Interest-only mortgage is similar to other home loans. But in case of other home loans, you pay monthly installment but here you pay only the interest for a period of 5-10 years, often for the whole term.
Advantages of interest only mortgage:
1) If you are a regular and practiced investor then this loan will be benificial for you. If you are sure that investing this money into stock or in any small business can give you a good return in the long run and you would be capable to repay the principal amount in fixed term; then go for it.
2) Interest only mortgage can be blessing for you if you get revenue out of it in the form of commission or bonuses. You can easily pay your monthly interest with your monthly salary and make money with principal amount by investing it in stock market.
3) Because of low initial payment you can qualify for a loan of a big figure.
4) If your financial condition is crucial and credit score is negative then low interest mortgage rates gives you a chance to improve your credit history.
Cons of interest only mortgage:
1) If it is an ARM, then there might be a risk of increase in the interest rate.
2) A fall in expected income growth can cause problems in paying off your emi.
3) If you are not disciplined enough in spending money then this mortgage will not be the right option for you.
4) Decline in property value will lead you to many financial problem.
Advantages of interest only mortgage:
1) If you are a regular and practiced investor then this loan will be benificial for you. If you are sure that investing this money into stock or in any small business can give you a good return in the long run and you would be capable to repay the principal amount in fixed term; then go for it.
2) Interest only mortgage can be blessing for you if you get revenue out of it in the form of commission or bonuses. You can easily pay your monthly interest with your monthly salary and make money with principal amount by investing it in stock market.
3) Because of low initial payment you can qualify for a loan of a big figure.
4) If your financial condition is crucial and credit score is negative then low interest mortgage rates gives you a chance to improve your credit history.
Cons of interest only mortgage:
1) If it is an ARM, then there might be a risk of increase in the interest rate.
2) A fall in expected income growth can cause problems in paying off your emi.
3) If you are not disciplined enough in spending money then this mortgage will not be the right option for you.
4) Decline in property value will lead you to many financial problem.
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