Investment Property Loans › Should I choose principal and interest or interest only for an investment loan?

Should I choose principal and interest or interest only for an investment loan?

It depends on your strategy. Interest only keeps repayments lower and maintains higher deductible debt, which some investors prefer. Principal and interest pays the loan down and builds equity faster. Each has trade offs.

Written by Ross McFarlane, Licensed Mortgage Broker (Credit Representative 526725). About the author

Why this matters

There is no single right answer, it turns on your goals, cash flow and tax position. Investors focused on cash flow or holding multiple properties often lean interest only, while those wanting to reduce debt choose principal and interest. Because the tax angle matters, this is a decision to make with your broker and accountant together.

The key points

Interest only: lower repayments, higher deductible debt.
Principal and interest: pays down debt, builds equity.
The right choice depends on your strategy.
Decide it with your broker and accountant.

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Last reviewed: June 2026

General information only. This page provides general information about home loans and is not financial or credit advice, a quote, or a guarantee, and your personal circumstances have not been considered. Lending policies, interest rates, fees and eligibility vary by lender and change over time. Always confirm your own situation with a licensed mortgage broker or lender before acting. Ross McFarlane (Credit Representative 526725) is an authorised Credit Representative of Australian Associated Advisers Pty Ltd t/a Keylend, Australian Credit Licence 392169.