Compare principal and interest home loans

The table below displays principal and interest home loans from our Online Partners.

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  • Star Rating - lowest first
  • Star Rating - highest first
  • Interest rate p.a. - lowest first
  • Interest rate p.a. - highest first
  • Comparison rate^ p.a. - lowest first
  • Comparison rate^ p.a. - highest first
  • Monthly repayment - lowest first
  • Monthly repayment - highest first
promoted
Fees & charges apply. Australian Credit Licence 237391.
5.54%
Variable
5.57%
$2,852
Principal & Interest
dot
Cashback up to $4,000*
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$0 application fees, monthly or annual fees
dot
Apply Online
Cashback
Owner occupied
20% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 237391.
Fees & charges apply. Australian Credit Licence 237391.
promoted
Fees & charges apply. Australian Credit Licence 395219.
5.54%
Variable
5.58%
$2,852
Principal & Interest
dot
Available for purchase or refinance, min 10% deposit
dot
Fast turnaround times to meet tight settlement timeframes
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No application, ongoing or monthly fees.
Owner occupied
10% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 395219.
Fees & charges apply. Australian Credit Licence 395219.
promoted
Fees & charges apply. Australian Credit Licence 234945.
5.49%
Variable
5.40%
$2,836
Principal & Interest
dot
A simple low rate with an increasing discount.
dot
Apply in minutes. No Unloan Fees.
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Fee-free extra repayments and redraw.
Owner occupied
20% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 234945.
Fees & charges apply. Australian Credit Licence 234945.
promoted
Fees & charges apply. Australian Credit Licence 230686. Products issued by ubank, part of NAB.
5.69%
Variable
5.71%
$2,899
Principal & Interest
dot
Easy application. Fast approval. No annual fee.
dot
Unlimited additional repayments free of charge.
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Products issued by Ubank, part of NAB
Owner occupied
20% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 230686. Products issued by ubank, part of NAB.
Fees & charges apply. Australian Credit Licence 230686. Products issued by ubank, part of NAB.
promoted
Fees & charges apply. Australian Credit Licence 240701.
5.63%
Variable
5.66%
$2,880
Principal & Interest
dot
Award-winning products and service. Fast approvals.
dot
Discover competitive rates, no ongoing fees & flexible options.
dot
P&N Bank is your local way home.
Owner occupied
40% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 240701.
Fees & charges apply. Australian Credit Licence 240701.
promoted
Fees & charges apply. Australian Credit Licence 234945.
5.49%
Variable
5.40%
$2,836
Principal & Interest
Owner occupied
20% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 234945. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 234945. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 237476.
5.49%
Variable
5.50%
$2,836
Principal & Interest
Cashback
Owner occupied
20% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 237476. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 237476. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 238311.
5.49%
Variable
5.53%
$2,836
Principal & Interest
Owner occupied
40% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 238311. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 238311. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 496431.
5.54%
Variable
5.55%
$2,852
Principal & Interest
Owner occupied
10% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 496431. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 496431. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 237391.
5.54%
Variable
5.57%
$2,852
Principal & Interest
Cashback
Owner occupied
20% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 237391. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 237391. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 395219.
5.54%
Variable
5.58%
$2,852
Principal & Interest
Owner occupied
10% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 395219. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 395219. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 231204.
4.99%
2 year fixed
5.86%
$2,681
Principal & Interest
Owner occupied
20% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 231204. Star Rating for a $500k owner occupier 2 year fixed rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 231204. Star Rating for a $500k owner occupier 2 year fixed rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 238311.
5.30%
2 year fixed
5.38%
$2,777
Principal & Interest
Owner occupied
5% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 238311. Star Rating for a $500k owner occupier 2 year fixed rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 238311. Star Rating for a $500k owner occupier 2 year fixed rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 496431.
5.29%
2 year fixed
5.50%
$2,773
Principal & Interest
Cashback
Cashback
Owner occupied
10% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 496431. Star Rating for a $500k owner occupier 2 year fixed rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 496431. Star Rating for a $500k owner occupier 2 year fixed rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 214077.
5.49%
Variable
5.52%
$2,836
Principal & Interest
Owner occupied
40% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 214077. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 214077. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 238981.
5.49%
Variable
5.55%
$2,836
Principal & Interest
Owner occupied
40% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 238981. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 238981. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 388053.
5.54%
Variable
5.59%
$2,852
Principal & Interest
Cashback
Owner occupied
40% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 388053. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 388053. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 237391.
5.64%
Variable
5.76%
$2,883
Principal & Interest
Cashback
Owner occupied
20% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 237391. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 237391. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 237502.
5.19%
3 year fixed
5.54%
$2,742
Principal & Interest
Owner occupied
30% min deposit
Fees & charges apply. Australian Credit Licence 237502. Star Rating for a $500k owner occupier 3 year fixed rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 237502. Star Rating for a $500k owner occupier 3 year fixed rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 237502.
5.19%
2 year fixed
5.58%
$2,742
Principal & Interest
Owner occupied
30% min deposit
Fees & charges apply. Australian Credit Licence 237502. Star Rating for a $500k owner occupier 2 year fixed rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 237502. Star Rating for a $500k owner occupier 2 year fixed rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 237502.
5.29%
2 year fixed
5.64%
$2,773
Principal & Interest
Owner occupied
20% min deposit
Fees & charges apply. Australian Credit Licence 237502. Star Rating for a $500k owner occupier 2 year fixed rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 237502. Star Rating for a $500k owner occupier 2 year fixed rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 240701.
5.63%
Variable
5.66%
$2,880
Principal & Interest
Owner occupied
40% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 240701. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 240701. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 230686. Products issued by ubank, part of NAB.
5.64%
Variable
5.66%
$2,883
Principal & Interest
Owner occupied
30% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 230686. Products issued by ubank, part of NAB. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 230686. Products issued by ubank, part of NAB. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 230686. Products issued by ubank, part of NAB.
5.64%
Variable
5.66%
$2,883
Principal & Interest
Owner occupied
40% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 230686. Products issued by ubank, part of NAB. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 230686. Products issued by ubank, part of NAB. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
promoted
Fees & charges apply. Australian Credit Licence 237502.
5.69%
Variable
5.71%
$2,899
Principal & Interest
Owner occupied
20% min deposit
Redraw facility
Fees & charges apply. Australian Credit Licence 237502. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 237502. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR

