Interest Only

An interest-only loan gives you the option of paying just the interest, or paying interest and as much principal as you want in any given month. The interest-only option is available in the initial years of the loan for a fixed number of years. After the interest-only period, Payments adjust to cover the interest and principal needed to fully repay the loan over the remaining term. The monthly payment is then fixed and no further payment calculations are needed. all payments will then include principal and interest. Interest-only loans can be either traditional fixed rate or adjustable rate mortgage. If you choose to make the interest-only payment one month, that month's payment is lower than it would be had you made the principal and interest payment. Your interest rate may or may not be lower than a traditional mortgage, but you will have the option of choosing your payment. This enables a borrower who expects to increase their salary substantially over the course of the loan to borrow more than they would have otherwise been able to afford, or investors to generate cashflow when they might not otherwise be able to.