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Perhaps you are considering an interest-only mortgage loan due to reduced initial repayments. Check out the benefits and drawbacks before you go ahead. Ensure you can afford greater repayments by the end for the period that is interest-only.
In the event that you curently have a home loan and are also struggling along with your repayments, see problems spending your home loan for assistance.
Exactly How home that is interest-only work
On an interest-only mortgage loan (home loan), your repayments just cover interest regarding the amount lent (the main). For a collection period (as an example, five years), you spend absolutely nothing from the quantity borrowed, so that it doesn’t reduce.
The loan will change to a ‘principal and interest’ loan at the end of the interest-only period. You are going to begin repaying the total amount borrowed, in addition to interest on that quantity. Which means greater repayments.