Home Loan Options for Adelaide Investors and Families: Interest Only Loans
For many home buyers and property investors, interest only home loans can be a convenient and attractive option for home financing because it means lower initial costs.
With this type of mortgage, you repay only the interest of the principal (the amount borrowed) for a fixed amount of time. This means your initial payments are lower than they would be with a standard principal and interest loan.
The length of the interest only period varies, but generally lasts between one and five years.
An interest only home loan is not recommended for first time home buyers, but can offer great advantages for investors.Book a FREE appointment with a professional mortgage broker now!
What are the advantages of an interest only home loan?
In the short term, the interest only option frees up money that you can use to renovate or improve the property. This may translate to a better financial result in the long term – whether you plan to live in the home, rent it out or sell it, this technique can help you get a strong return from a smaller initial investment.
An interest only mortgage can also help first-time investors get a foot on the property ladder. Lower costs in the first one to five years make it easier to balance the contributions you are also making to your principal place of residence, and may help you add more properties to your portfolio.
What are the disadvantages of the interest only mortgage?
It is important to remember that once the interest only period ends, you will be responsible for the full principal repayments and interest on the loan. Some buyers find this increase sudden, so it is important to plan ahead to ensure you’ll be ready to accommodate larger payments later on.
If you’re unsure about whether the interest only option is the right home loan for you, arrange a chat with the experts at AAA Mortgage Solutions.
The team can explain all the details of the interest only mortgage and help you decide whether it’s the right choice for your situation.
Give them a call on 1300 555 888.