- Where
- Ground floor,
9 Hercules Street,
Hamilton QLD 4007
(By appointment only) - P: 1300 375 626
- E: info@mediprocapital.com.au
- When
- Monday - Friday
9:00am - 5:00pm
MediPro Capital Finance © 2019
We offer a range of investment and lending services for all types of financial decisions. When you are going to invest or buy, make sure you work with us for access to the best possible rates, and a complete financing solution.
I was speaking with a doctor the other day. This particular doctor was telling me he wanted to pay less in terms of repayments on his loan. He wanted to use the extra money to pay off other business loan.
I suggested an interest only loan. This type of loan is becoming increasingly popular in the Australian market.
An interest only loan is different from a regular loan because as the name suggests, the repayments you make only cover the interest on the loan you take out. It's a unique type of loan because for the agreed upon period (usually up to 5 years) the borrower only has to pay the interest on the loan they took out. At the end of the period, it falls back to the traditional repayments of both the principal amount and the interest together.
In 2015 $153.8 billion dollars' worth of interest only loans were taken out, making it one of Australian's fastest growing loan types. However, like its traditional counterpart, it has both advantages and disadvantages to it.
In terms of advantages there are three major ones:
There are also 3 main disadvantages to interest only loans. These are:
Interest only loans are an invaluable resource for certain people like investors, but they are also considered one of the riskier type of loans. If you are considering one, ask yourself if the short-term benefits outweigh the long-term ones, and if you will be able to afford the larger payments once the interest-only period ends. If you are unsure, ask your broker for advice and see what they can do for you.