Skip to main content
Loading the latest on mortgages, RBA & inflation…
Local Knowledge Finance

My interest-only period is ending. What are my options?

Short answer

When an interest-only period ends, the loan usually switches to principal and interest, so repayments go up. Start early: ask your lender what the new repayment will be and whether an extension is possible. Extending or refinancing needs a fresh assessment, and lender policies vary and change. Hardship help exists if you cannot pay.

Talk to a broker 02 8338 8900

This answer is awaiting review by James Chee CPA. Written by Local Knowledge Finance editorial team. Check the dated sources below and talk to a broker about your own situation.

Content last updated

What lenders will want to see

  • Moneysmart explains that repayments rise when an interest-only period ends and the loan reverts to principal and interest. [Moneysmart (ASIC)]
  • Moneysmart notes you pay more interest over the life of the loan with an interest-only period. [Moneysmart (ASIC)]
  • Lenders must assess whether a new or changed loan is unsuitable for you, which is why an extension is not automatic. [ASIC]
  • If you are struggling to pay, Moneysmart advises contacting your lender early about hardship. [Moneysmart (ASIC)]

Who this may suit

  • Borrowers with several months before the interest-only period ends
  • Self-employed borrowers whose income can be evidenced with recent returns

Who it may not suit

  • Anyone who has already fallen behind: speak to your lender about hardship first
  • Investors wanting a view on the tax impact: ask your tax agent

Your options, including not borrowing

  • Let the loan move to principal and interest, if the higher repayment fits your budget.
  • Ask your current lender about extending the interest-only period. It is assessed like a new application. [ASIC]
  • Refinance to another lender. Policies vary by lender and change; we check current policy for your situation.
  • Sell or reduce the debt if the higher repayments are not sustainable.

Risks to weigh

  • Extending interest-only means you pay more interest over the life of the loan. [Moneysmart (ASIC)]
  • Leaving it late can narrow your options if your income has changed.
  • Refinancing can involve fees, break costs and a new credit enquiry.

Next steps

  1. 1Find the end date of your interest-only period on your loan statement.
  2. 2Ask your lender for the new principal and interest repayment in writing.
  3. 3Gather recent tax returns and BAS if a fresh assessment is needed.
  4. 4Talk to us early if you want to compare extending, switching or refinancing.

Common follow-up questions

No. Lenders generally treat an extension as a credit decision and assess your current finances before agreeing.
Contact your lender before the change and ask about hardship options. Free financial counselling is available through the National Debt Helpline.
It can be an option if you pass a new assessment, but it usually means paying more interest overall. Compare the total cost, not only the monthly repayment.

Sources

Related guides

Self-employed home loans Refinancing Insights

Related questions

I am self-employed and struggling with my mortgage repayments. What can I do?
Read the answer
Can I refinance if my self-employed income has dropped?
Read the answer
Will refinancing affect interest deductibility on my investment loan?
Read the answer

General information about credit only. It is not tax, financial, superannuation or Centrelink advice and does not take your objectives, financial situation or needs into account. Lender policies change; any loan is subject to lender assessment and approval.

Ding Financial Pty Ltd t/a Local Knowledge Finance, Corporate Authorised Credit Representative 517980 of Global Mutual Funds Pty Ltd (ACL 222640). Sydney · 02 8338 8900 · [email protected]

One Practice · Five Specialisations

Specialist Finance Divisions

Local Knowledge Finance operates as a unified practice across commercial, development, residential, refinancing and debt consolidation finance. Every division is led by James Chee — CPA, Registered Tax Agent and mortgage broker at Local Knowledge Finance — so your strategy is never siloed.

Commercial Finance

Business & Commercial Lending

Business purchase, commercial property, equipment finance, cashflow lending and SMSF loans — structured by a CPA and Tax Agent who understands your financials.

Business acquisitionsCommercial propertyEquipment & vehiclesSMSF lending
Explore Commercial Finance

Development Finance

Construction & Development Lending

Specialist construction loans for duplexes, townhouses and medium-density projects up to $10M. Fast non-bank approvals with progressive drawdown management.

Duplex & townhouse buildsKnock-down rebuildsLand subdivisionMezzanine finance
Explore Development Finance

Tailored Home Loans

Prestige & Residential Lending

Sydney's Eastern Suburbs specialist for prestige home loans, first home buyers, refinancing and investment lending — with local market intelligence that matters.

Prestige home loansFirst home buyerRefinancingInvestment properties
Explore Tailored Home Loans

Debt Consolidation

Consolidate & Save

Roll credit cards, personal loans, car finance and other debts into one home loan at a fraction of the rate — structured with a separate split and accelerated payoff plan.

Credit card debtPersonal loansCar & vehicle loansATO & tax debts
Explore Debt Consolidation

Refinancing

Rate Reviews & Loan Restructuring

Switch to a sharper rate, unlock equity, consolidate debt or move off an expiring fixed rate — with the true cost modelled, not just the headline rate, by a CPA and mortgage broker at Local Knowledge Finance.

Lower your rateCash-out & equityFixed → variableDebt consolidation
Explore Refinancing

Want to talk your situation through?

Call 02 8338 8900 or send us a message. We'll look at your documents and tell you plainly what your lending options are.

Get my lending options More questions answered