Interest-Only

IO

A loan structure where you pay only interest for an agreed period — the loan balance does not reduce.

Interest-Only loans require only interest payments for an agreed initial period (commonly 1 to 5 years). The loan balance stays the same for the IO period and reverts to Principal & Interest afterward — usually with a higher repayment because the principal must be repaid over a shorter remaining term. IO is more common on investment loans for tax-deductibility reasons; APRA has tightened IO lending standards since 2017.