interest only mortgage Definition Pros and Cons

[{"selector":"#anim-08f541ad-0ce8-4dd0-aea7-ff90d1d3e4e4","keyframes":{"opacity":[0,1]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-bfb27c37-ee24-43ba-8df6-e137461d2e82","keyframes":{"transform":["scale(0.3333333333333333)","scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] An interest-only mortgage is a type of mortgage in which the mortgagor (the borrower) is required to pay only the interest on the loan for a certain period.

[{"selector":"#anim-d893c1c0-6a39-491a-bde6-53a5a9f3b682","keyframes":{"transform":["scale(1)","scale(1.5)","scale(0.95)","scale(1)"],"offset":[0,0.33,0.66,1]},"delay":0,"duration":1450,"easing":"ease-in-out","fill":"both","iterations":1}] [{"selector":"#anim-0fad0e8d-9252-4032-8d7a-5a079fe267a3","keyframes":{"opacity":[1,1]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-36f48fc1-d708-4839-810f-a44c1e18fa47","keyframes":{"transform":["scale(3)","scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] [{"selector":"#anim-29aadf15-d117-4655-b001-fdb6672d4d72 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate(0%, 0%) scale(1.5)","translate(0%, 0%) scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] Heart The principal is repaid either in a lump sum at a specified date, or in subsequent payments.

[{"selector":"#anim-57744d25-4a87-4dab-b2e0-e519f73623e3","keyframes":{"opacity":[1,1]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-c2359806-84fe-4e37-86d4-65a5ec18a025","keyframes":{"transform":["scale(3)","scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] [{"selector":"#anim-24ddc81a-222f-431e-ab51-7c5a4d595f0d","keyframes":{"transform":["scale(1)","scale(1.5)","scale(0.95)","scale(1)"],"offset":[0,0.33,0.66,1]},"delay":0,"duration":1450,"easing":"ease-in-out","fill":"both","iterations":1}] Heart An interest-only mortgage is one where you solely make interest payments for the first several years of the loan, as opposed to your payments including both principal and interest.

Interest-only payments may be made for a specified time period, may be given as an option, or may last throughout the duration of the loan (mandating you pay it all back at the end).

Usually, interest-only loans are structured as a particular type of adjustable-rate mortgage.

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While interest-only mortgages mean lower payments for a while, they also mean you aren't building up equity, and mean a big jump in payments when the interest-only period ends

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With some lenders, paying the interest exclusively may be a provision that is only available for certain borrowers.

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Most interest-only mortgages require only the interest payments for a specified time period—typically five, seven, or 10 years.

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