Interest Options Explained
Choose between interest-only payments or capped interest based on your cash flow needs and business situation.
Interest Rates
From
per month
Simple interest, no compounding
Interest-Only (Monthly Payments)
You pay interest monthly from your own cash flow. The loan balance stays the same throughout the term.
Example: $80,000 in hand
Monthly payment: $1,725.74 while the loan is on foot
Best for:
- Businesses with regular monthly income
- When you want a lower total loan amount
- Investment properties with rental income
Lower loan amount
Smaller loan means less impact on your LVR and borrowing capacity.
Capped Interest (Pre-paid)
When you choose capped interest, we take and hold the interest upfront from the loan amount. You make no monthly payments during the capped period.
Example: $80,000 in hand (6 months capped)
No monthly payments for the 6 month capped period
Best for:
- Property development (waiting for sale)
- Business acquisitions with a clear exit
- When cash flow is tight but exit is certain
Maximum cash flow flexibility
No monthly payments means all cash can go to your project.
Compare Your Options
Interest Calculator
Interest-Only (Monthly Payments)
Monthly payment: $1,725.75
Capped Interest (6 months pre-paid)
No monthly payments during capped period
This calculator is for illustration purposes only. Actual rates and terms will be confirmed during your application. Loan preparation fee from $4,995, capitalised into the loan.
Side-by-Side Comparison
| Feature | Interest-Only | Capped Interest |
|---|---|---|
| Monthly payments | Yes — interest only | No payments during capped period |
| Interest handling | Paid monthly from cash flow | Taken and held from loan amount upfront |
| Loan amount required | Lower | Higher (includes pre-paid interest) |
| Cash flow impact | Monthly outgoings required | No impact during capped period |
| Best suited for | Steady income situations | Development / exit-based scenarios |
Important Considerations
LVR Impact
With capped interest, you require a higher loan amount to get the same cash in hand. This higher loan amount affects your LVR and the total amount you can borrow against your property.
Exit Strategy
If choosing capped interest, ensure you have a clear exit strategy — whether that's selling a property, refinancing, or receiving business income to repay the loan.
No Switching Between Options
You cannot switch between capped interest and interest-only after the loan has been established. Choose the option that best suits your needs at the outset.
Tax Considerations
Interest on business and investment loans may be tax-deductible. Consult your accountant for advice specific to your situation.
Loan Preparation Fee
From $4,995, capitalised into the loan.
No upfront payment required. Additional properties may incur a small additional fee.
Not Sure Which Option is Right for You?
We can discuss your situation and help you choose the best interest structure for your needs.