eChoice Home Loans

If you’ve ever purchased an investment property, chances are you’re familiar with the concept of an interest only home loan. Offering lower repayments and many of the same features as traditional loans, interest only loans are particularly suitable for investors. However interest only loans are also suitable for general home buyers, refinancing an existing loan, as bridging finance or to pay for home renovations.

How it works

A principal and interest loan is still the most common type of home loan. Loan repayments include interest and principal, allowing home owners to repay the loan in full by the end of the loan term, assuming they make the minimum repayments.

With an interest only home loan, repayments only cover the interest component. The principal is repaid in full at the end of the loan term.

Because borrowers only repay the interest component, interest only loans have lower repayments than principal and interest loans.

At a glance

• lower repayments
• loan terms typically between two and five years
• repay principal in full at the end of the loan term