period

NB: These lists may not address every single risk or benefit for every lender available.

We hope that this article has provided some insights into the risks and benefits when taking out an interest only loan in Australia. The above is general advice only. If you would like personal advice tailored to your individual circumstances, please feel free to contact the team at Probroker on 1800 195 123 or info@probroker.com.au

171 thoughts on “What are the risks and benefits of interest only loans?”

  1. May I simply say what a comfort to discover someone that really knows what they are talking about on the internet. You actually realize how to bring an issue to light and make it important. More people must look at this and understand this side of the story. I cant believe you are not more popular since you surely have the gift.

  2. Hmm it appears like your blog ate my first comment (it was super long) so I guess I’ll just sum it up what I submitted and say, I’m thoroughly enjoying your blog. I as well am an aspiring blog writer but I’m still new to everything. Do you have any suggestions for newbie blog writers? I’d genuinely appreciate it.

  3. Something more important is that when looking for a good on the internet electronics shop, look for web stores that are constantly updated, preserving up-to-date with the most current products, the most effective deals, along with helpful information on services and products. This will ensure that you are dealing with a shop that stays atop the competition and provide you things to make knowledgeable, well-informed electronics purchases. Thanks for the important tips I have really learned through the blog.

  4. Also a thing to mention is that an online business administration study course is designed for college students to be able to efficiently proceed to bachelor degree courses. The 90 credit college degree meets the other bachelor education requirements so when you earn your current associate of arts in BA online, you may have access to the newest technologies in this particular field. Some reasons why students would like to get their associate degree in business is because they are interested in the field and want to receive the general education necessary in advance of jumping to a bachelor college diploma program. Many thanks for the tips you really provide inside your blog.

  5. http://www.spotnewstrend.com is a trusted latest USA News and global news provider. Spotnewstrend.com website provides latest insights to new trends and worldwide events. So keep visiting our website for USA News, World News, Financial News, Business News, Entertainment News, Celebrity News, Sport News, NBA News, NFL News, Health News, Nature News, Technology News, Travel News.

  6. Howdy! This is kind of off topic but I need some advice from an established blog. Is it hard to set up your own blog? I’m not very techincal but I can figure things out pretty fast. I’m thinking about making my own but I’m not sure where to start. Do you have any ideas or suggestions? Thanks

  7. Nice read, I just passed this onto a colleague who was doing a little research on that. And he actually bought me lunch since I found it for him smile So let me rephrase that: Thank you for lunch!

  8. I am usually to blogging and i really appreciate your content. The article has really peaks my interest. I am going to bookmark your web site and keep checking for brand spanking new information.

  9. always i used to read smaller posts which as well clear their motive, and that is also happening with this paragraph which
    I am reading at this place.

  10. A person essentially help to make severely articles I’d state.

    That is the very first time I frequented your web page
    and to this point? I surprised with the analysis you made to create this particular publish amazing.
    Fantastic activity!

  11. What?s Going down i am new to this, I stumbled upon this I’ve found It absolutely useful and it has helped me out loads. I am hoping to give a contribution & help different users like its helped me. Good job.

  12. What’s up it’s me, I am also visiting this web site
    regularly, this web site is in fact pleasant and the people are truly sharing nice thoughts.

  13. I would like to thank you for the efforts you’ve put in writing this site. I’m hoping the same high-grade site post from you in the upcoming also. In fact your creative writing skills has inspired me to get my own site now. Really the blogging is spreading its wings quickly. Your write up is a great example of it.

  14. Thanks for the tips you have shared here. One more thing I would like to express is that laptop memory needs generally increase along with other developments in the engineering. For instance, if new generations of processor chips are made in the market, there’s usually a corresponding increase in the size preferences of both the laptop or computer memory in addition to hard drive space. This is because the application operated by way of these processor chips will inevitably surge in power to leverage the new engineering.

  15. I think other web-site proprietors should take this website as an model, very clean and wonderful user friendly style and design, as well as the content. You are an expert in this topic!

  16. I used to be very happy to find this web-site.I wished to thanks to your time for this excellent learn!! I positively having fun with every little little bit of it and I’ve you bookmarked to check out new stuff you blog post.

  17. Aw, this was a really nice post. In idea I want to put in writing like this moreover ? taking time and actual effort to make an excellent article? however what can I say? I procrastinate alot and in no way appear to get something done.

  18. you are in point of fact a just right webmaster. The website loading speed is amazing. It seems that you’re doing any unique trick. In addition, The contents are masterwork. you’ve done a fantastic activity in this subject!

