An interest only mortgage loan is a kind of borrowing where you have to pay only on the interest on the loan. This kind of loan allows you to pay the principal whenever you want and until ten you will have to pay a fixed interest rate.
Several interest only loans truly put a time period to the principal and it has to be repaid within this time period. It could be anything from 5 to 10 years. This kind of loan does have its advantages and disadvantages. For some kind of people, this loan may have several advantages. Interest only mortgage loans are good for people who have a fluctuating income every month. Depending on the profile of a borrower, this loan can be profitable one, or else it could completely turn into a financial pitfall.
If the borrower expects their income to rise in the coming future, then this kind of loan is a profitable option. Also, the personal profile of the borrower matters. The person should be disciplined enough to repay the loan amount on time. Other wise the loan can turn into a nightmare for you. If you are a first time home buyer, this kind of loan can be advantageous and you can consider the interest amount as your monthly amount. Also, first time home buyers are most likely to upgrade their homes so they can easily pay of the principal by selling their first home. This way they get to keep their profit without any mortgage hassles.