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Repayment options

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Principal & Interest (P&I) 

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A Principal & Interest home loan is where both the principal and the interest are repaid during the loan term.

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This is by far more common than Interest Only loans as it means that your home loan will be paid off at the end of the term.

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Interest only (IO)

 

An Interest Only home loan is where only the interest is required to be paid for the first few years (usually up to 5 years).  The principal amount is not required to be repaid during the Interest Only period.

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Stricter lending criteria apply to Interest Only loans.

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Interest Only loans also have higher interest rates than Principal & Interest loans.

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