With an Interest Only Repayments home loan, your minimum repayments will only cover the interest charges on your loan for an agreed period. This means your loan balance won’t reduce during the interest-only period since you are not making any principal repayments unless you choose to make additional repayments.
An interest-only mortgage is generally best suited to a buyer in a strong financial position who plans to own the property for a limited time, such as five to 10 years.
If you have an interest-only mortgage, you must plan to repay the capital (the amount you borrowed). If you don’t, you will have a large amount to pay at the end of your mortgage term and may need to sell your home to repay it.