  19. From my observation, shopping for technology online may be easily expensive, although there are some how-to’s that you can use to help you get the best offers. There are continually ways to uncover discount deals that could help to make one to hold the best electronic products products at the lowest prices. Interesting blog post.

  20. hello there and thanks in your information ? I?ve certainly picked up anything new from right here. I did however experience a few technical points using this website, as I experienced to reload the website many times prior to I may get it to load properly. I have been pondering in case your web host is OK? No longer that I am complaining, but sluggish loading circumstances occasions will often have an effect on your placement in google and can damage your quality ranking if advertising and ***********|advertising|advertising|advertising and *********** with Adwords. Anyway I am adding this RSS to my e-mail and can glance out for a lot more of your respective exciting content. Ensure that you update this once more very soon..

  21. Good day! This is my first comment here so I just wanted to give a quick shout out and tell you I genuinely enjoy reading through your posts. Can you suggest any other blogs/websites/forums that go over the same topics? Thanks!

  22. I am very happy to read this. This is the type of manual that needs to be given and not the accidental misinformation that’s at the other blogs. Appreciate your sharing this best doc.

  23. I’m curious to find out what blog system you’re working with? I’m experiencing some small security problems with my latest website and I would like to find something more safe. Do you have any recommendations?

  24. Awesome blog! Do you have any hints for aspiring writers? I’m hoping to start my own blog soon but I’m a little lost on everything. Would you suggest starting with a free platform like WordPress or go for a paid option? There are so many options out there that I’m completely confused .. Any recommendations? Thanks!

  25. Thanks for expressing your ideas. I’d also like to state that video games have been at any time evolving. Modern technology and innovations have made it easier to create sensible and enjoyable games. All these entertainment video games were not that sensible when the actual concept was being used. Just like other styles of electronics, video games too have had to progress by many many years. This is testimony towards the fast growth and development of video games.

  26. I would like to thank you for the efforts you’ve put in writing this blog. I am hoping the same high-grade web site post from you in the upcoming as well. In fact your creative writing abilities has inspired me to get my own website now. Really the blogging is spreading its wings fast. Your write up is a good example of it.

  27. You actually make it seem so easy with your presentation but I find this matter to be really something that I think I would never understand. It seems too complex and extremely broad for me. I am looking forward for your next post, I?ll try to get the hang of it!

  28. Thanks for the thoughts you are revealing on this site. Another thing I’d like to say is that getting hold of some copies of your credit report in order to check out accuracy of each and every detail would be the first measures you have to accomplish in credit improvement. You are looking to freshen your credit reports from detrimental details errors that screw up your credit score.

  29. One other issue is that if you are in a situation where you would not have a cosigner then you may genuinely wish to try to exhaust all of your school funding options. You can get many grants and other free college funding that will present you with funds to help with school expenses. Thanks alot : ) for the post.

  30. great points altogether, you simply gained a new reader. What would you recommend about your post that you made some days ago? Any positive?

  31. Yet another issue is that video gaming has become one of the all-time most significant forms of fun for people of any age. Kids have fun with video games, and adults do, too. The particular XBox 360 is among the favorite gaming systems for those who love to have a lot of activities available to them, as well as who like to experiment with live with other folks all over the world. Thanks for sharing your ideas.

  32. The root of your writing while sounding agreeable at first, did not really work perfectly with me personally after some time. Someplace within the sentences you managed to make me a believer unfortunately just for a while. I nevertheless have a problem with your jumps in assumptions and one might do nicely to fill in those breaks. If you can accomplish that, I could certainly end up being fascinated.

  33. I liked as much as you’ll obtain carried out right here. The cartoon is attractive, your authored material stylish. nonetheless, you command get bought an nervousness over that you wish be delivering the following. ill certainly come more in the past again as precisely the same nearly a lot regularly inside case you protect this hike.

  34. I believe that avoiding refined foods is the first step in order to lose weight. They could taste beneficial, but ready-made foods have very little vitamins and minerals, making you consume more simply to have enough energy to get throughout the day. Should you be constantly eating these foods, moving over to whole grain products and other complex carbohydrates will aid you to have more strength while ingesting less. Interesting blog post.

  35. I’m extremely impressed with your writing skills as well as with the layout on your weblog. Is this a paid theme or did you customize it yourself? Either way keep up the excellent quality writing, it is rare to see a great blog like this one nowadays..

  36. Write more, thats all I have to say. Literally, it seems as though you relied on the video to make your point. You definitely know what youre talking about, why throw away your intelligence on just posting videos to your blog when you could be giving us something enlightening to read?

