![]() Imagine you are planning on buying a new house, and, for that reason, you need to borrow $350,000. For example, becoming unemployed or being faced with unexpected additional costs may lead to financial troubles. Having a high amount to pay in the future may be risky as you cannot be sure about your future situation.It means that you will need to pay a higher amount each month after the interest-only period (where you pay back the interests and principal together) or pay off the principal as a lump sum. You will still have to repay the principal value of your mortgage.You can read more about this process in the mortgage amortization calculator if you're not quite familiar with it. Interest-only loans do not amortize during the interest-only period. As the principal value is not paid, your mortgage remains the same - your debt does not decrease.There are, however, some disadvantages to an interest-only mortgage loan: If you expect that your salary will increase with time, it will be easier for you to pay off the debt in the future.Managing your household's budget is easier due to small and stable interest-only mortgage payment.The savings calculator may help you estimate potential income. You can invest the money you saved from not paying the principal value. The mortgage interest rates are often small. ![]() The monthly payments are smaller than a typical mortgage over the period without the principal.Here are the Advantages of an interest-only mortgage loan: ![]()
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