Few days back, one of my friends was looking to mortgage a house in Santa Barbara. He had already found a house in Santa Barbara, that he really liked. So getting mortgage loan offers was the next thing (and he needed the offers quickly). He researched for the options on the internet (on websites like www.estreetloans.com) and found that interest only mortgage was the one that best suited him.

He discussed this with others and finally went for interest only mortgage for his Santa Barbara house.

But what is this interest only mortgage?

Interest only mortgage is one popular option where you need to pay only the interest component of the mortgage loan for the first few years. Using interest only mortgages you can save some cash which you would have otherwise used in making mortgage payments. This cash can then be used for investing in avenues which offer good returns. This, in fact, is the most important factor to consider when you are contemplating going for an interest only home mortgage loan. If you don’t have any other high-return avenues for investing this extra cash, then you would be better off going for a full mortgage payment from the start of your mortgage loan installments.

You need to remember that this cash that you are saving now, will actually be going back to the mortgage lender (through increase in the monthly loan payments at the end of the interest only time period). So, do not spend this amount that you have saved; you will need it in the future. Interest only mortgages are also good for people who are expecting a pay rise in the years to come (so their pay-back capability will increase after few years).

However, mortgage is one of the biggest financial decisions and you must evaluate all options before you decide on one.

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1 Comment for 'Interest only Mortgage'

1.  
   mortgage brokers
   November 1, 2008 | 8:59 am
    

   mortgage brokers…

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