  37. Wow that was unusual. I just wrote an really long comment but after I clicked submit my comment didn’t appear. Grrrr… well I’m not writing all that over again. Regardless, just wanted to say excellent blog!

  38. Its such as you learn my mind! You appear to grasp a lot about this, like you wrote the guide in it or something. I believe that you simply could do with some percent to pressure the message house a bit, however instead of that, this is fantastic blog. A fantastic read. I will certainly be back.

  39. Hi! This is my first visit to your blog! We are a group of volunteers and starting a new project in a community in the same niche. Your blog provided us valuable information to work on. You have done a marvellous job!

  40. I’ve really noticed that repairing credit activity must be conducted with techniques. If not, it’s possible you’ll find yourself destroying your rank. In order to be successful in fixing your credit score you have to ascertain that from this moment you pay your complete monthly dues promptly prior to their planned date. It is definitely significant since by not necessarily accomplishing that area, all other actions that you will decide to use to improve your credit rank will not be effective. Thanks for sharing your thoughts.

  41. Hello there, just changed into alert to your weblog through Google, and located that it is really informative. I am going to watch out for brussels. I?ll appreciate should you proceed this in future. A lot of other folks will be benefited out of your writing. Cheers!

  42. I have observed that in the world the present day, video games are definitely the latest trend with kids of all ages. Often times it may be impossible to drag your son or daughter away from the games. If you want the best of both worlds, there are numerous educational gaming activities for kids. Thanks for your post.

  43. Berlin’de Gerçek bir sonuç veren en iyi medyumu halu hoca ile sizlerde çalışınız. İletişim: +49 157 59456087 Aşık Etme Büyüsü, Bağlama Büyüsü gibi çalışmaları sizlerde yaptırabilirsiniz.

  44. Nice post. I study something tougher on different blogs everyday. It’ll always be stimulating to learn content from different writers and observe slightly one thing from their store. I?d choose to make use of some with the content material on my weblog whether you don?t mind. Natually I?ll offer you a link in your net blog. Thanks for sharing.

  45. The following time I learn a blog, I hope that it doesnt disappoint me as a lot as this one. I mean, I do know it was my choice to read, but I actually thought youd have one thing interesting to say. All I hear is a bunch of whining about one thing that you can fix should you werent too busy on the lookout for attention.

  46. Hey, you used to write excellent, but the last several posts have been kinda boring? I miss your tremendous writings. Past few posts are just a bit out of track! come on!

  47. Superb site you have here but I was wondering if you knew of any user discussion forums that cover the same topics talked about in this article? I’d really love to be a part of community where I can get opinions from other experienced individuals that share the same interest. If you have any recommendations, please let me know. Bless you!

  48. Do you have a spam issue on this website; I also am a blogger, and I was curious about your situation; many of us have developed some nice procedures and we are looking to exchange strategies with others, be sure to shoot me an email if interested.

  49. Thanks for expressing your ideas with this blog. Additionally, a misconception regarding the banking companies intentions if talking about home foreclosure is that the financial institution will not take my payments. There is a certain quantity of time in which the bank will require payments every now and then. If you are way too deep inside hole, they may commonly require that you pay the payment completely. However, that doesn’t mean that they will not take any sort of payments at all. In the event you and the financial institution can manage to work one thing out, the particular foreclosure method may stop. However, when you continue to miss out on payments beneath new approach, the home foreclosure process can just pick up exactly where it left off.

  50. Most of the things you assert is astonishingly accurate and that makes me wonder the reason why I had not looked at this in this light previously. Your article truly did switch the light on for me personally as far as this specific topic goes. However there is one particular position I am not necessarily too cozy with and whilst I make an effort to reconcile that with the main theme of your position, allow me see exactly what all the rest of the readers have to point out.Nicely done.

  51. excellent post, very informative. I wonder why the other experts of this sector don’t notice this. You should continue your writing. I’m sure, you’ve a huge readers’ base already!

  52. Thanks for ones marvelous posting! I genuinely enjoyed reading it, you may be a great author.I will be sure to bookmark your blog and definitely will come back in the future. I want to encourage you to definitely continue your great job, have a nice day!

  53. Excellent post. I was checking continuously this blog and I am impressed!
    Very helpful info specifically the last part 🙂
    I care for such info a lot. I was seeking this particular information for a
    long time. Thank you and best of luck.

  54. I’m very happy to read this. This is the kind of manual that needs to be given and not the random misinformation that is at the other blogs. Appreciate your sharing this best doc.

  55. Virtually all of whatever you articulate happens to be supprisingly precise and it makes me ponder why I hadn’t looked at this in this light previously. Your article truly did switch the light on for me personally as far as this issue goes. Nonetheless at this time there is actually one particular factor I am not really too cozy with so while I make an effort to reconcile that with the actual main theme of your issue, allow me observe just what the rest of the readers have to say.Very well done.

