Interest only Mortgage Loans

Mortgage is termed as an “interest only mortgage” only if the scheduled monthly mortgage payment – that means the payment that a borrower is required to make --involves only the interest. The option to pay interest only lasts for a specified period, usually 5 to 10 years. Borrowers have the right to pay more than interest if they want to.

If the borrower exercises the interest-only option every month during the interest-only period, the payment will not include any repayment of principal. The result is that the loan balance will remain unchanged.

To what all borrowers does Interest Only Mortgage suits ?

Interest-only mortgages are for borrowers who have a valid use for a lower initial required payment, and are prepared to deal with the consequences.

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