Page 134 - Smart Money

YOUR GUIDE TO

COMMON LOAN

FEATURES AND BENEFITS

Interest only repayments
You only pay the interest on the loan, not the principal, usually for the
first one to five years although some lenders offer longer terms. Many
lenders give borrowers the option of a further interest-only period.
Because you’re not paying off the principal, your monthly repayments
are lower. These loans are especially popular with investors who pay off
the principal when the property is sold, having achieved capital growth.
Extra repayments

If you pay more than the required regular repayment, the extra amount is
deducted from the principal. This not only reduces the amount you owe
but lowers the amount of interest you repay. Making extra repayments
regularly, even small ones, is the best way to pay off your home loan
quicker and save on interest charges.
Weekly or fortnightly repayments

Instead of a regular monthly repayment, you pay off your home loan
weekly or fortnightly. This can suit people who are paid on a weekly or
fortnightly basis, and will save you money because you end up making
more payments in a year, cutting the life of the loan.

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