  56. Thanks for the helpful write-up. It is also my belief that mesothelioma has an very long latency period of time, which means that the signs of the disease might not exactly emerge until eventually 30 to 50 years after the initial exposure to asbestos. Pleural mesothelioma, that’s the most common variety and influences the area across the lungs, might result in shortness of breath, upper body pains, and also a persistent cough, which may lead to coughing up body.

  57. obviously like your web-site however you have to take a look at the spelling on quite a
    few of your posts. Several of them are rife with spelling issues and I in finding it
    very bothersome to inform the truth on the other hand I’ll definitely come back again.

  58. Hi! I know this is somewhat off topic but I was wondering if you knew where I could locate a captcha plugin for my comment form? I’m using the same blog platform as yours and I’m having difficulty finding one? Thanks a lot!

  59. you are really a good webmaster. The web site loading speed is incredible. It seems that you’re doing any unique trick. In addition, The contents are masterpiece. you have done a excellent job on this topic!

  60. I loved as much as you will receive carried out right here. The sketch is tasteful, your authored subject matter stylish. nonetheless, you command get got an edginess over that you wish be delivering the following. unwell unquestionably come further formerly again since exactly the same nearly a lot often inside case you shield this hike.

  61. Thank you for some other wonderful post. The place else may just anyone
    get that kind of info in such a perfect means of writing?
    I’ve a presentation subsequent week, and I am at the look for such information.

  62. Hey very nice website!! Man .. Excellent .. Amazing .. I will bookmark your site and take the feeds also?I’m happy to find numerous useful info here in the post, we need develop more strategies in this regard, thanks for sharing. . . . . .

  63. I’m really inspired together with your writing abilities as well as with the structure to your
    blog. Is that this a paid subject matter or did you modify it your self?
    Either way stay up the excellent quality writing, it’s uncommon to see a nice blog like this one these
    days..

  64. Pretty nice post. I just stumbled upon your blog and wanted to
    say that I’ve truly enjoyed browsing your blog posts.

    After all I’ll be subscribing to your rss feed and I hope you write again soon!

  65. Good blog! I really love how it is easy on my eyes and the data are well written. I am wondering how I could be notified when a new post has been made. I’ve subscribed to your RSS feed which must do the trick! Have a nice day!

  66. Very nice post. I just stumbled upon your blog and wanted to say that I’ve really enjoyed surfing around your blog posts. After all I will be subscribing to your rss feed and I hope you write again very soon!

  67. I have read some good stuff here. Definitely worth bookmarking for revisiting. I wonder how much effort you put to make such a magnificent informative website.

  68. Can I just say what a aid to search out somebody who really is aware of what theyre talking about on the internet. You undoubtedly know the right way to deliver a difficulty to light and make it important. Extra folks need to read this and perceive this side of the story. I cant imagine youre not more well-liked because you positively have the gift.

  69. Yet another issue is really that video gaming has become one of the all-time most important forms of entertainment for people of every age group. Kids engage in video games, and also adults do, too. Your XBox 360 has become the favorite video games systems for individuals that love to have a lot of activities available to them, plus who like to experiment with live with other individuals all over the world. Many thanks for sharing your ideas.

  70. Yet another thing I would like to state is that as opposed to trying to fit all your online degree programs on days that you end work (since the majority people are worn out when they go back home), try to receive most of your lessons on the saturdays and sundays and only one or two courses in weekdays, even if it means a little time away from your weekend. This is beneficial because on the weekends, you will be much more rested and concentrated upon school work. Thx for the different guidelines I have acquired from your weblog.

  71. My coder is trying to convince me to move to .net from PHP. I have always disliked the idea because of the costs. But he’s tryiong none the less. I’ve been using Movable-type on numerous websites for about a year and am worried about switching to another platform. I have heard great things about blogengine.net. Is there a way I can transfer all my wordpress content into it? Any kind of help would be really appreciated!

  72. Incredible! This blog looks exactly like my old one! It’s on a completely different topic but it has pretty much the same page layout and design. Great choice of colors!

  73. Hey There. I found your blog using msn. This is a very well written article.
    I’ll be sure to bookmark it and come back to read more of your useful
    info. Thanks for the post. I will definitely comeback.

  74. I have observed that in the world of today, video games would be the latest craze with kids of all ages. There are times when it may be not possible to drag your children away from the activities. If you want the best of both worlds, there are lots of educational activities for kids. Interesting post.

