Interest Only
Home Loans
What is an Interest-Only Mortgage?
An interest-only mortgage is a unique loan option that allows you to pay only the interest for an initial period, usually between 5 to 10 years, before you start paying both principal and interest. Interest only is popular due to its 40-year term giving homeowners a longer payment plan. This means your monthly payments are lower during the interest-only period, giving you more flexibility in managing your finances. After this period ends, your monthly payment will increase as you begin paying down the principal amount as well. Interest-only mortgages are especially appealing to those who want lower monthly payments initially and may plan to refinance or sell before the loan resets. If you would rather pay both interest and principal upfront than take a look at a Fixed-rate Mortgage.
What are the Benefits on an Interest-Only Mortgage?
Is an Interest-Only Mortgage Right for Me?
Interest-only mortgages aren’t for everyone, but they’re a great fit for certain financial situations. If you’re confident in your ability to make larger payments down the road or plan to sell or refinance before the principal payments start, this loan could be a good option. It can also work well for those with variable income, such as self-employed individuals, who want to keep their payments flexible. However, it’s important to be prepared for the payment increase once the interest-only period ends. If you’re uncertain about future income stability, you might prefer a more traditional mortgage structure.
An interest-only mortgage can be a powerful tool for those looking to maximize flexibility and manage cash flow effectively. Reach out to our team at Vision Home Mortgage to see if this loan option aligns with your financial goals!
