Interest only loans are calculated on the daily balance of the debt. So if you pay off a large chunk of the principal the balance will reduce accordingly and your interest payments will reduce by the same proportion.

Petra

It is always possible to make lump sum repayments on interest only loans, but depending on the financial institution you are with they may charge you a fee to do this. The cost can range from nothing to a full break fee costing thousands of dollars so you should probably scrutinise your loan agreement pretty carefully first. Fixed loans usually…[Read more]