What is an interest-only home loan?

An interest-only mortgage only requires the borrower to repay the interest owing for a set term of the loan. The principal, the original amount borrowed, remains outstanding and the borrower must repay that when the loan term expires.

Interest-only mortgages are popular with investors who rely on the capital (the property value) to rise and allow them to repay the loan.

Source: Bankheadlines.com.au

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