By Chris Dang June 22, 2025

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Could 10-Year Interest-Only Loans Be the Lifeline Property Investors Need?

Property Market News
Could 10-Year Interest-Only Loans Be the Lifeline Property Investors Need?

Key takeaways

When a lender comes out offering a 10-year interest-only (IO) home loan, it naturally raises a few eyebrows, and some important strategic questions.

A 10-year IO loan isn’t good or bad, it’s a tool, and tools depend on how you use them.

It can extend runway, provide breathing space, and align with growth strategies, but not a fix-all.

As always, the key is strategy first, not product-chasing.

We’re in a challenging environment for property investors and homebuyers — interest rates are still relatively high, living costs are biting, and many long-term investors are finding themselves "asset rich but cash poor."

So, when a lender comes out offering a 10-year interest-only (IO) home loan, it naturally raises a few eyebrows, and some important strategic questions.

Is this the kind of innovation that can give investors more breathing room, or is it just a risky gimmick?

What’s being offered?

AMP has launched a 10-year interest-only loan that’s available for both owner-occupiers and investors.

That’s double the usual five-year IO term offered by most mainstream banks.

And it’s not limited to new loans; they’re opening it up to refinancers, too.

This is significant because one of the big pressures property investors are facing right now is the transition from interest-only periods into principal-and-interest repayments, just as their costs are peaking.

So, the idea of extending interest-only terms without the usual refinancing hoops might sound like music to some investors’ ears.

The benefits for investors

There are a few clear upsides to a longer IO term, if used wisely.

1. Improved cash flow flexibility

The main appeal is simple: lower repayments in the short-to-medium term.

By deferring principal repayments, you free up cash flow—money you can use to offset higher living costs, fund renovations, or even invest further.

And if you're a seasoned investor holding assets with strong capital growth potential, this can be a savvy move.

Rather than tying up capital in P&I repayments, you're using the bank's money to ride the growth wave longer.

2. Portfolio survival tactic

Let’s face it—many investors who bought in during the boom years with IO loans now face a squeeze.

They’re seeing their IO terms expire, their repayments jump, and rental yields often not keeping up.

This product could be a lifeline for them, allowing them to hold on through this part of the cycle.

3. Strategic planning tool

For more sophisticated investors, this might not just be a survival mechanism but a strategic tool.

It gives you optionality: manage debt smarter, time your portfolio movements, and create buffers while you wait for the next upswing in the market.

But there are risks too

While the flexibility sounds great, there are traps here for the unwary.

1. You’re not reducing debt

Remember, IO loans don’t reduce the loan balance.

You're not building equity through repayments, you're relying on capital growth or voluntary offsets.

If you don't own the right property and its value stagnates, you could be left vulnerable when the IO period ends.

2. Risk of ‘kicking the can’

Some investors might be tempted to just delay the pain without a long-term plan.

That’s dangerous.

If you’re just using this to survive and hope the market bails you out, that’s speculation, not investing.

3. Future assessment risk

Even with IO repayments now, eventually the full principal needs to be paid back.

And if your income hasn’t risen or serviceability hasn’t improved when that time comes, refinancing could be tough.

Is it a good idea?

Here’s my take: for the right investor, yes, this could be a very smart move. But it’s not a silver bullet.

The difference comes down to strategy.

At Metropole, we always say property investing is a game of finance with some houses thrown in the middle.

Loans like this can offer tactical breathing room, but only if they’re part of a bigger wealth plan, one that involves buffers, capital growth, and the right property assets in the first place.

For example, a 10-year IO loan might be ideal if you:

Have strong capital growth properties already compounding value
Want to build or hold a larger portfolio for longer
Are confident in your exit or repayment strategy at the end of the IO term
Need to preserve cash flow in the short term for reinvestment or liquidity

But I wouldn’t recommend this to those who are already stretched too thin.

Final thoughts

A 10-year interest-only loan isn’t a magic wand, but it is a tool, and like all tools, it depends on how you use it.

In the right hands, it could give experienced investors the time and space to grow wealth, preserve capital, and strategically manage their portfolio through a tricky period.

But go in with your eyes wide open and make sure it fits into a broader, personalised strategy that takes both the risks and opportunities of the current cycle into account.

Need help thinking it through?

That’s exactly what we do every day at Metropole.

Strategic finance isn’t about chasing the latest offer; it’s about building a lasting financial future.

Are you wondering how you should invest in this interesting phase of the property cycle?

If you're like many property investors, you're probably wondering what's the right thing to do at present.

Should you buy, should you sell, or should you just wait?

You can trust the team at Metropole to provide you with direction, guidance, and results.

Whether you’re a beginner or an experienced investor, at times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s exactly what you get from the multi-award-winning team at Metropole.

We help our clients grow, protect and pass on their wealth through a range of services including:

Strategic property advice – Allow us to build a Strategic Property Plan for you and your family. Planning is bringing the future into the present so you can do something about it now! Click here to learn more
Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $4Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney, and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment-grade property. Click here to learn how we can help you.
Property Development - We enable you to become an “armchair developer” and get all the benefits of property development without getting your hands dirty. We take the hassles out of your investment by assisting you with all the expertise you need, from concept to completion, including construction. Click here to see if it’s the right way for you to grow your portfolio.
Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
Property Management – Our stress-free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years, and our properties lease 10 days faster than the market average.

About Chris Dang Chris Dang is an accountant by training and has worked in the Financial Planning industry for many years. Chris brings together property, accounting, and financial planning experience to help clients of Metropole Wealth Advisory create a holistic plan for their wealth.