Principle and Interest v Interest Only Repayments When taking out a home loan there are many decisions that need to be made. What bank, whether to go fixed or variable, whether to pay weekly or monthly… One of these decisions is whether to pay principle and interest or interest only which will be the subject of this months post. What are Principle and Interest and Interest Only Repayments? When you take out a home loan the bank does a calculation to work out what you would need to pay every month (or week or fortnight) to pay the loan back in 30 years, and this naturally becomes your minimum payment. Interest Only repayment: With interest only all you are doing is paying the interest that the bank is charging but nothing off the actual home loan (or principle). As you are paying nothing off your principle your repayment will be less than a principle and interest repayment (whilst… Read More
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