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The initial results in the table above are sorted by Star Rating (High-Low) , then Comparison rate^ p.a. (Low-High) , then Provider Name (Alphabetical) . Additional filters may have been applied, which impact the results displayed in the table - filters can be applied or removed at any time.

promoted
Fees & charges apply. Australian Credit Licence 237391.
Interest rate p.a.
Comparison rate^ p.a.
Monthly repayment
5.54%
Variable
5.57%
$2,852
Principal & Interest
IMB Bank Budget Home Loan
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Fees & charges apply. Australian Credit Licence 237391. See Terms & Conditions. ^ Comparison Rate Warning. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR
Fees & charges apply. Australian Credit Licence 237391. See Terms & Conditions. ^ Comparison Rate Warning. Star Rating for a $500k owner occupier variable rate P+I loan at 80% LVR

If you’re shopping around for a home loan, you might see products advertised with the words ‘principal and interest’ or sometimes, more cryptically, just ‘P&I’. Here’s what that actually means.

What is principal and interest?

Principal and interest is a type of loan where the borrower repays the loan as well as the interest charged by the lender from the very start of the term. In other words, from the beginning, your regular repayments will go towards paying down the loan amount (the principal) as well as the interest that’s added on top.

Principal and interest is generally the most commonly-offered loan set up, with the main alternative being an interest-only loan. With that kind of loan, your repayments only cover the interest charged by the lender for a period of time, usually up to five years in the case of a home loan. After this period, the loan reverts to principal and interest repayments for the remainder of the term.

How do principal and interest loans (P&I loans) work?

With a home loan, the lender charges interest based on an annual percentage rate. Using that rate, interest is typically calculated each day on the loan’s current balance and the interest amount is divided by 365 to give the daily interest amount. As interest is usually charged monthly, the daily interest amounts for the month are added together and that total is added to your loan balance.

With a principal and interest loan, your regular repayments – whether they are weekly, fortnightly or monthly – pay off the interest plus a chunk of the loan balance. That way you are gradually eating away at the loan amount, so each month the amount of interest you are charged should progressively decrease, assuming your interest rate does not change. The amount of interest charged can also fluctuate depending on the number of days in the month.

Of course, interest is just one of the costs of taking out a loan. It’s also important to consider the fees charged. For this reason, loans are advertised with an interest rate and a comparison rate, which is designed to give borrowers a more accurate picture of the cost of the loan as it factors in the interest rate and most fees based on a sample loan amount and term.

