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.

§ Tool · tier 3 · independent

Loan Structure Advisor.

AI analyzes your situation and recommends optimal loan structure

AI advisorFree, no signupOn-deviceLiveupd February 2026

Inputs

Your numbers

Awaiting inputs

Move the sliders or type in the form on the left — the math updates live as you go. Click Get AI verdict when you want a written analysis.

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.

§ Worked examples

Real-world scenarios

First Home Buyer Structure

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

Inputs

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

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.

§ FAQ

Questions Australians ask

§ Glossary

Plain-English definitions

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.

§ Pair it with

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

01Answer questions about your situation
02Share your risk tolerance and goals
03Get personalized structure recommendations
04The 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

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: Estimates only. Interest rates, fees and policies change frequently. Always verify with lenders directly. General information, not personal financial advice.

Last updated · February 2026