Interest-Only Home Loan: The Benefits
The traditional mortgage has a loan term of 30 years. Homeowners repay it in monthly installments. The repayment covers a portion of the principal and the interest rate charge.
Interest-only home loans have existed for several decades as a niche product. It caught on with more borrowers in the 1980s and 1990s when interest rates rose. The Australian government wants the majority of its citizenry to become homeowners. Thus, it has worked with banks and lenders to find new solutions.
Mortgages with the interest-only feature offer two benefits, it frees up cash flow and allows investors to obtain properties on a modest budget.
For example, a mortgage of $500,000 and a 3% interest rate over 30 years nets a monthly repayment of $2,108. If the borrower opts for interest-only repayments, the monthly amount totals $1,250. It’s a difference that helps first-time homebuyers find their financial footing. It also helps investors improve properties and incur low overhead costs.
Investors have a purpose. The Australian government finds ways to help them balance costs with improving communities.
Interest-only home loan applicants need to remember that the interest-only feature expires. It lasts between one to 10 years. The home loan rates change.
As a non-bank lender, Mortgage House offers this mortgage to applicants with confidence. Our loan specialists walk borrowers through the details.
Interest-Only Home Loan Conclusion
Mortgage House loan specialists can walk individuals through the details of the interest-only home loan. In some cases, it is the best option. If our loan specialists find other products, they present them to the borrower. Contact our team today.