Just as the name suggests in the method of â€˜interest only mortgagesâ€™ you will pay for your loan in terms of just the interest which would include a lower principle amount. What you get is a lower mortgage payment that you have to make at the end of the month. For many people this is most ideal as it falls within the budget of many. Finally it is up to you to decide if it suits you in the long run. To be more accurate to make such a decision it is always advisable to use a mortgage calculator.
This mortgage system is a slightly different from a traditional loan. Unlike the traditional system where you would be asked to make a payment each month here part of the payment is used for paying the principle amount of money that you actually borrowed. The rest of the money is used to pay the interest on the loan. In most cases you pay more of the interest at the start by which most lenders benefit and then you slowly depreciate the interest value. In an interest only loan you are just asked to pay a very small principle amount or may be just the interest only. The principle amount which of course has to be paid by other means.
People usually use such a system if they do not have a steady means of income or in fact do not want to stay at the new home for a very long time. With this system there are pros and cons linked to it. At some point of time you would still have to pay the principle amount. For many people who work in sales or in a seasonal job this method is most appropriate.
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