Should I get interest-only for my investment?

Interest-only is popular for investors because all interest is tax-deductible and it maximizes cash flow. However, you're not building equity, and you'll need to pay principal eventually. It suits investors prioritizing cash flow over equity building.

What split ratio should I choose?

A common starting point is 60-70% fixed, 30-40% variable. Size the variable portion to handle your likely extra payments and savings. If you can save $20k/year, keep at least $100k in variable.

Loan Structure Advisor

AI Advisor

AI analyzes your situation and recommends optimal loan structure

Free to useNo data storedReal-time dataAI insightsUpdated: February 2026

The right loan structure can save you thousands. Should you fix? Split? Use an offset? Our AI asks the right questions, searches current rates, and gives you a personalized recommendation based on your goals and risk tolerance.

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Real-World Examples

First Home Buyer Structure

Emma is buying her first home for $650k with $80k deposit, income $95k, low risk tolerance.

Inputs Used:

purpose:First HomehouseholdIncome:95,000deposit:80,000riskTolerance:Low - prefer fixed rates

Recommend: 70% fixed (2 years), 30% variable with offset. Fixed portion gives budget certainty. Variable portion allows extra repayments and future salary access via offset.

Investor Strategy

Marcus buying $580k investment property, $120k deposit, high income, wants tax benefits.

Inputs Used:

purpose:Investment PropertyhouseholdIncome:180,000deposit:120,000riskTolerance:High - chase lowest rateinvestmentGoals:Tax benefits

Recommend: 100% variable interest-only. Maximizes tax deductions (all interest is deductible). Put offset on PPOR if you have one. Review interest-only period after 5 years.

Frequently Asked Questions

Glossary

Loan Structure

The overall configuration of your mortgage - including rate type (fixed/variable/split), repayment type (P&I/IO), and features (offset, redraw).

Interest-Only (IO)

Repayments that cover only the interest, not reducing the loan balance. Common for investors but the loan must convert to P&I eventually.

Principal & Interest (P&I)

Repayments that cover both interest and gradually pay down the loan balance. Standard for owner-occupiers.

Related Tools

Calculate Split Scenarios

Model different fixed/variable split ratios.

Fixed vs Variable Comparison

Compare the costs of different rate structures.

Offset Account Benefits

See how an offset can work with your loan structure.

How to Use

1Answer questions about your situation
2Share your risk tolerance and goals
3Get personalized structure recommendations
4The AI may ask follow-up questions for clarity

Pro Tips

If you plan to sell within 3 years, avoid long fixed terms - break costs can be painful
For investors: interest-only repayments maximize tax deductions but extend the loan
First home buyers often benefit from 100% variable with offset to maintain flexibility
If rates are high and expected to fall, shorter fixed terms let you re-fix cheaper later

Avoid These Mistakes

Fixing for too long when you're uncertain about staying in the property
Not considering offset when you have significant savings - it's often better than extra repayments
Choosing the lowest rate without considering features you actually need
Over-complicating with multiple splits - simpler is often better for owner-occupiers

Disclaimer: This calculator provides estimates only and should not be relied upon for financial decisions. Interest rates, fees, and policies change frequently. Always verify information with lenders directly. This is general information, not personal financial advice. Consider seeking advice from a licensed mortgage broker or financial advisor.

Last updated: February 2026