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Information On Interest-Only Loans From Total Mortgages

Wednesday 29 November 2017, 6:33PM

By Beckie Wright

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Total Mortgages has some information on interest-only loans, and includes some warnings on IO as well. A loan is said to be interest-only if the monthly instalment payment that has to be made by the borrower consists of only the interest. The luxury of paying the interest lasts only for a specific period of time though, which normally ranges from five to ten years, and the borrowers have the option of paying more than the interest if they want to.

In an interest only loan the loan balance will remain as it is. An IO loan is viable for people who would like to pay the principal amount when convenient, and for

borrowers who do not have a stable income who would like to have the flexibility that comes with an IO mortgage. When their financial condition improves, they can make that substantial payment to principal. They are also good for people who are looking for a new house, and people who want to allocate their cash flow to a second mortgage, and people who are looking for a quick capital gain.

However, you have to be very careful though when accepting an interest-only mortgage, as many such mortgages do not come with the various features explained above. The other aspect is the presence of a lot of deceptions. Here are some of the deceptions –

Lenders charging a higher rate for a loan with an IO option.

Some lenders say that it is cheaper to amortize an interest-only loan.

Lenders quoting an interest rate which is fixed for the interest-only period, but it might not be entirely fixed.

Lenders assuring the borrowers that they won’t have to pay for the mortgage insurance in an interest-only loan.

However, if you take all the right precautions, by consulting a mortgage broker or a loan officer who you can trust and who is willing to provide you with all the essential data on the features of each loan, you will have all your issues resolved.

For more information on Hamilton mortgage brokers, loans Hamilton and insurance brokers Hamilton please go to https://www.totalmortgages.co.nz .