What is an 'InterestOnly Mortgage'
A type of mortgage in which the mortgagor is only required to pay off the interest that arises from the principal that is borrowed. Because only the interest is being paid off, the interest payments remain fairly constant throughout the term of the mortgage. However, interestonly mortgages do not last indefinitely, meaning that the mortgagor will need to pay off the principal of the loan eventually.
BREAKING DOWN 'InterestOnly Mortgage'
Interestonly mortgages can be useful for firsttime home buyers because it allows young people to defer large payments until their incomes grow.
At the end of the interestonly mortgage term, the borrower has a couple of options. He or she can either renew the interestonly mortgage or repay it through standard means, such as entering into a normal mortgage and liquidating investments.

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