Which is better: principal and interest or interest-only?

Whether a principal and interest or interest-only home loan is the better option for you will depend on your circumstances and priorities. Here are some potential benefits of each which may help you decide which repayment type is right for you.

Benefits of principal and interest repayments

  • Interest rates on offer with principal and interest loans are generally lower than interest-only loans.
  • As you are progressively paying down the balance from the start of the loan term, you generally end up paying less in interest over the life of the loan, compared to an interest-only loan.
  • With a principal and interest loan, you are building up equity in your home from the start as the balance decreases.

Benefits of interest-only repayments

  • Your regular repayments will generally be lower during the interest-only period than they would be with a principal and interest loan.
  • Lower repayments during the interest-only period may mean you have more cash available to use for other purposes.
  • For investors, opting for an interest-only home loan may offer potential tax benefits, according to Moneysmart.

How to compare principal and interest home loans

With a principal and interest home loan, the interest you pay is typically the biggest cost aside from the principal you borrow, so it’s worth paying close attention to the rate you’re charged at. It can also be worth bearing in mind the fees charged by your lender, such as establishment fees and annual or monthly fees. This is why the comparison rate can be useful for borrowers looking to weight up the interest rate as well as fees.

Loan features can also contribute to the overall value you’re getting and can be worth factoring in when you’re comparing your options. For example if you have a principal and interest loan that allows you to make extra repayments so you’re paying off even more of the loan’s principal ahead of time, this could help you save quite a bit of money in interest in the long run. Alternatively, an offset account could help you save in interest too.

Consider the relevant product documents available as part of your decision-making, including the Target Market Determination and Key Facts Sheet.

 

Frequently Asked Questions about Principal and Interest Home Loans

In general terms, there are three types of home loans available to Aussie borrowers – fixed rate home loans, variable rate home loans, and split rate home loans, which are a combination of the other two.

Fixed rate home loans have a rate that is set in place or ‘fixed’ for a period of time known as the term of the loan. This term will most commonly be one, two, three or give years, and in this time, the rate will not change.

By contrast, variable rate home loans have a rate that can fluctuate, potentially moving up or down depending on factors such as the Reserve Bank of Australia’s cash rate, and individual lenders’ decisions.

Split rate home loans combine both fixed and variable components, potentially allowing borrowers to take advantage of desirable features of both.

There is no definitive answer to the question of which type of home loan is more expensive, as it will ultimately come down to the interest rate set by the individual lender. That said, fixed rate home loans on the whole tend to be more expensive than variable rate ones, in part because the lender will want to account for the extra money they might miss out on if rates rise.

A home loan with a low interest rate might not always be the cheapest, if there are expensive fees and charges attached. For this reason, when you find a low variable home loan rate, it’s important to check the comparison rate, which will give you a better idea of the true cost of the loan.

The comparison rate of a loan is a number that lenders are legally required to display next to the interest rate. The idea behind a comparison rate is that it’s intended to represent the true cost of said loan, when fees and charges are taken into account along with the interest rate.

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About our home loan experts

Alasdair Duncan, Content Editor

Alasdair Duncan
Alasdair Duncan is Canstar's Content Editor, specialising in home loans, property and lifestyle topics. He has written more than 500 articles for Canstar and his work is widely referenced by other publishers and media outlets, including Yahoo FinanceThe New DailyThe Motley Fool and Sky News. He has featured as a guest author for property website homely.com.au. In his more than 15 years working in the media, Alasdair has written for a broad range of publications. Before joining Canstar, he was a News Editor at Pedestrian.TV, part of Australia’s leading youth media group. His work has also appeared on ABC News, Junkee, Rolling Stone, Kotaku, the Sydney Star Observer and The Brag. He has a Bachelor of Laws (Honours) and a Bachelor of Arts with a major in Journalism from the University of Queensland, and has completed a RG146 compliance training course. When he is not writing about finance for Canstar, Alasdair can probably be found at the beach with his two dogs or listening to podcasts about pop music. You can follow Alasdair on LinkedIn.