  75. Hi, Neat post. There’s a problem with your web site in internet explorer, would test this? IE still is the market leader and a huge portion of people will miss your excellent writing due to this problem.

  76. One more issue is that video games are usually serious as the name indicated with the principal focus on knowing things rather than amusement. Although, there’s an entertainment facet to keep the kids engaged, every single game is normally designed to develop a specific expertise or programs, such as numbers or scientific discipline. Thanks for your article.

  77. Today, while I was at work, my sister stole my apple ipad and tested to see if it can survive a 30 foot drop, just so she can be a youtube sensation. My apple ipad is now destroyed and she has 83 views. I know this is completely off topic but I had to share it with someone!

  78. Thanks for revealing your ideas. I would also like to state that video games have been ever before evolving. Technology advances and inventions have made it simpler to create genuine and fun games. All these entertainment games were not as sensible when the real concept was being used. Just like other styles of technological innovation, video games also have had to evolve as a result of many many years. This is testimony towards fast progression of video games.

  79. Hello there! I know this is kinda off topic but I was wondering which blog platform are you using for this site? I’m getting tired of WordPress because I’ve had issues with hackers and I’m looking at options for another platform. I would be great if you could point me in the direction of a good platform.

  80. Thanks for your posting. I would also like to opinion that the very first thing you will need to do is determine if you really need credit improvement. To do that you will have to get your hands on a replica of your credit profile. That should really not be difficult, because government mandates that you are allowed to acquire one free copy of your real credit report on a yearly basis. You just have to inquire the right persons. You can either look at website owned by the Federal Trade Commission or contact one of the major credit agencies immediately.

  81. I have observed that of all different types of insurance, health insurance coverage is the most questionable because of the conflict between the insurance cover company’s obligation to remain making money and the user’s need to have insurance policies. Insurance companies’ earnings on health plans are extremely low, thus some companies struggle to make money. Thanks for the tips you reveal through your blog.

  82. Thanks , I’ve recently been looking for info about this subject for ages and yours is the best I have discovered so far. But, what about the conclusion? Are you sure about the source?

  83. A formidable share, I simply given this onto a colleague who was doing somewhat analysis on this. And he in truth bought me breakfast as a result of I discovered it for him.. smile. So let me reword that: Thnx for the deal with! But yeah Thnkx for spending the time to debate this, I really feel strongly about it and love reading more on this topic. If potential, as you develop into experience, would you thoughts updating your blog with more particulars? It’s highly helpful for me. Large thumb up for this weblog submit!

  84. Thanks for the several tips discussed on this blog site. I have noticed that many insurers offer prospects generous deals if they favor to insure multiple cars with them. A significant volume of households have several vehicles these days, specifically those with elderly teenage kids still dwelling at home, plus the savings in policies may soon begin. So it pays to look for a good deal.

  85. I would like to thank you for the efforts you’ve put in writing this website. I’m hoping the same high-grade site post from you in the upcoming as well. In fact your creative writing abilities has inspired me to get my own website now. Really the blogging is spreading its wings fast. Your write up is a good example of it.

  86. In my opinion that a home foreclosure can have a major effect on the client’s life. Home foreclosures can have a Six to ten years negative impact on a borrower’s credit report. The borrower that has applied for home financing or any loans for instance, knows that your worse credit rating is definitely, the more tough it is to secure a decent loan. In addition, it can affect the borrower’s capability to find a respectable place to lease or rent, if that gets the alternative property solution. Interesting blog post.

  87. Have you ever considered writing an e-book or guest authoring on other websites? I have a blog centered on the same ideas you discuss and would really like to have you share some stories/information. I know my audience would appreciate your work. If you are even remotely interested, feel free to shoot me an e mail.

  88. I have not checked in here for a while as I thought it was getting boring, but the last several posts are good quality so I guess I’ll add you back to my daily bloglist. You deserve it my friend 🙂

  89. There are actually loads of details like that to take into consideration. That could be a great level to bring up. I supply the thoughts above as basic inspiration however clearly there are questions like the one you deliver up the place an important thing will be working in sincere good faith. I don?t know if best practices have emerged around issues like that, but I’m sure that your job is clearly identified as a good game. Each boys and girls feel the impression of just a second?s pleasure, for the remainder of their lives.

  90. Another important component is that if you are a mature person, travel insurance regarding pensioners is something you must really think about. The more aged you are, a lot more at risk you will be for permitting something awful happen to you while abroad. If you are not really covered by a few comprehensive insurance policies, you could have many serious problems. Thanks for revealing your advice on this web site.

Leave a Comment

Your email address will not be published. Required fields are marked *