Banks have significantly raised rates for Interest Only Loans, so you may now be much better off with a principal & interest investment loan.
Mid last year, most banks increased their interest-only rates by about 0.40% and reduced rates on investment principal and interest loans. This has changed the ‘game plan’ in investment lending as there is now only about a 0.50% difference in interest rates between the two loan types.
Interest Only Loans used to be the loan of choice for investors due to lower loan repayments (as the repayments don’t include paying off the principal amount) and to maximise negative gearing. With the recent increase in Interest Only interest rates, your new weekly repayments are close to the repayments you would make on a Principal & Interest loan, where you have the advantage of also paying down the principal debt.
Check your latest statements and compare it to our chart.
We think that it is crucial for all investors with interest only loans to consider their portfolio and seek expert advice to find out if an interest only loan is still their best choice.*
Call (08) 9200 1841 or send an email to firstname.lastname@example.org, we will contact you for your personalised loan advice, at no cost to you.