Newcomer question number #17: How do interest only loans work? - I understand that you only pay interest. This means you have more disposable income to support more investment properties. - I think I read that having an I/O loan and putting extra in an offset account is effectively the same at a P/I loan (if disciplined) but with more flexibility if you need access to the funds. - I understand that in the long run, it doesn't matter if you don't pay down the capital if you build a large portfolio which increases in value, then you can sell it down to pay of the capital owing on remaining properties. But when I look at loan info on bank websites, they talk about interest only period of <5 years, then the repayments are higher than than a regular P/I loan as you catch up. How do people do this in the long run? Do they sell properties when the I/O period ends? Do they refinance with a new I/O loan? Is there something else I'm missing?