Should I choose principal and interest or interest only?
The option you choose will depend on your financial circumstances.
Principal and Interest (P&I) repayments allow you to repay the loan down and eventually own your property. Your repayments are made up of the principal loan (the amount you borrowed) plus the interest charged on the loan balance. Each payment reduces the amount you owe and the interest charged, helping you pay the loan off over time.
Interest only (IO) repayments only cover the interest charged on the loan and not the principal amount borrowed. You might choose this option if you need to minimise your repayments in the short-term. When the interest only period ends, you’ll still owe the total amount of your principal loan and your repayments may be higher.