10 Oct 2021

10-Year Interest-Only SMSF Mortgage

SMSF Mortgage

Self-Managed Super Funds are becoming increasingly popular among Australians because they provide more freedom when it comes to investing in your retirement. SMSFs are popular because they allow you to choose where you invest. You can use your SMSF to purchase investment properties using an SMSF home loan. However, not all lenders offer these types of home loans. At Mortgage House, we offer a few types of Self-Managed Super Fund home loans, allowing you to purchase an investment property while also increasing your retirement in your superannuation. One such loan product is our interest-only SMSF home loan. 

Interest-Only Home Loan

An interest-only home loan allows you to only pay the interest on your loan for a set period of time. During this time, none of the repayments go towards your principal loan amount (the amount you borrowed). Interest-only home loans are a great way to temporarily reduce your monthly mortgage repayment amount. While the most common interest-only period is five years, we do offer a ten year option. 

What are the Benefits and Drawbacks of an Interest-Only Loan?

Some benefits of an interest-only loan include:

  • Lower monthly repayments during the interest-only period, allowing you to save money or pay off other debts
  • May be useful during short-term financial difficulties
  • Being able to claim higher tax deductions on your SMSF investment property

Some drawbacks of an interest-only loan include:

  • A higher interest rate during the interest-only period
  • The principal amount of your loan not being reduced during the interest-only period
  • Your repayments increase after the interest-only period is over, which could lead to financial hardship
  • You won’t build up your equity in your property if its value doesn’t increase. 

If you want to learn more about a 10-year interest-only self-managed super fund home loan, the lending specialists at Mortgage House can sit down with you. 

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