An Interest-only loan is a loan in which the borrower pays only the interest for some or all of the term, with the principal balance unchanged during the interest-only period. Interest-only loans are often used for investment properties, as they can help to reduce the monthly payments and free up cash flow. However, interest-only loans can also be risky, as they can lead to higher interest costs over the life of the loan.
There are two main types of Interest-only loans:
Interest-only loans can be a good option for borrowers who are looking to reduce their monthly payments. However, it is important to carefully consider the risks before you take out an interest-only loan.
Here are some of the pros and cons of interest-only loans:
If you are considering an interest-only loan, it is important to carefully consider the pros and cons before you make a decision. Interest-only loans can be a good option for some borrowers, but they are not right for everyone.