Interest Only Loan

Interest only loans are commonly used by investors or buyers who want lower monthly repayments in the short term. During the interest only period, the loan balance stays the same because no principal is being repaid. This means repayments rise later when the loan returns to principal and interest, so lenders apply stricter assessment criteria. Buyers using interest only loans may have limited borrowing power which affects how competitive they can be when making offers. Sellers should understand this dynamic because it influences buyer behaviour, negotiation strategies and contract confidence levels. A strong agent knows how to identify finance dependent buyers and ensure they remain committed throughout the approval process. Clear communication between the agent, buyer, broker and conveyancer helps prevent delays and withdrawal during the cooling off period or finance clause timeframe.

Practical Example

A buyer interested in your property submits an offer but explains they are seeking an interest only loan to keep repayments low while they complete a renovation on another property. Your agent requests a copy of their pre approval letter and speaks with their broker to understand the conditions. The lender requires additional documentation because interest only loans involve higher risk. As the finance clause approaches, the buyer becomes nervous about meeting the deadline. Your agent steps in, coordinates communication and ensures the bank receives all outstanding documents. The buyer’s loan is approved on the final day of the finance period and the sale becomes unconditional. Thanks to your agent’s proactive management, the deal stays intact and progresses toward settlement.

Trusted by 44,000+ homeowners Australia-wide

4.9 from 2,848 verified reviews

My dealings with whichrealestateagent have been superb. They suggested suitable agents and found all of my dealings with them to be very professional. I would highly recommend their services to…

James– QLD, Australia

123…2919