Should you switch your investment loan to principal and interest?

Investopoly · Jul 5, 2018 · 9m

Over the past two years lenders have been incrementally increasing interest rates on investment loans and loans with interest only repayments (as opposed to principal and interest). As the chart below illustrates, the average interest rate margin between a principal and interest home loan and an interest only investment loan is now 1.04% p.a. As recent as January 2016, interest rates for these loans were virtually identical.This begs the question, should you switch your investment loan to principal and interest repayments to save approximately 0.47% p.a. in interest costs (i.e. difference…