The Difference Between 'Principal & Interest' and 'Interest Only' Loans

Principal & Interest Loan

A principal & interest loan means that each loan repayment you make gradually pays off the amount that you borrowed (the principal), as well as the interest on the loan.


Interest Only Loan

Repayments for an Interest Only Loan only go towards paying off the interest portion of your home loan. The principal is then paid off in full at the end of the loan period or gradually paid off when you switch the loan to a Principal and Interest loan.


Choosing Which One Is Right For You

Deciding which loan to choose really depends on your situation, suitability depends on if you're a first home buyer or a property investor. To get more information on these loan options call us on 0800 38 48 58.




All credit applications will be subject to our usual lending criteria, terms and conditions. Fees may apply. Lenders mortgage insurance may be required. Loans are for residential New Zealand property only.
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