Interest-Only vs P&I: What Investors Get Wrong (And What It Costs You)

Most property investors treat interest-only versus principal and interest as a repayment decision. It's not. It's a borrowing capacity decision, and picking the wrong one can quietly cost you one to two properties you never knew you were eligible for. In this deep-dive episode of the Property Nerds podcast, Arjun Paliwal (CEO of InvestorKit) sits down with Jack Fouracre from Fouracre Financial to go further into finance strategy than most brokers ever explain. Together they break down exactly how one $700,000 loan can be assessed completely differently by two different banks, why that gap can swing your servicing by over $100,000, and why the "cheaper rate" everyone chases isn't actually the win people think it is. They also unpack a concept from the world of accounting that reframes debt entirely: how a $50,000 loan balance that felt unmanageable in the 1990s can feel almost meaningless on a $1.5 million asset today, without a single dollar of it ever being paid down. Chapters: 0:00 – The First-Year Illusion: Why Your Repayment Isn't Doing What You Think 1:59 – The Basics Reset: What Interest-Only and P&I Actually Mean 4:11 – The Cheaper Rate Trap: Why 0.3% Doesn't Mean What You Think It Means 6:33 – The Servicing Blindspot: Why Major Banks Judge a Loan You Don't Have Yet 9:39 – The Extra Property Multiplier: How the Right Bank Adds 1–2 Properties to Your Portfolio 12:03 – The LVR Threshold Shift: Why 80%, 90% and 97% Change Every Rule 14:17 – The Purchase Split Strategy: Why One Loan Can Be P&I While the Rest Stay Interest-Only 19:11 – The Inflation Blindspot: Why a $50K Debt Feels Worthless 40 Years Later 22:05 – The Real Answer: Why It's Never One or the Other 🥇🥇 InvestorKit - Back To Back "REB Buyers Agency Of The Year 2023, 2024, 2026" Book your discovery call here: https://www.investorkit.com.au/discov... If you're scaling a portfolio and want the right structure before your next purchase, the team at Fouracre Financial can walk you through it: fouracrefinancial.com.au ✅ HOW WE CAN HELP YOU: By being the most trusted, data-driven Buyers Agency for aspiring investors who wish to create real financial change by helping them invest with confidence, outperform the market, and build a high-performing property portfolio. 👉 https://www.investorkit.com.au ✅ CONNECT WITH INVESTORKIT: Website: 👉 https://www.investorkit.com.au Send your questions to: 👉 arjun@investorkit.com.au Follow us on Facebook: 👉   / investorkit   Follow us on Instagram: 👉   / investorkit.com.au   Subscribe to our YouTube Channel: 👉    / @investorkit   Connect with us on LinkedIn: 👉   / investorkit   Disclaimer: The information provided in this podcast is general in nature and should not be considered as personal financial advice. The podcast host, guests, and contributors are not licensed financial advisors. Please seek professional financial advice that is tailored to your situation and circumstances before making any financial decisions.