Interest-Only Loans

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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:

Pros:

Cons:

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.

Things to consider before taking an Interest-only loan :