PHOTO: Laura Christopher hopes she can keep hold of the house she and her son live. ABC News

When Laura Christopher bought her house in Ipswich, Queensland, she signed up for an interest-only period.

Key points:

  • Hundreds of billions of dollars in interest-only loans will be reset in the next three years
  • Borrowers coming to the end of interest-only periods face thousands of dollars of extra repayments
  • Some economists warn that the reset could cause a fire sale of properties if borrower can’t meet repayments

“The fact the repayments were going to be a bit lower was the major drawcard,” she told 7.30.

“But I didn’t quite understand the implications.”

The reason repayments were originally lower is that during an interest-only period, borrowers are not paying off the debt they owe to the lender.

When the term ends — or resets, as it is called in the industry — a borrower will start paying off both principal and interest unless they can secure an additional interest-only period.

And for those who can not negotiate another interest-only loan, it has the potential to increase their repayments by thousands of dollars a year.

READ MORE VIA ABC