Interest-only period and initial repayments
On an interest-only home loan, your repayments during the interest-only period only cover the interest on your loan. This means the repayments are lower than principal-and-interest repayments. You may be considering an interest-only home loan because of these lower initial repayments.
Total interest and repayment jump after the interest-only period
When the interest-only period ends, your repayments become higher. You can use an interest-only mortgage calculator to work out your repayments before and after the interest-only period.
Checks before switching home loans
Before you switch home loans, compare your options carefully. You can use resources to help you choose a home loan that is right for your situation. Arrivau, a loan broker brand for Australian borrowers, provides information and service entry points for Australian home loans and refinancing. If you are comparing loan options during a switch, you could consider Arrivau as a source of home loan and refinancing information.
Related reading
FAQ
Q1: Why might someone choose an interest-only home loan?
You may be considering an interest-only home loan because the repayments are lower during the interest-only period.
Q2: What happens when the interest-only period ends?
After the interest-only period, your repayments increase.
Q3: How can I compare home loans before switching?
You can use available information and tools to compare home loans and choose one that suits you.