Mortgage : Home Loans : Refinance : Home Equity Loans

By Kristy Annely

One of the great things about interest-only mortgages lies in the fact that you they are not interest-only. You also need to repay the principal! Interest-only mortgage loans have been in existence for a long time, contrary to what some people think. They are loans for which the borrower needs to only pay the interest for a specified period of time, rather than the principal and interest. These loans are becoming increasingly popular, particularly with context to the booming real estate business, with houses becomes more expensive and fancy.

Interest-only mortgages come with their advantages and disadvantages. What they have done though is bring quality housing nearer to aspiring house owners, who until now could not even dream of purchasing their own house. They are appealing to such borrowers. These borrowers are fairly confident of repaying the interest in the specified amount of time. They are also popular with young executives. For young executives who are starting off on a career, interest-only mortgages are considered a less risky proposition. This is due to the simple reason that it is assumed that their career growth will enable them to repay the interest along with the principal in the specified time.

Since interest-only mortgage loans allow for a specified period of time for repayment, which could sometimes be up to 30 years. This also means that they are appealing to businessmen and the very rich. What they do is invest the money in some other business and repay the interest along with the principal, with the money generated out of the business.

Whatever may be the reason for going in for an interest-only mortgage, always remember not to go by certain assumptions. For example, you might not have a steady career path; or not everything will always be hunky dory with your business. Five years down the line, if something goes horribly wrong, will you be able to repay the principal? One has to make a thorough analysis of one

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This entry was posted on Saturday, July 29th, 2006 at 5:06 am and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.