What is the difference between principal and interest and interest only?

Most Qudos Bank Home Loans offer two repayments types, these are:

  • Principal and Interest
  • Interest Only*

The difference between the two is that principal and interest repayments mean you will be paying down your principal balance (as well as interest it accrues) from your first repayment. Whereas, with interest-only repayments, the principal balance will not be reduced and interest continues to be calculated during this period.

*Interest only subject to approval. During an interest only period, your interest only payments will not reduce your loan balance. This may mean you pay more interest over the life of the loan.

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