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What is an Interest Only home loan?

With an Interest Only (IO) home loan, you only pay off the interest charged on your loan balance. This means your repayments are less compared to a Principal & Interest loan.

An IO loan could be a good short term option. Remember, for your IO period, you're not paying down your Principal (the loan amount you borrowed) so you'll pay more over the life of the loan.

Athena has super sharp rates for IO compared to other lenders and we can match your scenarios with personalised credit assessments.

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How to IO like a PRO

Our steps to making sure you get the most of Interest Only.

💜   Have a plan for when you will start paying the loan principal. Be aware that when you start paying the principal, your repayments would be higher compared to Interest Only repayments

💜   See how you can reduce your Interest Only loan repayments by making regular or ad hoc extra payments into your redraw or offset

💜   Keep an eye on your circumstances changing and switch back to P&I ahead of time if you can

💜   Calculate the additional cost of Interest Only over the period you’ll use it. Choosing an Interest Only mortgage for a period of the loan will mean you pay more interest overall over the life of the loan


Why choose Interest Only?

Flex your cash flow with Interest Only to suit any of these situations.

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Fixed rate ends

You’ll find a softer landing by reducing your home loan repayments for a chunk of time.

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Savvy investor

Maximise cashflow, minimise your tax and achieve your investment property goals faster.

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Big life change

Maybe you need time off work, a change of job, you start your own business or your family grows.

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Tight budget

Trim your household budget with an IO loan for renovations, repairs, savings, or investments.


We have an Interest Only home loan between 1-5 years of variable rate (or 1-3 years fixed interest only^^) to help manage your cashflow.

Athena lets you switch to Principal & Interest at any time, and make unlimited additional repayments on your loan without a penalty fee.

When your selected Interest Only period ends, you’ll automatically switch to our best Principal & Interest home loan rate for your LVR tier.

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For investment properties

Get up to 5 years Interest Only to free up cash and maximise tax efficiency.

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For the home I live in

Get up to 5 years Interest Only, or swap to Principal & Interest anytime you want.

Interest Only loan interest rates

Choose from Straight Up: no fees, no loyalty tax, with a redraw. Choose Power Up: no fees, no loyalty tax plus multi offsets and split loans. Alternatively, go fixed rate for repayment stability.

Comparison rate calculated on a $150,000 secured loan over a 25 year term^

Owner Occupier rates | Interest Only

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Power Up
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Investor | Interest Only

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Meet our Loan Experts

Want to understand more about Principal & Interest vs Interest Only before you apply?

Our Australian home loan experts are here 5 days a week.

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Learn more about Interest Only


Is an Interest Only home loan right for me?

Making your mortgage repayments as low as possible may seem like a no-brainer.


Principal & Interest vs Interest Only

There’s more than one way to pay off your home loan. Learn which loan option is right for you.


How home loan interest rates work

Setting the record straight on home loan interest rates.

Interest Only FAQs

What does it mean for my repayments after the interest only period ends? 

Monthly repayments will revert from interest only to principal and interest. We will notify you 30 days before your interest only period ends with your estimated P&I repayment so that you will be prepared for the repayment increase.

Important - your P&I repayment after an IO period will be higher than before your IO period, because you have to repay your loan over a shorter period of time.  

Can I do another 5 years IO at the end of the IO term? 

In general, the maximum IO term is 5 years, but we can consider applications for a further 5 years, with a full assessment of your financial circumstances, requirements and objectives. You would need to have demonstrated sound credit history on all your loans.

If we agree to an extension, we cannot extend the loan term which means that when the IO period ends your principal and interest repayments will increase significantly.

Can I make additional payments? 

Yes, you can. You can make unlimited additional repayments to your offset account or redraw facility to reduce the balance your interest is calculated on during an IO period.

Can I take money out of redraw / offset?

Yes, you can withdraw funds from redraw or offset via Home Hub or App.

Can I switch it back?

Yes, you can switch to Principal and Interest repayment whenever you are ready. Let us know!

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Athena acknowledges the traditional owners of the land on which we gather the Gadigal people of the Eora nation. We acknowledge that sovereignty was never ceded and respect their continued and continuing connection to this place.