Interest only — useful, not universal.

The first is maximising deductibility — if the loan is on an investment property, paying interest only keeps the deductible balance steady and preserves cashflow for principal repayments on a non-deductible owner-occupier loan instead. The second is short-term cashflow relief during a deposit-saving window for the next property. The third is a defined lifestyle phase — construction, maternity leave, business transition — where lower mandatory payments reduce stress temporarily.

The trap is using IO as a permanent product on everything. At some point, IO reverts to P&I (usually after 5 years), and the P&I payment is calculated on the original loan amount across the shorter remaining term. If you haven't planned for that reversion, the payment jump can be a shock. We model the reversion payment upfront so there are no surprises.