Interest Only home loan repayments
An Interest Only term reduces your repayment, so you’ll only be repaying your loan interest, not your home loan balance.
Why choose interest-only?
A period of interest only repayments over the life of your loan, could help you manage your finances when changes in your circumstances mean you need to maximise your cash flow. Find out more about the benefits of an interest-only home loan.
Access extra cash
Fund renovations, urgent repairs, or maintenance on your home or rental property.
Get out of debt
Overcome the loss of a loved one, a reduction in income, or clear your debts.
Cope with the unexpected
Prepare for a new baby, time off work due to illness, separation, or divorce.
Perks for investors
Reap potential tax benefits* by offsetting rental income against your costs.
How do I apply?
Whether you already have a home loan with us or are looking to apply for a new loan, you can request interest-only repayments on any of our variable or fixed rate loans.
For the home I live in
As an owner-occupier, you can request interest-only repayments on an existing home loan or for a new mortgage for up to 5 years over the life of the loan.
Existing loan applications: call 132 558, 8am-8pm, Mon-Fri and 9am-6pm, Sat-Sun (Sydney time) or request a callback.
For an investment property
Investment loans offer interest only repayments up to a maximum of 15 years, subject to approval and eligibility criteria.
Existing loan applications: call 132 558, 8am-8pm, Mon-Fri and 9am-6pm, Sat-Sun (Sydney time) or request a callback.
What happens when it expires?
You'll automatically switch to Principal and Interest repayments when your interest-only repayment period ends unless you're eligible to apply for another term.
Apply for an extension
If you have not yet taken the total maximum interest only period that applies to your loan type, you may be able to extend the Interest Only repayment term, subject to approval. You’ll need to start the process well in advance of your Interest Only expiry date and provide details of your income, expenses and liabilities. Just call to apply.
Reached your time limit?
Reached your time limit on interest only, but don t want to switch to Principal and Interest? You could close out your current loan and apply for a new one. Call to discuss.
8am-8pm, Mon-Fri and 9am-6pm, Sat-Sun (Sydney time)
Interest-only and investors
When investing in property, an interest-only loan can be your best ally. Using the interest repayments to offset rental income and maintenance costs could come in handy at tax time. With up to 15 years available on interest-only repayments for Investment loans, choosing this option could go a long way to help you build a property investment portfolio**.
Boost your home loan savings
Use an offset account
Potentially reduce the interest you'll pay by linking an offset account to your loan.
Make extra repayments
Extra accessible funds in your loan account help reduce your loan balance.
Repayment frequency
You could pay off your loan faster with more frequent repayments.
Frequently asked questions
When you choose to make interest-only repayments on your home loan, you’re repaying the interest portion of the mortgage only. You’re not repaying the actual amount that you’ve borrowed. While with principal and interest repayments, you’re repaying both the interest and the loan balance.
Yes. Interest-only repayments are available on fixed rate loans. However, you can only change the repayment type once the fixed rate term has expired. Break costs will apply if you attempt to change the repayment type during a fixed interest period.
There are benefits to making interest-only repayments. However, it would be wise to be mindful that:
- Interest-only repayments are available for a set period over the life of the loan. Up to 5 years on an Owner-occupied loan and up to 15 years on an Investment loan, subject to approval and eligibility criteria.
- Principal and interest repayments following an interest-only period will be higher than if you’d been paying both the principal and interest from the start
- Equity will build at a slower pace during the interest-only period as you’re not repaying the loan balance
- Paying interest-only for a period over the life of your loan means you’ll pay more interest overall than if you’d been paying both the principal and interest.
Things you should know
Conditions, credit criteria, fees and charges apply. Residential lending is not available for Non-Australian Resident borrowers.
This information is general in nature and has been prepared without taking your personal objectives, circumstances and needs into account. You should consider the appropriateness of the information to your own circumstances and, if necessary, seek appropriate professional advice.
Any tax information described is general in nature and it is not tax advice or a guide to tax laws. We recommend you seek independent, professional tax advice applicable to your personal circumstances.
*The taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and their interpretation. You must seek independent tax advice to determine taxation implications that are applicable to your personal circumstances.
**Interest Only repayments: Conditions apply. It's important to understand that interest rates for loans with Interest Only repayments are higher. Your repayments will increase at the end of the Interest Only term as the amount you've borrowed will need to be paid back in a shorter timeframe. This also means you'll pay more interest over the life of the loan with an Interest Only repayment term, than if you'd opted to continue paying principal and interest. There's a maximum of 5 years for Owner Occupied loans and up to 15 years for Investment loans on Interest Only repayments, subject to approval and eligibility criteria. If you've had less than this, you may be able to extend the Interest Only repayment term. You'll need to start the process well in advance of your Interest Only expiry date and provide details of your income, expenses and liabilities.
Credit provided by Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.