Interest Only Mortgage

With an interest only mortgage loan you are basically taking on a loan that will not decrease in principal as your payments are applied only to the interest that has accrued on the loan. An interest only mortgage loan is smart for homeowners who are aggressive in saving or people that are involved with high returns on their current investments. At any time you can refinance your home to acquire a more traditional type of home mortgage.

An interest only mortgage allows you the opportunity to pay back the pending interest only; none of your payments will be applied to the principal. Interest only mortgaging is not for everyone. One must be considerably disciplined in their finances. A person heavily invested in high yielding investments may benefit form a interest only loan as they can use their profits to pay the loan in full when the money is due as this is not an amortizing mortgage.

It may be in your benefit to consult an interest only calculator to determine if you will benefit from an interest only mortgage. By paying just the interest it will take you considerably longer for your home to gain equity. Homes that are being paid for by interest only mortgages will reap considerably less if the homeowner needs to sell. By paying interest only your will not have an amortizing mortgage, which means it can take potentially quite a bit longer for you to be mortgage free. Interest only mortgages are a creative yet useful way of financing your home if you know that your income will dramatically increase in the future or your investments are sound and will continue to be so that when the loan reaches maturation you will be able to either pay the loan in full or to refinance to a traditional loan. You can apply for and receive an additional interest only mortgage if the terms are right for you and you are disciplined in saving and investing.