05 Feb 2022

What Do You Do at the End of an Interest-Only Mortgage?

Interest-Only Mortgage End

Homebuyers have an array of home loan products available to them. Among them is the interest-only mortgage. This option has different features that require careful consideration from the homebuyer. Some home buyers agree to take on this mortgage because it allows them to become homeowners. 

The unique feature is that interest-only mortgage ends. The interest-only period lasts five or ten years. When it expires, the monthly repayments make a significant jump. The homeowner repays a new interest rate and the principal. If the homeowner takes no action and the interest-only period expires, the repayments can double. A homeowner can also extend the interest-only period, obtain a new mortgage, or sell the home.

If you opt to extend the interest-only period, keep in mind that you essentially extend the life of the loan. To get out from under the mortgage, you must chip away at the principal. Otherwise, the home loan goes on for what seems like forever.

Another option is to obtain a new mortgage. In this case, you attempt to refinance the existing home loan.

Lastly, you can sell the home and pay off the mortgage with the proceeds. This is the option that many investors pick. 

Mortgage House helps clients achieve their financial goals. We provide a mortgage choice that fits most financial circumstances. 

Interest-Only Mortgage End Conclusion

An interest-only mortgage has two periods. Therefore, it has two endpoints. Homeowners and investors must keep an eye on the expiration and take action before it occurs. Mortgage House loan specialists walk clients through the details of this loan. Contact our team today.

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