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What is an interest-only home loan?
An interest-only home loan offers you smaller repayments for a set period of time when you only repay the interest on the amount borrowed. Once the interest-only loan period has passed, your loan typically reverts to a principal-and-interest loan.
The interest rates for interest-only loans are often higher than principal-and-interest loans and because you are not paying off the principal from the start of your loan you’ll end up paying more over the lifespan of your home loan.