Interest-Only Home Loans

Reduce your repayments for a set term by paying interest only, so your loan balance stays the same.{sub-heading}

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Why choose an interest-only term

There are loads of reasons why an interest-only loan is a smart choice for investors.{sub-heading}

Boost cashflow

Keep more money in your pocket at the beginning of your loan period by reducing your repayments.

Maximise tax benefits

An interest-only loan may help increase the tax deductions you can claim on your investment property.34

Increase your investment’s value

With lower repayments, you may have more money in your pocket to invest back into your property.

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What you need to know about interest-free home loans{yellow-border}

Your home loan term remains the same

Once the interest only period is over, you will need to make payments on both the principal and interest within the remaining loan term. Your loan term remains the same, which means your repayments will be higher than if you’d also made principal repayments since the start of your term.

You can lock in a fixed rate

You can also get an interest-only period with a fixed-rate loan. The interest-only term must match the fixed-rate term.

You can offset your home loan

Choose an eligible variable home loan, such as the Clear Path Variable Interest Only Home Loan, and get a BOQ account to offset the interest.

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Our interest-only home loans

Choose from two home loans that offer interest-only terms for investors.

Fixed Rate Home Loan

Fix your rate for up to 5 years and relax knowing interest rate rises won’t affect you.

Discounted 2 year fixed rate

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Comparison rate11

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For Investors Interest Only.

  • Enjoy great interest rates on terms from 2 to 5 years.
  • Choose Principal and Interest, or Interest-Only repayments.

Economy Variable Home Loan

Our lower-rate variable home loan helps you keep things simple yet flexible.

Economy variable rate

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Comparison rate11

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For Investors Interest Only.

  • Access unlimited free redraw.
  • Make extra repayments whenever you like.
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Important information{yellow-border}

Personal Banking Guide to Fees and Charges

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Personal Lending Supplementary Terms and Conditions

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Ready to apply?{yellow-border}

Before we get you set up, you’ll need your ID, employment details, and financial details, like income, assets, expenses and liabilities. {sub-heading}

Check your eligibility

To qualify for a home loan you must:

  • Be 18 years of age or over
  • Have never been bankrupt
  • Be an Australian citizen or permanent resident
  • Earn a regular income

Request a call back

You’ll hear from someone in our BOQ branches within 2 business days.

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Chat to a lending expert

Call us on 1300 641 725

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What is an interest-only home loan?

Only pay monthly interest on your home loan for a set term (1-5 years). During this time, your loan balance won't reduce.

At the end of the term, you’ll start paying principal and interest. To pay your home loan off within the remaining term, your repayments will be higher than if you had been paying off the principal at the beginning of the loan.

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Handy home loan tools{yellow-border}

Principal and interest calculator

Break down your loan into principal and interest to see how much you could reinvest with an interest-only loan.

Find out more

Split loan simulator

See how splitting your loan between fixed and variable rates will affect your repayments.

Calculate

Find your borrowing power

Calculate how much you can borrow and estimate what your repayments will be.

Get started

Need more home loan help?

Investor Home Loan Interest Rates

Looking for investment property interest rates? Compare our current home loan interest rates for investors here.

Learn more{icon-button}

Buying an Investment Property

Here's some tips and advice on what you should consider when look at investor home loans.

Learn more{icon-button}

Principal and Interest vs. Interest Only home loans

Learn more about the different mortgage repayment types and how they could meet your changing home loan needs.

Learn more{icon-button}

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Frequently asked questions{yellow-border}

Didn’t find what you were looking for? Go to our help and support page to find out more. {sub-heading}

Help and support

How do Interest Only loans work?

An Interest Only home loan means you only repay the monthly interest on the amount borrowed for a set term of one to five years. No repayments are required to reduce the principal amount borrowed, which means the loan balance doesn't reduce.

At the end of the Interest Only period, the loan will change to a 'Principal and Interest' loan and you'll start repaying the amount borrowed, as well as interest on that amount. Your loan repayments will be higher for the remainder of the loan term than they would have been if you had made Principal and Interest repayments from the beginning of the loan, because you will have less time left in the loan term to pay off the principal amount.

What happens when my Interest Only term ends?

When you applied for your Interest Only loan, you would have nominated the period of your Interest Only term. This is usually 1 to 5 years. At the end of your Interest Only term, your loan automatically changes to a variable rate loan with Principal and Interest repayments. As a result, your repayment amount may change and is likely to be higher. But that’s not the end of the story. You do have other options.

What are my options after my Interest Only term ends?

While your loan will automatically revert to a variable rate loan with Principal and Interest repayments, you’re not locked into that. Depending on what is important to you, other potential options could include:

  • extending your Interest Only term (subject to assessment and approval)
  • switching to a fixed rate term
  • automatically reverting to a variable rate with Principal and Interest repayments.
  • If you’re not sure whether to switch to a fixed rate or stay on a variable rate, you can even split your home loan so part of it is fixed and the other part is variable.

With all these options, it can be a little confusing to figure out what’s right for you. But don’t worry, we’ll get in touch with you before your Interest Only term expires (around 30 to 60 days prior) with more information about the options you can consider and the steps you’ll need to take.

What is the difference between an Interest Only and Principal and Interest home loan?

With Interest Only home loans, you only repay the monthly interest on the amount borrowed for a set term of 1 to 5 years. No repayments are required to reduce the principal amount borrowed, which means the loan balance doesn't reduce.

Principal and Interest home loans repayments include a component that goes towards paying down the principal balance of the loan (the amount you borrowed) and a component that goes towards interest (the cost of borrowing).

For more information and examples, please visit our Interest Only vs Principal and Interest home loans page.

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Important Information

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