Capitalised Interest
Interest added to the loan balance instead of paid in cash.
What is Capitalised Interest?
Capitalised interest is interest that's added to your loan balance rather than paid in cash. Common in construction loans (during the build phase) and some bridging loans. You're effectively borrowing to pay your interest.
Why it matters for you
Capitalisation helps cash flow during periods when you can't make full repayments — like a construction build or interim before selling a property. The trade-off: your loan balance grows, so you're paying interest on interest.