Interest-only loans are where you merely pay back the interest of a loan to the lender. So if you borrowed $500,000 and made repayments for five years, your balance would still be $500,000. They are designed predominantly for investors for cash flow and tax deductibility purposes.
“9 years ago I took the plunge in buying my first Sydney property, a modest 2 bedroom apartment in Alexandria. I remember procrastinating for at least 2 years before I made that decision, thinking I didn’t have enough deposit and coming up with all sorts of excuses. In 2012, I sold the apartment, but I regretted delaying the decision to buy as all my fears back then turned out to be completely unfounded. If you’re looking to buy your first home and you have some doubts, I suggest you talk to the experts to get a different perspective and to demystify potential misconceptions.”
– Chen, aged 40