Interest Only Home Loan: Understanding the Basics
Sometimes a real estate property finds you before you find the funding. There is no reason to let the property slip through your fingers, which is a purpose of the interest-only home loan. It is important to understand how it works so that you are prepared to repay the funds in their entirety. The following are some basics to keep in mind.
Frees Up Cash Flow
Homebuyers and investors opt for this loan because it frees up cash for a period of time almost immediately. This allows you to purchase a property that will come off the market sooner rather than later. Homeowners use the cash to renovate the house or pay for the costs of moving, which is convenient.
Good for Real Estate Investing
Some real estate investors operate on modest budgets. If they plan to turn a property around before the first mortgage payment is expected, they have to be careful with the funds. It’s a balancing act and this loan is a useful tool. It acts as an infusion of cash.
Interest Only Portion Expires
This loan is a short-term solution because the interest-only portion expires. Once it expires, the repayment amount is likely to jump, so you need to be prepared. Plus, equity does not accrue at this time. If you are an investor, these details have little consequence. If you are a homeowner, we want to be sure that this is a good fit before getting started.
Interest Only Home Loan Conclusion
At Mortgage House, we take pride in being innovative and forward thinkers. This is why we offer our clients innovative products like the interest-only home loan. We also want to be sure our clients achieve success, so we walk you through the loan’s intricacies. Explore our home loan interest rate calculator to gain additional insight.