Principal and interest repayments
Principal and interest repayments repay part of the balance as well as the interest each period, so the loan is cleared by the end of its term.
Principal and interest repayments, explained.
In the early years most of each repayment is interest; the split reverses over time as the balance falls. Extra repayments early in the term therefore save far more interest than the same amount later.
Principal and interest loans usually carry a lower rate than interest-only loans and are assessed more favourably, because the debt is reducing.
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The Learn section is general information about lending in Australia. It does not take account of your objectives, financial situation or needs, is not credit assistance, and is not tax, legal or financial advice. Lender policies, government schedules and regulations change; check the current position with the relevant body or with us before relying on it.
