Interest only mortgages are exactly as they sound. They are mortgages in which your monthly payments work to only pay down interest. There are two obvious effects from this arrangement. First of all your monthly payments are smaller because you are not paying down the balance of your mortgage. Second, you are not building equity in your home.
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If you decide upon an interest only mortgage your loan term will often be 5, 7, or 10 years. At the point at which this expires your loan can become a fixed rate or adjustable mortgage amortized over a traditional 15 or 30 years.
Interest only mortgages are not for everyone. Only speaking with a qualified mortgage professional can reveal the best possible fit for your loan needs. On our site we offer a free short no obligation application to get competing quotes and loan information from mortgage broker professionals.
With the lower monthly payments an interest only mortgage affords you it might be possible to pay down high interest debts or furnish your new home. And you may still earn money of your home if property values are appreciating. This appreciation can help to offset the equity you would ordinarily gain from a conventional loan.