Interest-Only Loan
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
An interest-only loan lets the borrower pay only the interest for an initial period, with no principal reduction during that time.
What Interest-Only Loan means
Payments are lower at first but jump when the principal-and-interest period begins. You build no equity through paydown in the interim. These loans suit specific cash-flow or investment strategies.
Florida example
A Florida investor uses an interest-only loan to keep early payments low on a rental while rents rise. They plan to refinance or sell before the payment recasts, accepting the risk if those plans slip.
How it works
An interest-only loan lets you pay just the interest for a set period, often the first several years. Your payment is lower during that time.
The balance does not drop until the interest-only period ends. After that, payments rise to cover principal too.
Who it fits
These loans suit buyers with rising income or investors managing cash flow. They carry more risk since you build no equity early on.
We help you decide if the trade-off makes sense. Apply now and we will compare it to a standard loan.
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