Joshua Sale, GM, Research

Joshua Sale
Joshua Sale is responsible for developing the methodology and delivering Canstar’s flagship Star Ratings, as part of Canstar’s Research Team. With tertiary qualifications in economics and finance, he enjoys helping Australians find more suitable financial products by transforming complex calculations into a consumer-friendly Star Rating that explains the values and benefits of different financial products. As one of Canstar’s company spokespeople, Joshua is confident participating in print, radio and broadcast journalism interviews. He has participated in interviews with the Australian Financial Review, news.com.au and Money Magazine, along with other leading media outlets, discussing topics such as home loan equity, banking incentive schemes, digital wallets and wider finance trends. You can follow Joshua on LinkedIn. Have a media enquiry, and interested in featuring Joshua as a financial expert and commentator? Contact Canstar’s Media Team today.

Important information

For those that love the detail

This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you.

Canstar may earn a fee from its Online Partners for referrals from its website tables, and from sponsorship or promotion of certain products. Fees payable by product providers for referrals and sponsorship or promotion may vary between providers, website position, and revenue model. Sponsorship/promotion fees may be higher than referral fees. If a product is sponsored or promoted, it’s an ad and it is clearly marked as such. An ad might appear in different places on our website, such as in comparison tables and articles. Ads may be displayed in a fixed position in a table, regardless of the product's rating, price or other attributes. The location of an ad doesn’t indicate any ranking or rating by Canstar. Payment of fees for ads does not influence our Star Ratings. See How We Get Paid to find out more. Payment of fees for ads does not influence our Star Ratings or Awards.

Home loan Star Ratings are updated daily. During periods of significant market fluctuations, such as adjustments to the reserve bank's cash rate, star rating updates will be paused for variable home loans until the market has stabilised. However, advertised interest rates of products will continue to be updated as advised by lenders. The results don’t include every provider in the market and we may not compare all features relevant to you. Current rates and fees are displayed and may be different to what was rated. You can find a description of the initial sort order below the table. You can use the sort buttons at the top of each column to re-order the display. Learn more about our Home Loans Star Rating Methodology. The rating shown is only one factor to take into account when considering products. The table defaults to display only home loans available to somebody borrowing up to 80% of the property value, but you can use the filters to change this. Similar products might have different features and fees depending on the amount you borrow. Contact the lender for details.

The products and Star Ratings in the table might not match your exact inputs in the selector. Sometimes the methodology uses profiles with categories or bands (e.g. income, loan amount or monthly spend), but sometimes a single methodology, without any categories or bands, is applied.  The results will show the products that most closely match your selection, based on our profiles. If you are unsure about any terms used in the comparison table please refer to the glossary.

What is a Target Market Determination?

A Target Market Determination (‘TMD’) is a document that explains which people particular financial products may be suitable for (the target market) and sets out any conditions around how financial products can be distributed to consumers.

Why do product issuers provide Target Market Determinations?

From 5 October 2021, TMDs are compulsory for most financial products.

Issuers and distributors of financial products must take reasonable steps that are likely to result in financial products reaching consumers in the target market defined by the product issuer.

We recommend that you consider the TMD before making a purchase decision. Contact the product issuer directly for a copy of the TMD.

Any advice on this page is general and has not taken into account your objectives, financial situation or needs. Consider whether this general financial advice is right for your personal circumstances. Canstar provides information about credit products. We’re not suggesting or recommending a particular credit product for you. If you decide to apply for a loan, you will deal directly with the provider, not with Canstar. Consider the Target Market Determination (TMD) before making a purchase decision. Contact the product issuer directly for a copy of the TMD. It’s important you check rates and product information directly with the provider. For more information, read our Detailed Disclosure. ^Read the Comparison Rate Warning.

Canstar is not providing a recommendation for your individual circumstances. We cannot and do not recommend that any particular product is suitable for you. 

We provide links to our Online Partners. These are brands that may pay Canstar a fee for referring you. Our tables default to display only our Online Partners’ products initially, you can adjust the Online Partner Filter to see all of the products available for comparison on Canstar’s website. We provide these links so that you can click through to the product provider’s website to get more information. The provision of these links does not constitute a recommendation by Canstar.

Before you elect to terminate or modify existing lending arrangements, we recommend you consider (i) your personal circumstances, and (ii) any associated fees, exit costs and application costs that may be applicable as well as the impact these changes could have on you. We suggest you consider seeking independent advice from a qualified adviser.

“Interest-only loan” generally means a loan where you will only pay interest during the interest-only term. That means you won’t be making payments which reduce debt during the interest-only term.