Interest only mortgage loans are a relatively new option for the average home purchaser. They were designed to offer low payments, since there is no principal being repaid, while offering the choice to make lump sum payments against principal when additional cash is available. An interest only mortgage is ideal for someone who receives periodic lump sum income.
With an interest only mortgage, payments are low every month, making it easier for those on commission, for example, to handle the payments and still have an opportunity to pay against principal in the months where commission is higher or when a bonus is received.
An interest only mortgage is not for everyone but it is an excellent money management tool in the right situation. Its definitely worth investigating whether the interest only mortgage is a product, you should consider.
Interest only loans are also called lines of credit. A line of credit, interest only loan or revolving loan is one that you can access as needed and pay just the interest owing each month. These loans have a sliding scale of interest rates, the lowest being for an interest only loan that is secured by real assets and the highest for those who have just opened an account at the financial institution, or do not have a high credit rating. In your list of money management tools, the arranging of a revolving loan should be one of your top priorities.
Interest only loans are gaining in popularity as a substitution for a conventional mortgage and may be an ideal option for those who receive high periodic income (sales people on commission for example), rather than a regular bi-weekly or bi-monthly salary. A revolving loan is something you usually apply for once and never have to apply for again, as long as you make the interest payments and additional payments to reduce the outstanding balance of the loan. Once you apply, you can let the credit line just sit there, available for when you really need it. Its like having an instant pre-approved loan, a great money management tool.
Monthly, you receive an itemized statement, that tells you exactly how much you have borrowed and what the payments are each month. When you repay a portion of the credit youve used, it becomes available for you to use again. You have control of your credit and debt. Shop for the best option for your money management style, there are as many options for interest only loans as there are lending institutions.
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About the Author;
Ryan Atkinson is the founder of http://www.money-management-info.com. Helping others understand the fundamentals of managing money. Click here to learn more about Mortgage Refinancing, Reverse Mortgages & Home Equity Loans.
