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An interest-only (IO) investment loan requires you to pay only the interest on the loan balance for a set period - typically 1–5 years - without reducing the principal. The primary reason investors choose IO: mortgage interest is tax-deductible, while principal repayments are not.
Yes - IO investment loans are still available from most lenders. You'll typically need an LVR under 80% and must demonstrate you can service the full P&I repayment.
For high-income investors who can maximise the tax deduction and believe property will appreciate, IO can be part of a strategy. But total interest paid is significantly higher over the loan life.
The loan reverts to P&I repayments on the original balance over the remaining term - with higher repayments than if it had been P&I from the start.
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