An interest only loan is a type of loan where you only pay the interest on the principal amount for a certain period of time. This means that your repayments are lower during the interest only period, which can help you manage your cash flow and budget better.
An interest only loan can also be beneficial for certain tax purposes, as you can deduct the interest payments from your taxable income. However, an interest only loan also has some drawbacks, such as higher interest rates, higher total interest payments, and lower equity in your property. An interest only loan may not be suitable for everyone, and it requires careful planning and consideration. That’s why we recommend speaking with a specialised loan broker to determine whether an interest only loan is right for you.