Would that be because instead having 30 years to pay back the principle because you've (for lack of a better word) wasted 5 years you now only have 25 years left to pay back the principle and hence need to pay back more per month to catch up?
Nope. It's because there is no time frame to pay back principle. It is a loan to infinity. There is a proportion of the loan which is principle, and some (most initially) which is interest. On an interest only loan you are not paying the principle. It comes back to bite you in the end.
Some here suggest that you purchase many properties on interest only and sell off some after a few years for a profit. Using the profit, they pay off the other properties.
I have all of my loans on interest only.
Never had any problems renewing them with the same deal, you just have to ask and they roll over to another interest only.
I have paid off some of the principal here and there with lump sums.
Amazing that so many people here have principles when they discuss repayment of principal.
3 loans with ASB.
Already done 5yrs I/O.
To extend I/O period they want to redocument.
For 2 loans the rents more than cover the $600 P&I payment increase.
3rd loan will need topping up from my beer money :-(.
4th with ANZ - P&I at new interest rate is $100 per month cheaper than it was I/O - great!
An unexpected large jump in repayments that hadn't been on my radar.
That extra $ would probably be better used buying another than paying Principle?
The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.