Property investors: How much more is your interest-only home loan costing you?

Calculate the benefit of a principal and interest loan over an interest-only loan for your investment property.
Vincent Turner

If you have an investment property, chances are you’re financing it with an interest-only home loan.

For many years, most lenders, mortgage brokers and financial advisers have recommended interest-only loans over a principal and interest loan to free up cash flow, and maximise the tax-deductible portion of outgoings (the interest part of your home loan repayment).

However, price pressures from industry regulators have increased the costs of interest-only loans so much that for most property investors, choosing an interest-only loan could be costing property investors thousands.

How this calculator can help you

This calculator will help you work out whether choosing interest-only or a principal and interest repayments for your investment property loan could be financially better for you.

We calculate the results by taking into consideration:

  1. The interest cost of the investment loan compared to the tax savings of negative gearing
  2. The amount you’ll be owing compared to your repayments

What your results mean

If your result is a positive figure (green coloured), you could be better off choosing a principal and interest loan.

If your result is negative, you could be better off choosing an interest-only loan.

What to do next

If your current lender or mortgage broker hasn’t already reached out to you to tell you that you could be saving money by switching to a principal and interest loan, you deserve to be getting better advice and service. You have two options to optimise your financial outcome easily, right now:

This information is general in nature, and you should always seek professional advice when making financial decisions.

Vincent Turner
* Three year fixed rate, owner occupier, P&I loan with a maximum LVR of 95% and a loan amount >$150,000. Lender rates and products may change. We cannot suggest you remain in or switch to any loan until we complete our assessment. Fees and charges apply. ^ WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rate is calculated on the basis of a loan of $150,000 over a term of 25 years. ± All loan applications are subject to uno assessment and lender approval. uno does not guarantee that it will be able to find a customer a better loan than the one they currently have or to save them money.