What is an interest-only home loan?

The proportion of new home loans that are interest-only has grown from about 30 per cent six years ago to 43 per cent now.

Interest-only loans are mainly used by investors, but are increasingly being considered by owner-occupiers. Interest-only loans allow the borrower to not pay back any principal for anywhere between five and 15 years.

So the monthly repayments of an interest-only mortgage are lower. Or a borrower is able to service a larger loan.

Source: The Age

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