What exactly does that mean?

The "principal" which is the actual amount you borrowed or the loan itself. So when you pay off the principal the mortgage amount you owe actually decreases.

And the "interest" which is the cost of borrowing money from the bank.

If you were just paying the interest-only portion but not the principal then your weekly cost will be lower (this is why people think it's a good idea)

If you went interest-only and hypothetically kept it like that for the full 30 years of the mortgage then you would never actually pay down any of the amount you borrowed from the bank.

This isn't great if you live in the home, you retire and you no longer have an income. Ideally, most people when they retire want to have no mortgage on their home so they don't have to worry about living expenses like rent or a mortgage.

When is interest only a good idea? Well, this is a debatable topic, but some property flippers or investors do this or it might help if you are really struggling to pay your mortgage as a short-term fix.

We dive a lot deeper into this and what consequences you'll have if you are thinking about using this facility; if you should do it from day dot or only use it as a backup plan.

Book a call here with one of our advisers today to go over if this is right for you.