Should You Get an Interest-only Home Mortgage?

Before you consider taking out an interest-only mortgage, you should first understand what they are. Unlike traditional, fixed-rate mortgages, interest-only mortgages allows the borrower to initially pay the interest on the principal for a short period of time, rather than making payments on both the principal and the interest. This is how it works: say, for example, you've taken out a mortgage for $100,00.00, which would require a monthly payment of around $1,000.00. However, with an interest-only mortgage, the same payment would only amount to around $695.00. You could use the extra money to pay existing debts, like credit cards or student loans, or perhaps invest it.

The concept of an interest-only home loan is not a new one. A descendant of the jumbo market, these types of mortgages were initially geared towards those who intended to utilise the excess cash for other types of investments. This is an ideal option for the market-savvy investor, as it frees up some income for other projects. However, this type of mortgage has now entered the mainstream market, and is available to most home buyers.

There are many benefits associated with taking out interest-only loans. They allow younger buyers to take advantage of a developing real-estate market, giving them the opportunity to afford a slightly higher priced home.

Before taking out an interest-only mortgage, there are few things that you must take into consideration. While the thought of only having to pay for interest for the next few years may seem very tempting, you must remember that when the interest-free grace period is over, you will have higher payments than you would have with a traditional mortgage. Many young couples do not account for this, assuming that they will be earning more money in the future, not anticipating that they may face financial hardships down the road, thus putting their home at risk.

While there are many advantages to taking out an interest-free mortgage, it is important to remember that the grace period will not last forever and that the monthly payments will eventually go up. As long as you make financial plans for the future, taking advantage of an interest-only mortgage could allow you to increase your financial well-being, bringing you peace of mind.

Mark Lambie is the founder of The Loan House a website that allows consumers to quickly and easily get online mortgage quotes and mortgage information.

---

Desperately Seeking Good Leads, The Adventure Driven Loan Officer

As loan officers, the word "lead" is by far one... Read More

First Time Buyer Home Loans - Things To Consider When Applying Online

As a first time home buyer, there are several things... Read More

Secrets Your Banker Wont Tell You - Which Loan is Best for You?

Recently I was driving in my Car and I heard... Read More

Fixed-To-Adjustable-Rate-Mortgage

What is a Fixed-To-Adjustable Rate Mortgage?This type of mortgage offers... Read More

Bad Credit Home Financing - Get The Mortgage Loan You Want Even With Poor Credit

Having poor credit alone cannot hold you back from getting... Read More

Consolidate Debt With A Home Equity Loan

If you are a home owner who is having to... Read More

What is a Mortgage?

A mortgage is a loan, usually from a bank, finance... Read More

How To Determine The Price Of Your Home

Why is it that some homes sit on the market... Read More

Ten Things a Mortgage Processor Must Know to be Effective

From time to time, we hear a story about a... Read More

Home Mortgage Refinancing ? What?s in Your Contract?

Are you one of the millions of Americans who will... Read More

Home Equity Loan Considerations

In other words, the benefit of the loan must outlast... Read More

A Guide to Getting a Home Improvement Loan

If you've got a few things around the house that... Read More

What is an Interest Only Mortgage?

An Interest Only Mortgage is one where the repayments are... Read More

5 Tips for Savvy Use of Your Home Equity Line of Credit

Tapping your home's equity to pay college expenses, consolidate credit... Read More

Refinancing Your Mortgage Can Really Save You Money

Refinancing a mortgage is simply taking out a new mortgage.... Read More

No Fee Mortgages Coming Soon

Buying a home, especially for the first time, can be... Read More

What On Earth are Home Equity Loans?

Home equity loans are one of the most common types... Read More

Bad Credit? With Poor Credit You Can Still Refinance Or Get A Home Equity Line Of Credit

Have you decided to refinance your home or apply for... Read More

Choosing The Right Buy-To-Let Mortgage

Buy-to-let took off during the 1990s with the increasing availability... Read More

Key an Eye on Your Mortgage Payments

In previous decades, when a borrower missed a payment on... Read More

Refinance Your Second Mortgage

A 2nd mortgage is a secured loan on your property,... Read More

The Right Home Loan - Floating or Fixed Rate Loan

Choosing a home loan has never been tougher. Yes, with... Read More

Home Equity Line of Credit ? Great Idea for Rainy Day Emergencies

Most Americans tend to live on a paycheck-to-paycheck basis, and... Read More

7 Credit Improving Steps You Must Take Before Applying For A Mortgage

If you think you have good credit, think again. Chances... Read More

Mortgages After Bankruptcy: Easier Than You Would Expect

Give yourself time to rebound. Whether you had to turn... Read More

Home Mortgage Loan Information - Which Type of Home Loan is Best For You?

If you are considering buying a home, then you may... Read More

Buy a Home With a Government Grant? Avoid this Scam

If you watch enough late night television, you'll see advertisements... Read More

Home Mortgages: Think Before You Borrow

In today's overheated housing market, lenders are making it easier... Read More

Carolina Mortgage Loans

You're selling your home and are looking to relocate to... Read More

Best Buy to Let Mortgages

Are you looking for the best buy to let mortgages... Read More

What is a Capped Mortgage?

A capped mortgage is a variable rate mortgage with a... Read More

Home Mortgage Rate Shopping - Why Some Shoppers Give Up And Others Dont

About 29% of current homeowners and a much larger percent... Read More

Home Equity Line of Credit ? Great for Remodeling Projects

Many homeowners are lucky enough to find a house that... Read More