Loan Repayment Calculator
Calculate your investment property loan repayments. Compare principal & interest vs interest-only payments and see the total cost over the life of your loan.
Set to 0 for full P&I loan
P&I vs Interest Only: Which Is Better for Investment Properties?
Choosing between principal & interest (P&I) and interest-only (IO) repayments is one of the most important financing decisions for property investors. Each strategy has clear trade-offs:
- Interest-only keeps your repayments low, which improves cash flow and maximises your tax-deductible interest expense for negative gearing. However, you don't build any equity — your loan balance stays exactly where it started.
- Principal & interest costs more per month, but you steadily pay down the loan. At the end of the term you own the property outright, and you pay significantly less total interest over the life of the loan.
Many investors start with an interest-only period to maximise cash flow in the early years, then switch to P&I once the property becomes positively geared or when the IO period expires. Use the calculator above to see exactly what this costs.
How Investment Property Loans Work in Australia
Most Australian lenders allow interest-only periods of 1–5 years on investment loans, after which the loan automatically reverts to principal & interest repayments for the remainder of the term. Some lenders allow IO extensions, but this is assessed on a case-by-case basis and may require a new application.
Interest-only loans are particularly popular among investors using a negative gearing strategy. Because IO repayments are 100% interest (and therefore 100% tax-deductible on an investment property), they maximise the tax deduction in the early years when rental income is typically lower than holding costs. This can significantly reduce your out-of-pocket costs when combined with a tax refund or PAYG withholding variation.
Keep in mind that when the IO period ends, your repayments will jump — sometimes significantly — because you now have to repay the same principal over a shorter remaining term. Use this calculator to model the exact impact and make sure you can comfortably afford the higher repayments when the time comes.
Related Loan Guides
Compare repayment examples for Australian investment loans, including principal and interest, interest-only periods, and cash flow planning.
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