Interest-only or principal and interest — which one should you choose, and when does it actually make sense?

In this episode of Wealth Coffee Chats, we unpack the real strategy behind structuring your home and investment loans. While principal and interest is typically the smart move for your owner-occupied home (especially to reduce non-deductible debt faster), there are scenarios where interest-only can play a powerful strategic role — particularly during your acquisition phase or when planning to convert a PPR into an investment property.

But lending policies have changed.

Banks no longer assess interest-only loans the way they used to, and that shift can significantly impact your borrowing capacity. From shortened assessment terms to full reapplications when interest-only periods expire, today’s lending environment requires far more strategy and forward planning than before.

In this episode, we cover:

• Why principal and interest is usually ideal for your PPR
• When interest-only can make sense as part of a long-term plan
• How converting a home into an investment property affects deductible debt
• The impact of updated bank servicing rules on borrowing power
• Why a five-year interest-only term could reduce your assessed capacity

How lender policy differences can dramatically change your borrowing outcome

The role of PAYG variations in improving cash flow

Why loan structuring is never “set and forget”

If you’re building a portfolio, upgrading your home, or planning your next acquisition, this episode will help you understand how loan structure decisions today can affect your borrowing power tomorrow.

Strategy matters — and the right structure can make all the difference.