A Principle and Interest Loan, or P & I loan, is where you have a set repayment for the life of the loan (usually 25 or 30 years). A portion of the repayment is Principle (or the amount you originally borrowed), and a portion is interest. For example, if you had a loan of $ 100,000 at 6%pa, then your minimum monthly repayment would be $ 644.30, of this $ 493.15 is interest, $151.15 is principle. Have you ever wondered how banks make there money, now you know. It also means that if you miss repayments, the bank can put you into default (meaning you could lose your home).