Interest Only Mortgage

Interest only mortgage is the type of mortgage that allows the mortgagor to pay off the interest charged over the loan amount as the monthly payments. It is an amazing way to typically reduce your monthly payments. The term of interest only mortgage usually lies between 5-7 years and the interest rate remain fixed for the specific time period. After the term, gets over many make the refinance their homes, make a lump sum payment, or start with paying off the principal of the loan. However, while paying the principal amount, payments significantly increase.

The borrower may consider choose interest only mortgage in case-

  • You have a desire to buy more home.
  • If you know that the house will be sold in short time period.
  • Want to make short monthly payments now and have the full confidence that you would pay of the loan amount be it in large numbers, easily.
  • If you are detrain that investing the loan amount elsewhere would get your higher return on investment.  

Also, there are some great benefits of interest only mortgage. Some of them include-

  • Lower monthly payments till the term of the mortgage.
  • The borrower can purchase a larger home later by qualifying for a larger loan amount.
  • Helps in placing extra money into investment to built net worth.
  • During the whole term of interest only mortgage, the whole amount of monthly payment qualifies at tax deducible.

Interest only mortgages are useful for first time home buyers as it allows young people to defer making large payments until their income grows. The mortgage types also beneficial for the buyers whose income fluctuates because of the earning deemed through incentives. They can confide with paying slimmer interest payments during the term of mortgage and would pay the large amount of the principle when receives their commissions or bonuses.