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  • Profile photo of petrarankinpetrarankin
    Member
    @petrarankin
    Join Date: 2003
    Post Count: 2
    May 30, 2003 - 1:31 am

    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

    Profile photo of petrarankinpetrarankin
    Member
    @petrarankin
    Join Date: 2003
    Post Count: 2
    May 29, 2003 - 1:33 am

    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 have higher fees.

    Petra Rankin

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    Senior Account Manager
    National Finance and Trading Group
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