Interest-only mortgages are peddled aggressively today by
lenders, institutions and brokers, but they're not advisable for
everyone.
An interest-only loan may work for you if:
-your income is mainly in the form of sporadic commissions or
bonuses
-if you are likely to make a more money in the near future
-if you will invest the savings on the difference between an
interest-only mortgage and an amortizing mortgage, and confident
that the investments will provide a better return.
-Professionals advisers don't recommend interest-only mortgages
to regular salary employee's who take out moderate-size mortgage
loans and don't have a plan for better returns.
-With an interest-only mortgage loan, your stuck paying only the
interest on the loan in monthly payments for a fixed number of
years. After the end of that loan, usually five to seven years,
you either refinance, pay the loan off in a lump sum, or start
paying off the principal, in which case the payments will be
greatly enhanced.
-Business owners with unpredictable saleries might work well
from interest-only loans, because "they need to utilize their
cash flows as much as possible, and this is a suitable way of
doing it,". And you always have the option of paying down
principal of the loan whenever you want.
-interest-only loans were for usually for wealthy borrowers
The concept is that an interest-only loan program allows you to
buy more houses than one can afford. These loans appeal to the
younger borrowers who have a future of increased income in the
comming years... and want to utilize this program to jump start
on thier home purchase.
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