Buying a home or looking to refinance? The table below features home loans
with some of the lowest interest rates on the market for owner occupiers.
Interest-only (IO) loans are home loans which delay the repayment of the borrowed amount (the ‘principal’) for a fixed term, usually three to five years. This means for a short period of time, you only have to repay the interest component of the home loan, before it reverts to both principal and interest (P&I) repayments.
Interest-only home loans can be described as “less now, more later” in that your repayments for a few years will be significantly lower, but will be higher than usual once the interest-only period ends. They’re particularly attractive to investors, who can tax-deduct the interest repayments.
As an example of how interest-only loans can be cheaper now, but more expensive later, let’s look at a $400,000 home loan with a 4.00% p.a. interest rate over 30 years:
The IO loan will cost the borrower $313,400 in total interest, while the P&I option will cost around $287,500 - a difference of nearly $30,000.
To work out how much your repayments will be with an interest-only home loan, use an interest-only loan calculator.
Savings.com.au’s interest-only home loan calculator can allow you to compare interest-only home loans with principal and interest loans, to see how much you could save in the short-term in exchange for greater long-term expenses.
All you need to do to use to our interest-only home loan calculator is:
You can then compare this to a different home loan, and hopefully find the right loan for you.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.