Understanding some considerations about an interest home that is only will allow you to decide whether or not it is the best payment choice for you.
A mortgage payment typically comprises of two components:
- The major component – the total amount you borrow (your loan balance)
- The attention component – the total amount the lending company fees in your outstanding stability
Having an Interest Only mortgage loan, your minimum repayments will simply protect the interest costs on the loan for an agreed period of the time.
This implies 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 usually more than Principal & Interest mortgage loans (where your payments cover both the key as well as the interest).
A pursuit just mortgage loan may be suitable if you’re interested in:
- A method to increase your income tax deductions as home investor
- A way that is temporary lower your outbound costs along with manage a short-term earnings decrease ( ag e.g. If you are getting parental leave or having to pay educational expenses while you’re studying)
An period that is interest-only designed for CommBank Investment mortgages and Owner Occupied home loans.