interest-only loans
Pay just accrued charges
Interest-only loans are loans where the borrower pays only the interest for a set period, not the principal.
Monthly payments are lower initially, but the loan balance doesn't decrease: They took out an interest-only loan to keep payments manageable while renovating.
After the interest-only period ends, payments jump significantly as the borrower begins repaying principal—a structure that contributed to the 2008 housing crisis when many borrowers couldn't afford the higher payments.
- real estate investmentCapital placed in property
- investment propertyReal estate bought for income
- buy to letProperty purchased for leasing
- teaser rateTemporary low introductory interest
- amortizationGradual debt reduction schedule
minimum payment · balloon payment · underwater mortgage · reverse mortgage · principal · financial planning · deferred payment · repayment schedule · adjustable-rate mortgage · subprime mortgage · home equity · debt consolidation · prepayment penalty · housing bubble · cash flow