Dr Sam Wylie

And then you'd have to pay the principal as well.

If it was a principal and interest loan, which is what it's going to be, it's not going to be an interest only mortgage, interest only loan.

That's what you would want if you're an investor, investing in a property rather than buying one to live in.

So it's going to be principal and interest.

You're going to be paying the $12,000 interest and you're going to be paying back the $500,000.

That's the principal part.

that'll be on top of it.

But if it's a variable rate, I know this is a long answer, so I'll shut up in a moment, but if it's a variable rate mortgage, which is most likely it's going to be, could be fixed rate for three years, but if it's a variable rate, then if the RBA, the Reserve Bank of Australia, let's come back to them in just a moment, if they put interest rates up, then your 2.4% will go up.

And if they put interest rates up, because the RBA charges...

sets the interest rate here, and then the banks add a margin on top of it of about 2.4%.

And we live in extraordinary times, Kate, as you know, and interest rates are approximately zero from the RBA at the moment.

And the banks always put about 2.4% on top of that to make their profits.

So you've got 2.4%.

But if the RBA increased it, it's actually at 0.1%, but that's pretty close to zero.

If they increased it to 1.1%,

The banks would add that on and we go from 2.4 plus 1.1 to, let's say, 3.5.

And then we would go from you paying $12,000 interest to paying $17,500 interest.

It would drift up.

And in the last few years, those interest rates have been drifting down.

But if the RBA, the Reserve Bank of Australia, increases interest rates, then they'll drift up.