Switch your investment loans to interest only and put the principal you were paying on them into your home loan. Same repayments today, but your home loan shrinks faster. See what it saves, what it costs, and what happens when interest only ends. The example figures are a typical Brisbane household with two rentals.
| Stay as is | Switch to IO | Difference |
|---|
Stay as is: all loans principal and interest. Switch: investment loans interest only, the difference goes into your home loan. To keep it fair, both scenarios pay exactly the same each month. So when the switch forces higher repayments after IO ends, the stay-as-is scenario puts that same extra into its home loan too. Once a loan is gone, its repayment moves to the next one.
After the IO period each investment loan goes back to P&I, but now it has fewer years left to be paid off. So the repayment jumps above what you pay today.
Home loan shown net of your offset.
| Year | Home: stay | Home: switch | All debt: stay | All debt: switch | Monthly: switch |
|---|
Balances at the end of each year. Monthly is what you pay across all loans in the switch scenario, in the last month of that year. The bronze line marks the year interest only ends.
Tax follows the purpose, not the loan. Interest is deductible because the money was borrowed to buy an income-producing property. Paying your home loan down faster doesn't change that. Redrawing from the home loan later for personal use isn't deductible, and mixing purposes in one loan gets messy, so keep loans split.
IO isn't automatic. Approval depends on your lender's policy and on you passing serviceability, which is assessed on the higher P&I repayment over the shorter term. Many lenders cap each IO period at 5 years for investment loans. A renewal is a fresh application: the lender reassesses your income and serviceability at the time, so it isn't guaranteed. And because renewing doesn't extend the loan term, every extra year of IO squeezes the P&I period and makes the eventual jump bigger.
It only works if the money actually goes in. The saving comes from putting every dollar of principal you no longer pay into the home loan, every month. Spend it and you're simply carrying more investment debt for longer.
Download a PDF summary to send to your accountant or partner, or an editable copy with your numbers filled in that anyone can open in a browser and keep adjusting.
Want this run on your actual loans?A VFC broker can check whether your lenders will approve IO, test serviceability and set up the split properly with you.
Book a strategy callEstimates only. General information, not financial, tax or credit advice, and it doesn't consider your objectives, financial situation or needs. Interest only approval depends on lender policy and serviceability. Assumes rates stay where you set them, repayments monthly from November 2026, IO rate returns to the P&I rate when IO ends, rent and running costs rising 3% a year, your income staying flat, and 2026-27 resident tax rates plus 2% Medicare levy for every year. Splits each property's rent, costs and interest between owners by their share on title. Ignores depreciation, fees and lender minimums on extra repayments. The negative gearing check simplifies the Treasury Laws Amendment (Tax Reform No. 1) Act 2026: established residential property acquired after 7:30pm AEST on 12 May 2026 has its rental losses quarantined from 1 July 2027, usable only against residential rental profits and residential capital gains, with the rest carried forward. Doesn't model the CGT changes. Speak to your accountant and broker before you switch.