Interest Only Mortgages
Over the past few years Interest Only loans have become very popular with homeowners. The reason for this popularity is simple, an interest only loan is one that gives you the option of paying just the interest or the interest and as much principal as you want in any given month. This means that you can make a smaller payment, leaving you able to spend the money you save as you see fit. Interest only loans are an important tool in the mortgage world. They enable homeowners to have a choice in how much or how little they pay every month.
When to choose an interest only loan:
- When you need lower monthly payments
- If you plan to keep your loan ten years or less, or if you are uncertain how long you will keep your loan
- If you want the security of a fixed rate but don’t want to miss out on a payment that is lower
Use the money you save to:
- Take cash out to pay off high-interest debt such as credit cards
- Invest for your retirement
- Make home improvements
- Save for your children’s college fund
We offer a variety of interest only home loan options, including 30-year fixed-rate mortgages and adjustable rate mortgages. Our interest-only home loan programs are offered as interest only loans for periods of either three, five, seven or ten years.
Who Is an Interest Only Home Loan For?
There are a number of good reasons to consider an interest only loan when you are refinancing your current mortgage or purchasing a new home. On a traditional 30-year fixed-rate mortgage, roughly 70% of the payment goes toward interest during the first six or seven years of the loan. If your interest rate is low, then you’ve borrowed money at a good rate. This means the length of time you plan on spending in your home is a key consideration when deciding if an interest only loan is right for you.
If you are a more sophisticated borrower you can use the money you save with an interest only loan and could take the extra money you’d have each month from making interest only payments and invest it in something that would bring you a higher rate of return. Depending on your loan amount, this could mean you would have thousands of dollars at your disposal that would otherwise be going towards your principal. You have the ability to make your money work harder for you.